Gold reserves to anchor local currency

Minister Chidhakwa

Minister Chidhakwa

Walter Nyamukondiwa Chinhoyi Bureau
Government is working on a plan to establish a gold reserve set to anchor the introduction of a local currency when the right time comes for the return to the Zimdollar, it has been learnt.

This comes at a time when the country is grappling with cash shortages and economists believe the issuance of a gold backed local currency would help stimulate economic activity.

Modelled around the $200 million Afreximbank facility, which is backing the current bond notes in circulation, economists believe the local currency will ease liquidity challenges and stimulate aggregate demand.

Plans to create a gold reserve involve investing in the efficient operations of Government’s gold mining firms, including Sabi, Elvington and Jena gold mines.

Sabi Gold Mine resumed operations recently with targets to produce about 25kg of gold per month after a five-year hiatus caused by working capital constraints.

Mines and Mining Development Minister Walter Chidhakwa said the gold reserve would complement the Sovereign Wealth Fund, where a set of minerals would be reserved for future generations.

The legal processes that will give effect to the fund are still before Parliament.

“Naturally, in order to support the future introduction of our own currency, you want to have mineral resources that you hold in reserve,” said Cde Chidhakwa.

“We have discussed this matter with the Reserve Bank of Zimbabwe and what we are doing now, because most of the gold that is currently held is in private hands, we need to get our own companies operating.”

Government has full or part control of Sabi, Jena and Elvington gold mines, which have not been operating in recent years due to lack of capital.

Effort has been expended to resuscitate the companies, which are at varying levels of fruition.

Once all the companies owned by Government start operating, Minister Chidhakwa said they would be required to set aside part of their gold output to be kept as reserve by the RBZ.

He said Jena Gold Mine would soon take delivery of mining equipment to bolster its resuscitation, while other options were being looked at to bring on stream Elvington Mine in Chegutu.

This follows delivery of $7 million worth of equipment to the Zvishavane based Sabi Gold Mine.

Confederations of Zimbabwe Industries president Mr Busisa Moyo said a gold backed currency was a sound economic intervention.

“If it is along the lines of the Afreximbank facility, then it will give a lot of credibility to the currency because there is depressed demand for goods and products as people have no cash,” said Mr Moyo.

Demand, he said, should be at its highest owing to activities at the tobacco auction floors, but shortage of cash had dampened economic activity.

There are reports that some foreigners are taking advantage of liquidity constraints to bring in money and buy gold.

Some gold miners, including informal ones have in recent days been reported to be channelling their gold to the parallel market.

Minister Chidhakwa said contingent measures were being put in place to ensure that miners got their money as soon as they delivered to Fidelity Printers and Refiners.

Pin It
  • rubbish again

    dont waste your time on that rubbish talk, use the rand instead

  • GG

    You need to educate Zimbabweans first before you introduce the ZimDollar. This is long overdue. Only Zimbabweans on earth refuse their own currency, this really shows brainwash to its maximum level. Have you ever heard Americans saying they want Chinese Yen because it is doing well, or Chinese saying they want Euro because it is doing well. Even the Europeans are abandoning the Euro insisting they want their currency because it is their identity.,

    Look at Egypt in war, still use their currency, Syria which is basically in ruins but use their currency, Libya is crying for peace but use their currency, Ethiopia the country of malnourished but use their currency, Russia under sanctions but use their currency. Iraq under siege but use their own currency, Iran also use their own currency, Look at Pakistan and Afganistan, always in war but use their own currency. Even Lesotho is in South Africa full of mountains importing all from South Africa, still use their currency, Swaziland is in South Africa still use their currency, shame on Zimbabweans you are literate but not educated, Zimbabweans are at the forefront of destroying Zimbabwe. If you really want to use American Dollars, why do you not go to USA. Zambia took off zeros from their money but still use Zambian Kwacha, Mozambique took out zeros from their money but still use their Meticais.
    You even choose doctors to lead you who choose other people’s currency, or identity and you say that is economics, no ways. You can imagine, you have professors, doctors, engineers who want to be called by neighbours surnames or American names and you say you are educated? Even though the Wright Brothers were the first to fly, not any American would like their surname. They love who they are. We have professors in Zimbabwe who now want to be called by Robin Wood’s name?

  • Common Sense

    So once you get your gold, then what….

    You need an economy with sound policy and trust FIRST… otherwise the currency just has no value, and you get hyper inflation

    Please get someone pleese to run the economy, you are clearly incompetent and desperate

  • Don Duncan

    Gold mines have not been operating due to lack of management. Capital flows to gold mines that are managed well and have a stable culture/politics. No one wants to invest in a govt. enterprise except other governments. They are investing free money (taxes) with no punishment for losses. When all businesses are private “on principle”, meaning the govt. protects the right to property, then capital will flow and mistakes will be corrected most effectively. Why? Because incompetence is punished by job loss (as it should be) and only the best workers/businesspersons rise to the top. There is no need for govt. help, in fact it is counter productive. A separation of govt. & business is necessary for capitalism to flourish.

    Money creation and banking should be private. (Just look what govt. did!)

    Capitalism and the gold standard built the US into the leader of the world and socialism is destroying it. Don’t make the same mistake in Zimbabwe.

    Your only problem will be that the US Empire attacks any country that says it wants to go back to the gold standard. They fear it. It would make their paper money scam look bad. And they will kill millions to preserve the “petrodollar”.