Zimbabwe to Issue Gold Coins "RBZ Introduces Gold Coins As Store of Value"

[LawrenceChard]

Zimbabwe to Issue Gold Coins "RBZ Introduces Gold Coins As Store of Value"

According to multiple Zimbabwe news sources.

Although for some strange reason, the Press Release appears not to be visible on the The Reserve Bank of Zimbabwe's website.

Most, if not all, of the news sources carry similar  or identical content:

New Zimbabwe:

RBZ introduces gold coins as store of value
 27th June 2022  Business, Economy
By Xinhua

HARARE: The Reserve Bank of Zimbabwe (RBZ) on Monday announced the introduction of gold coins into the market as a store of value.

In a statement following a meeting of the bank’s Monetary Policy Committee (MPC) on June 24, RBZ governor John Mangudya also announced some measures meant to curb inflation.

“The MPC resolved to introduce gold coins into the market as an instrument that will enable investors to store value. The gold coins will be minted by Fidelity Gold Refineries (Private) Limited and will be sold to the public through normal banking channels,” Mangudya said.

He said that the MPC had expressed great concern over the recent rise in inflation, which increased to 30.7 percent on a month-on-month basis for June 2022, thereby increasing the year-on-year inflation for June to 191.6 percent.

“The committee noted that the increase in inflation was undermining consumer demand and confidence and that, if not controlled, it would reverse the significant economic gains achieved over the past two years,” he said.

In that regard, the MPC resolved to put in place measures to align the interest rates with the inflation developments and enhance the circulation of foreign exchange, on top of the introduction of gold coins.

Interest rates and statutory reserves for financial institutions were reviewed with effect from July 1, with the MPC increasing the bank policy rate from 80 percent to 200 percent per annum.It also increased the Medium Term Accommodation interest rate from 50 percent to 100 per cent, while the minimum deposit rate was increased for Zimbabwean dollar savings from 12.5 percent to 40 percent per annum.

The minimum rate for Zimbabwean dollar time deposits was also increased from 25 percent to 80 percent per annum.

The MPC, however, maintained the Statutory Reserve Requirements at the current levels of 10 percent for demand and call deposits and 2.5 percent for savings and time deposits.

“In order to enhance the circulation of foreign currency in the economy, as well as to support the willing-buyer willing-seller foreign exchange market, the MPC resolved to maintain the current export retention thresholds across the various sectors of the economy and that 25 percent of the unutilized export receipts shall be liquidated at the willing-buyer willing-seller exchange rate after 120 days from the date of receipt of the export proceeds,” Mangudya added.

The MPC had also noted the widespread use of forwarding pricing in foreign exchange by some economic agents and had therefore resolved that mechanisms to formalize forward pricing arrangements should be created.

This would be done through the development of a market for forwarding exchange rates, he said.

More to follow.

😎

Edited July 5, 2022 by LawrenceChard

[LawrenceChard]

2 hours ago, LawrenceChard said:

Zimbabwe to Issue Gold Coins "RBZ Introduces Gold Coins As Store of Value

According to multiple Zimbabwe news sources.

Although for some strange reason, the Press Release appears not to be visible on the The Reserve Bank of Zimbabwe's website.

Most, if not all, of the news sources carry similar  or identical content:

New Zimbabwe:

RBZ introduces gold coins as store of value
 27th June 2022  Business, Economy
By Xinhua

HARARE: The Reserve Bank of Zimbabwe (RBZ) on Monday announced the introduction of gold coins into the market as a store of value.

In a statement following a meeting of the bank’s Monetary Policy Committee (MPC) on June 24, RBZ governor John Mangudya also announced some measures meant to curb inflation.

“The MPC resolved to introduce gold coins into the market as an instrument that will enable investors to store value. The gold coins will be minted by Fidelity Gold Refineries (Private) Limited and will be sold to the public through normal banking channels,” Mangudya said.

He said that the MPC had expressed great concern over the recent rise in inflation, which increased to 30.7 percent on a month-on-month basis for June 2022, thereby increasing the year-on-year inflation for June to 191.6 percent.

