RBZ starts disbursement of 4 500 small gold coins

10 Nov, 2022 - 00:11 0 Views
RBZ starts disbursement of 4 500 small gold coins Dr Mangudya

The Herald

Oliver Kazunga Senior Business Reporter

THE Reserve Bank of Zimbabwe (RBZ) will tomorrow start disbursing 4 500 smaller units of Zimbabwe’s Mosi-oa-Tunya gold coins to banks ahead of planned release of the bullion coins in the market on Tuesday next week.

RBZ Governor Dr John Mangudya said at the Chamber of Mines of Zimbabwe (CoMZ) breakfast meeting on the state of the mining industry and prospects for 2023 that a total of 4 500 smaller denominations gold coins will be released from tomorrow.

However, he would not be drawn to divulge details on the purchase price per unit.

“For now we are starting with 4 500 and the value now depends (on the prevailing market price) because they are coming in as small as a tenth of an ounce,” he said.

The monetary authorities are releasing small gold coins so that ordinary citizens with excess liquidity can also invest in an alternative store of value other than the US dollar, the same way big investors were awarded an opportunity.

The gold coins were introduced for sale to the public in both local currency and United States dollars (and other foreign currencies) at a price based on the prevailing international price of gold plus 5 percent to cover the cost of production and distribution.

In July this year, RBZ introduced bigger denominations of gold coins as part of measures to ensure investors, mostly cash-rich institutions, have alternative means to preserve value.

“Also, just to advise you that starting on the 15th of this month gold coins of lower denominations of a tenth, a quarter and half of an ounce will be on sale starting Tuesday next week. We are going to be taking them to the banks on Friday (tomorrow) and Monday so that the public will start buying them on Tuesday.

“So, why are we doing this, so that we do not leave no-one behind and any place behind because we know that the bigger denominations were elitist and we have listened and therefore we are bringing these smaller denominations,” he said.

Further to that, the central bank released a statement yesterday evening updating the market on the planned introduction of the smaller denomination gold coins into the market as advised in the mid-term monetary policy statement of August 11, 2022

“The features and characteristics of the smaller units shall be similar to one-ounce gold coins in circulation save for the following aspects:  one-tenth ounce with a diameter of 16mm, weight of 3,39g, edge type (fully needed with serial number on face of the coin) and a thickness of 1,2mm.

“A quarter of an ounce will be 21mm in diameter with a weight of 8,48g, edge type (reeded with serial number engraved) and a thickness of 1,65mm.

“Half an ounce will have a diameter of 25mm, weight of 16,97g, edge type (reeded with serial number engraved) and a thickness of 2,25mm.”

The RBZ Governor said the sale terms and conditions of the latest edition of gold coins shall remain the same as those of the one-ounce gold coins that have been in circulation since July 25 this year.

The bank indicated earlier that once payment has been received by the selling agent, the buyer of the gold coin takes physical possession of the gold coin or opts to keep the gold coin through bankers of their own choice (custodial services) on terms and conditions of the custodial service provider.

At the discretion of the holder of the gold coin, the RBZ said, the bank or its agents would buy back the gold coins after a vesting period of 180 days in line with the need to promote a savings culture in the country.

For the buy-back, the bank or its agents (including Fidelity Gold Printers and Refiners and Aurex Jewellery) would request the bearer to surrender the original bearer certificate for the specific coin. Coins shall be purchased at the prevailing international spot price of gold.

On redemption, both residents and non-residents (international buyers), will have a choice to request payment in US or Zimbabwe dollars.

A gold coin is a coin that is made mostly or entirely of gold. Most gold coins minted since 1800 are 90–92 percent gold, while most of today’s gold bullion coins are pure gold.

More than 11 000 Mosi-Oa-Tunya valued at $11,4 billion have so far been sold.

Dr Mangudya told the miners yesterday that monetary authorities would continue with a tight monetary policy stance coupled with the favourable uptake of the gold coins and mopping up of excess liquidity will continue supporting the stability of the exchange rate and sustain disinflation.

The coins, which are also known as the Mosi-oa-Tunya gold coins just like their forerunners, are among a plethora of interventions introduced by authorities to stabilise the economy, including a sharp rise in the bank policy rate from 80 percent to 200 percent.

The Zimbabwe National Statistics Agency (Zimstat) has indicated that in October 2022, the month-on-month non-food inflation rate stood at 3,2 percent, shedding 2,0 percentage points on the September 2022 rate of 5,2 percent.

Zimstat also indicated that on a year-to-year basis, annual inflation slowed to 268,8 percent in October 2022, from 280,4 percent the previous month and 285 percent in August 2022.

The interventions by the monetary authorities complement measures introduced by the Government earlier this year where Treasury has been implementing the value for money audits to do away with overpricing on public contracts and fronting loading exchange rates.

The greedy practice resulted in companies pocketing huge sums of Zimbabwe dollar liquidity, which they offloaded on the parallel foreign exchange market, driving interest rates that fuelled inflation resurgence.

On its part, the central bank also hiked the bank policy rate, which determines the minimum level of interest rates charged by banks, from 80 to 200 percent, as it sought to discourage speculative borrowing, which was hurting the local currency.

Since the monetary authorities and Treasury started implementing the raft of interventions aimed at anchoring inflation and exchange rate stability, Zimbabwe has witnessed more than four months of monthly inflation decline.

Economist Prosper Chitambara said earlier this week that the gold coins had been effective in mopping up excess liquidity from the market while at the same time providing an alternative investment instrument. He said since their introduction, the response by the public had been very positive.

“We are already seeing stability in terms of inflation numbers. Obviously, it is part of the cocktail of reforms that the Government has been implementing. So I think the response to smaller denomination gold coins by smaller investors will be positive for ordinary citizens to also be able to invest,” he said.

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