Analyst Farai Mutambanengwe said if the Reserve Bank of Zimbabwe (RBZ)’s gold coins were to be sold in local currency they would provide a solution to the current inflationary challenges in the country.
The (RBZ) last week announced plans to introduce gold coins to be used as a new investment tool to store value for local investors.
The announcement followed a resolution agreed on by its Monetary Policy Committee (MPC) chaired by RBZ Governor Dr John Mangudya. The apex bank’s chief said in a statement:
The MPC resolved to introduce gold coins into the market as an instrument that will enable investors to store value.
Mutambanengwe said selling gold coins exclusively in Zimbabwe dollars would create competition for the US dollar as the most popular inflation hedge and reduce its demand. Mutambanengwe said:
The gold coins will have to be made available exclusively in Zimbabwe dollars, not US dollars. They can have an issue price, but most likely they will develop a secondary market on which they trade. The ideal would be for the Government to insist on exclusive trade in Zimbabwe dollars and they can even be auctioned.
If I were RBZ Governor I would use the gold coins as a means of incentivising Zimbabwe dollar holding and investments, as well as managing Zimbabwe dollar liquidity, rather than as a means of mopping up US dollars.
I would issue them exclusively in Zimdollars so one would first have to liquidate US dollars for Zimdollars before buying them.
Mutambanengwe added that buying gold coins for investment must have the effect of allaying investors’ worry about loss of investment value as they can easily keep the gold coins safe at home for hundreds of years and still sell them for a good price when they eventually decide to.
Economist Dr Prosper Chitambara said the introduction of gold coins was a “noble” idea which has “worked before in other countries.” He added:
We know that with gold, one can never go wrong.
The gold coins will be minted by Fidelity Gold Refineries, Zimbabwe’s sole authorised buyer of gold, while the central bank indicated the precious coins would be sold to the public through normal banking channels.
The coins are introduced when the Zimbabwe dollar is losing value against other currencies, a trend that has seen members of the public and businesses losing value in the local currency.
Zim Dollars – naaaagh!
I guess my US$ have a better and very convenient store of value, why then would I need to exchange my greenback for the gold coins. I would rather buy the gold coins using your ZWL$, convert the gold coins to US$ and stash the greenback somewhere safe!! No, never; Mthuli keep your gold coins and I’ll keep my US$!!
Suffering from dementia. Here the issue is of bring confidence and restoring it on our means of trade. It is not surprising that people like you are not uncommon,even during the time when Jesus walked on this Earth we had Judas. And earlier we had Abel. Your will is your command . Money in your pocket is yours,kuifuga kana kuwarira
Information is power.
You are just good at critising I thing it’s a good measure as it removes pressure on the USD.