“The committee noted that the increase in inflation was undermining consumer demand and confidence and that, if not controlled, it would reverse the significant economic gains achieved over the past two years,” he said.

In that regard, the MPC resolved to put in place measures to align the interest rates with the inflation developments and enhance the circulation of foreign exchange, on top of the introduction of gold coins.

Interest rates and statutory reserves for financial institutions were reviewed with effect from July 1, with the MPC increasing the bank policy rate from 80 percent to 200 percent per annum.It also increased the Medium Term Accommodation interest rate from 50 percent to 100 per cent, while the minimum deposit rate was increased for Zimbabwean dollar savings from 12.5 percent to 40 percent per annum.

The minimum rate for Zimbabwean dollar time deposits was also increased from 25 percent to 80 percent per annum.

The MPC, however, maintained the Statutory Reserve Requirements at the current levels of 10 percent for demand and call deposits and 2.5 percent for savings and time deposits.

“In order to enhance the circulation of foreign currency in the economy, as well as to support the willing-buyer willing-seller foreign exchange market, the MPC resolved to maintain the current export retention thresholds across the various sectors of the economy and that 25 percent of the unutilized export receipts shall be liquidated at the willing-buyer willing-seller exchange rate after 120 days from the date of receipt of the export proceeds,” Mangudya added.

The MPC had also noted the widespread use of forwarding pricing in foreign exchange by some economic agents and had therefore resolved that mechanisms to formalize forward pricing arrangements should be created.

This would be done through the development of a market for forwarding exchange rates, he said.

More to follow.

😎

I don't know how they think:

"In a statement following a meeting of the bank’s Monetary Policy Committee (MPC) on June 24, RBZ governor John Mangudya also announced some measures meant to curb inflation."

... is going to curb inflation, although it will give its citizens another alternative to the ZWL, RTGS Real Time Gross Settlement dollar, 

This Wikipedia page is interesting:

https://en.wikipedia.org/wiki/Zimbabwean_dollar

It seems as though the US Dollar is now, or again, the de facto currency.

I guess that the new gold coins, if they ever get issued, will be very popular with Nigerians, as they will constitute a way of conserving wealth.

Many stackers and precious metal investors do so because they mistrust fiat currencies including the UK Pound and the US Dollar. Just imagine the incentive if the alternative is the Zimdollar, a.k.a Zoller.

😎

 

[dicker]

The last time I looked inflation was approaching 200pct in Zimbabwe.  In reality it is probably much higher.  

If I was in the market for gold coins in Zimbo, and buying from the RBZ, I would be testing each and every coin!

 

 

[dicker]

https://www.aljazeera.com/amp/economy/2020/12/18/zimbabwe-is-hemorrhaging-gold-can-a-key-reform-curb-smuggling

[LawrenceChard]

14 hours ago, dicker said:

The last time I looked inflation was approaching 200pct in Zimbabwe.  In reality it is probably much higher.  

 

Wow!, I didn't know they had ever got it so low!

😎

[Oddjob]

Tonight on "Meet the Press" we have

And we ask discuss the question "Zimbabwe...how's that change of government going you wanted 40 years ago?".

[LawrenceChard]

Gold coins to be sold in Zim dollars - The Herald 

"THE Reserve Bank of Zimbabwe (RBZ) says its planned gold coins, to be introduced as an alternative investment option and inflation hedge on July 25, will be traded in both Zimbabwe dollars and foreign currency.

RBZ Governor Dr John Mangudya said in an interview this week that the gold coins, to be called Mosi oa Tunya, which will contain an ounce of pure gold, would provide an alternative investment option and also act as a store of value, currently dominated by the US dollar amid resurgent inflation."

There followed much comment, from oliticians and others, which did not make much sense, most of it saying that if they were only traded in Zimbabwe Dollars, this would help support the Dollar, but when you buy a commodity with any particular currency, you are effectively selling the currency to buy the commodity. It makes little sense to make people sell US Dollars to buy Zim Dollars, then use the Zim Dollars to buy gold coins. This just creates extra barriers, complexity, and costs, creating a disincentive to doing any deal.

