Zimbabwe: Reserve Bank to issue smaller gold coins in November

The Reserve Bank of Zimbabwe (RBZ) has pledged to introduce lower denomination gold coins. In his medium-term monetary policy statement released yesterday, Dr. Mangudya said the RBZ would release smaller gold coins in mid-November to allow for more buyers.

“Following the successful launch of gold coins on July 25, 2022 and in response to public demand, the bank will introduce and release gold coins in smaller units of tenth ounce, quarter ounce and half ounce for sale with effect from mid-November 2022,” he said.

The characteristics, characteristics and conditions of sale will remain identical to the present commercial regime.

Gold coins around the world remain a popular asset class and in countries like India they have become a home investment for many.

The smallest coin, containing just over 3.11 grams of gold, will cost $188.48, or the local currency equivalent at the interbank rate, one tenth of yesterday’s price of an ounce Mosi-oa -Tunya. The actual price when introduced will be the world price of gold for one tenth of a troy ounce plus a 5% minting and distribution fee.

The new decision to add half-ounce, quarter-ounce and tenth-ounce coins follows the highly successful launch of the Mosi-oa-Tunya one-ounce gold coins and its sales since July 25. Banks have so far sold 4,475 Mosioa-Tunya since launch, 90% of which were purchased in local currency.

But many ordinary people holding extra cash and liking the idea of ​​investing in gold or preserving the value of some of their savings in gold, have complained that one ounce coins are a lot overpriced and demanded smaller rooms.

Yesterday, the one-ounce coin cost US$1,884.80 or $936,589.89, and few ordinary people have that kind of money in their bank accounts.

In a Newsday article dated August 8, 2022, the Zimbabwe Coalition on Debt and Development (ZIMCODD) called for lower value gold coins as only the elite have access to them at the moment.

Currently, gold coins are valued at one ounce, weighing 33.93 grams, and are priced according to international prices which include production costs and bank charges, making them very expensive.

As a result, the coin is out of reach for low-income people and ordinary Zimbabweans.

“At the current price of around $1,800, the coin is inaccessible to the vast majority of citizens,” ZIMCODD said in its Weekend Reader.

“As such, it is relevant that a cheaper option be offered to those looking to protect their savings against inflation, but are unable to afford the current cost.”

Zimcodd said that due to pricing, gold coins are becoming the preserve of the wealthy, as the salaries the majority of civil servants earn, for example, cannot buy even a single coin.

Mangudya said securing a tight monetary policy, coupled with the favorable embrace of gold coins and the elimination of excess liquidity, would continue to support exchange rate stability and support disinflation. .

The central bank kept the key rate at 200%, saying it would be revised according to the evolution of monthly inflation. The high rate is intended to ensure that it is not viable to borrow local currency to speculate on the black market or even buy gold coins.

With foreign currency denominated loans now constituting more than half of total banking sector lending, effective September 1, reserve requirements would be extended to foreign currency deposits at rates of 5% for demand deposits and 2.5 % for time deposits and savings deposits to ensure the continued strength of the banking sector.

Currency retention thresholds were kept at 75% for agricultural exporters and 100% for tourism, recovering from the effects of Covid-19.

In order to further liberalize the foreign exchange market, the limit of foreign exchange transactions for individuals and micro, small and medium enterprises processed by foreign exchange offices will, as of August 15, increase from US$500 per week to US$5,000. EU per transaction per month for payments that include medical expenses, education expenses, business trips and vacations.

Zimbabwe’s total gold production for the first five months of the year increased by 86.3% to 13,171.58 kg from 7,068.85 kg for the corresponding period in 2021, according to official data.

According to production figures reported by Fidelity Printers and Refiners, the nation’s only gold buyer, last month’s gold production by small-scale and large-scale miners rose 79.5% to 2,994, 75 kg, against 1,668.01 kg in May. 2021.

According to a 263Chat article published on August 11, 2022, the Zimbabwean government launched an ambitious plan in October 2019 to transform the mining sector into a $12 billion export industry by the end of 2023.

The plan was launched as a key pillar for sustainable economic growth. The plan targeted gold production of US$4 billion a year, with platinum coming in second at US$3 billion. Diamond mining and polishing was set at US$1 billion, the combined goal for chrome, nickel and steel. Coal, hydrocarbons, lithium and other minerals are expected to provide the remaining US$3 billion. Key to the above ambition is the beneficiation of minerals at source as opposed to the export of raw mining products. The Chamber of Mines of Zimbabwe (CoMZ) has predicted that mining output could reach $18 billion by 2030, provided the sector’s major challenges are ironed out through policy and legislative reforms.

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