IMF Believes Zimbabwe’s Gold Coins are a Missed Chance to Build the Nation’s Gold Reserves

The introduction of gold coins by the Reserve Bank of Zimbabwe (RBZ) to mop up excess liquidity in the market and halt runaway inflation seems to be bearing fruit, at least for now. Individual buyers had taken up 35% of the bullion, with 65% being snapped up by corporates. As at 22 September 2022, a total of 9,516 gold coins had been sold to both individuals and corporate buyers, according to the Reserve Bank of Zimbabwe Governor, Dr John Mangudya. The gold coins are minted by the RBZ-owned Fidelity Printers, the sole buyer of gold in the country. Their price is determined by the international market rate for an ounce of gold, plus five per cent for the cost of producing the coin. Each coin weighs one troy ounce and has a purity of 22 carats. The Zimbabwe government took the unprecedented step of introducing gold coins as legal tender after inflation spiked from 191% in June to 257%. Currently, the central bank has been supplying the market with one-ounce coins, which hit the market at US$1,884.80, which saw fewer ordinary people participating because of the elevated price. The RBZ will in November introduce lower denomination gold coins to enable the participation of ordinary citizens. The smallest, a tenth of an ounce, will be made available to the public through banks and approved dealers.

SOURCE: AFRICAN BUSINESS

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