"Notably, prior to the latest update by the RBZ governor speculation was rife that the gold coins would be sold exclusively in foreign currency, a proposition analysts said would increase demand for and pressure on the US dollar in the parallel market.

Analysts believe the gold coins present an opportunity for the RBZ to make the local currency attractive to the investors if the coins are issued mainly in local currency, which will result in US dollars chasing the local unit as people would need it to make the investment. 

A gold coin is made mostly or entirely of gold. Gold has been used as money for many reasons and chief being that it is fungible, with a low spread between the prices to buy and sell.

“As you are aware, the US dollar has largely been used for two things; for the importation of goods and store of value. The gold coins will provide an alternative investment option to the US dollar as a store of value,” Dr Mangudya said.

He added that investors that purchase the gold coins will be able to preserve value, especially the negative impact of inflation as is currently the case on the domestic and global stage while investors would also be able to make good profits when gold prices rise.

As an inflation hedge, the gold coins will come in handy for investors given resurgent price increases triggered by Zimbabwe dollar exchange rate volatility and the negative impact of the war in Ukraine, which has sent global commodity prices through the roof. 

The introduction of gold coins, Dr Mangudya said, as an alternative and attractive investment option would reduce pressure on the US dollar on the open market, where excessive demand for the greenback has resulted in the depreciation of the Zimbabwe dollar.

He also said the apex bank would also put in place modalities that would see the bank buy back the gold coins, an arrangement that should bolster confidence among investors as to the sustainability of the coin’s market in the country.

The RBZ more than a week ago announced plans to introduce gold coins following a resolution agreed on by the bank’s Monetary Policy Committee (MPC), as a new investment instrument that also doubles up as a store value for local investors.

Dr Mangudya, who chairs the MPC, said in a statement;  “The MPC resolved to introduce gold coins into the market as an instrument that will enable investors to store value.”

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.

Buyers will be able to purchase and redeem the gold coins through normal banking channels, the coins may also be sold to the central bank-owned companies namely Fidelity Printers and Refiners and Aurex Private Limited. 

However, the Governor said the central bank was expected to release the operational modalities around which the gold coins would be traded.

“Authorised dealers are advised of the introduction of gold coins into the market, as an instrument that will enable investors to store value. The gold coins will be minted by Fidelity Hold Refineries Limited and will be sold to the public through normal banking channels.

“Operational modalities for the handling of the gold coins shall be availed in due course,” Dr Mangudya said.

Analyst Farai Mutambanengwe said if the gold coins were to be sold in local currency they would provide a solution to the current inflationary challenges in the country. This would create competition for the US dollar as the most popular inflation hedge and reduce its demand.

“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.”

Earlier, economist Dr Prosper Chitambara commented on the issue saying, “the idea is noble, it has worked before in other countries and it has proven to be a good fit with storing value and hedging against inflation. We know that with gold, one can never go wrong.

“To be honest, much of what we are doing is speculation, but I think to reduce pressure on the Zimbabwe dollar and reduce inflation, the coins should be sold also in local currency at the willing buyer willing seller rate,” Dr Chitambara concluded. 

The best part about buying gold coins for investment is that the investor does not have to worry about its maintenance to get the best returns, unlike other tangible assets. An investor can easily keep the gold coins safe at home for hundreds of years and still sell them for a good when they eventually decide to.

Price stability is an added advantage of buying gold coins for investment, analysts said, and when compared to other investment options in the market, the price of gold never falls by a significant margin and is rather always stable even during a global financial crisis.

Worldwide people look at gold as an alternative to currency, particularly where the local money is prone to lose value. Gold is a real physical asset that tends to maintain its value in the market, which, in turn, proves that buying gold coins is a good investment option.

Over the past two years, for example, the money supply in the United States has grown by more than 38 percent to about US$6 trillion, a rise that usually took decades to achieve.

Thus, a combination of the unsecured money supply from the US, rising global inflation, and fears that Washington is increasingly weaponising the US dollar to sanction other countries is driving investors to other investable assets.

While there is a shift to other global currencies, there is also a significant shift to gold. 

Central banks around the world are increasing the gold they hold in foreign exchange reserves, bringing the total to a 31-year high in 2021, according to an article by Nikkei Asia.

Central banks have built up their gold reserves by more than 4 500 tonnes over the past decade, according to the World Gold Council, the international research organisation of the gold industry.

According to the Gold Bars Worldwide website, countries with gold coins include South Africa, which issues the Krugerrand gold coins, Australia has the Australian Kangaroo, the United States has the American Eagle, Canada has the Maple Leaf, Austria has the Vienna Philharmonic."

I don't know why they have omitted to mention the UK with gold sovereigns, Britannias, Beasts, and a variety of other gold coins.

"Mosi oa Tunya" translates from Southern Sotho to English as "Smoke of Tunya"

 

[LawrenceChard]

On 04/07/2022 at 19:04, dicker said:

The last time I looked inflation was approaching 200pct in Zimbabwe.  In reality it is probably much higher.  

If I was in the market for gold coins in Zimbo, and buying from the RBZ, I would be testing each and every coin!

 

 

 

10 hours ago, LawrenceChard said:

Wow!, I didn't know they had ever got it so low!

😎

From Wikipedia:

Hyperinflation
All four issues of the Zimbabwean dollar experienced high rates of inflation, although it was not until the early 2000s that Zimbabwe started to experience totally unsustainable hyperinflation.

On 13 July 2007, the Zimbabwean government said that it had temporarily stopped publishing (official) inflation figures, a move that observers said was meant to draw attention away from "runaway inflation which has come to symbolise the country's unprecedented economic meltdown".

In 2008, the inflation rate accelerated dramatically, from a rate in January of over 100,000% to an estimated rate of over 1,000,000% by May, and nearly 250,000,000% in July.

As predicted by the quantity theory of money, this hyperinflation was linked to the Reserve Bank of Zimbabwe's choice to increase the money supply.

Money supply (2006–2008)

The Reserve Bank of Zimbabwe responded to the dwindling value of the dollar by repeatedly arranging the printing of further banknotes,[45][46][47][48][49] often at great expense from overseas suppliers.

A selection of Reserve Bank of Zimbabwe bearer cheques printed between July 2007 to July 2008 (now expired) ranging between 10 and 100,000,000,000 Z$ that illustrate the hyperinflation rate in Zimbabwe.
On 1 March 2008, it was reported that documents obtained by The Sunday Times showed that the Munich company Giesecke & Devrient (G&D) was receiving more than €500,000 (£381,562) a week for delivering bank notes equivalent to Z$170 trillion a week.

By late 2008, inflation had risen so high that automated teller machines for one major bank gave a "data overflow error" and stopped customers' attempts to withdraw money with so many zeros.

In June 2015, the Reserve Bank of Zimbabwe began to formally demonetise the Zimbabwean dollar, reducing its value steadily to zero in order to complete a switch to the US dollar by the end of September 2015.

The Zimbabwean government stated that it would credit 5 US dollars to domestic bank accounts with balances of up to 175 quadrillion Zimbabwean dollars, and that it would exchange Zimbabwean dollars for US dollars at a rate of US$1 to 35 quadrillion Zimbabwean dollars to accounts with balances above 175 quadrillion Zimbabwean dollars.

Exchange rate history

This table shows a condensed history of the foreign exchange rate of the Zimbabwean Dollars to one US Dollar:

First dollar	Second dollar		Third dollar
Month/Year Exchange rate 1983 1 1997 10 2000 100 Jun 2002 1,000 Mar 2005 10,000 Jan 2006 100,000 Jul 2006 500,000+	Month Exchange rate Aug 2006 650 Sep 2006 1,000 Dec 2006 3,000 Jan 2007 4,800 Feb 2007 7,500 Mar 2007 26,000 Apr 2007 35,000 May 2007 50,000 Jun 2007 400,000 Jul 2007 300,000 Aug 2007 200,000	Month Exchange rate Sep 2007 600,000 Oct 2007 1,000,000 Nov 2007 1,500,000 Dec 2007 † 4,000,000 Jan 2008 6,000,000 Feb 2008 ‡ 16,000,000 Mar 2008 70,000,000 Apr 2008 100,000,000 May 2008 777,500,000 Jun 2008 40,928,000,000 Jul 2008 758,530,000,000	Day Exchange rate August 2008 1,780 September 2008 590,000 7 October 2008 2,300,000 14 October 2008 10,700,000 21 October 2008 1,220,000,000 28 October 2008 251,000,000,000 8 November 2008 669,000,000,000

† Due to the December 2007 banknote shortage, funds transferred via Electronic Funds Transfer Systems (EFTS) bore a premium rate of about $4 million, while the cash transaction rate varied around $2 million.
‡ Exchange rate was 20,000,000 for large amounts.

The third dollar rates above are OMIR. The cash rate differs significantly to the above rates. The table below is the cash rate of the third dollar history:

Month	ZWR per USD
Sept 2008	1,000
Oct 2008	90,000
Nov 2008	1,200,000
Mid Dec 2008	60,000,000
End Dec 2008	2,000,000,000
Mid Jan 2009	1,000,000,000,000
2 February 2009	300,000,000,000,000

 

Some big numbers there!

😎

[dicker]

Yes, an absolute basket case.

The below is a good 5 min read that has a potted history.  
 

https://www.dallasfed.org/~/media/documents/institute/annual/2011/annual11b.pdf

[paulmerton]

"each coin will be identified with a serial number"

Unsure if a good thing or a creepy thing or both  

[GoldDiggerDave]

@dicker thanks for the link.  They think they have it bad when we get to the stage where our own currency is worth less then the blogroll it buys we will have to use harsh polymer notes on our backside. They need to thank themselves lucky as once the currency is worthless it still has a practical  secondary use.

[DaKine]

I don't see how a gold coin will prop up the value of Z-dolls unless they guarantee a fixed rate or (?) rate of rise. How is a guarantee that the inflation will not continue? Will the government prop the value of Z-dolls in gold? 

Mindboggling, I just don't see it succeeding when the confidence in it has been so shattered.

[Zhorro]

After the release of the 1oz gold coin in July, lower denominations are coming.

The one ounce coins are called "Mosi-oa-Tunya" - that's the local name for Victoria Falls, and translates as "The Smoke Which Thunders".

https://www.zerohedge.com/economics/zimbabwe-hails-success-gold-coin-issuance-lower-denominations-coming

[CoinStruck]

Yes understand 4,475 have been sold they will issue another 2,500 of the 1oz coins in November 2022 along with 1/10oz, 1/4oz and 1/2oz denominations. 

[Zhorro]

2 hours ago, CoinStruck said:

Yes understand 4,475 have been sold they will issue another 2,500 of the 1oz coins in November 2022 along with 1/10oz, 1/4oz and 1/2oz denominations. 

Are there two versions of the coin?  There are pictures of two obverse designs.

 

[GoldDiggerDave]

4 minutes ago, Zhorro said:

Are there two versions of the coin?  There are pictures of two obverse designs.

 

So when are the US going to invade, humanitarian bomb and  enforce democracy on them all in the name of freedom?

It did not end well for the last couple of world leaders who tried to peg their currency or supply of goods to gold 

[MonkeysUncle]

The opportunistic money making git in me led to me tapping a South African of my acquaintance to see if getting sticky mits on some was do-able. He was ahead of me and had arrived at the conclusion that trying to take one out of Zim could jeopardise the number of his body parts remaining attached to his body.

How releasing a coin worth $1,800 dollars on so in a country where $1,800 dollars is probably more than the inhabitants of a small town possess between them is somehow meant to help them/ the economy leaves me scratching my head.

It makes Covid lockdowns, invading t'Ukraine or electing Biden seem vaguely sensible. Answers on a postcard please...