Gold coins buyers reap rewards as prices soar

Buyers of Zimbabwe’s gold coins, introduced by the Reserve Bank of Zimbabwe (RBZ) in July 2022, have enjoyed significant gains on their investments due to the recent rise in gold prices.

Since their launch, the coins have appreciated by 26.27 percent, reaching US$2,302 per coin as of May 2, 2024, compared to their initial price of US$1,823.

The RBZ introduced these gold coins with the aim of reducing citizens’ demand for foreign currency.

The then central bank governor, Dr John Mangudya, during the launch, emphasised their role as a store of value, discouraging individuals from resorting to the black market for foreign currency preservation.

However, the initial price tag of US$1,823 made them largely inaccessible to individual buyers, with corporations comprising the majority of purchasers to date (78 percent).

To address this, the central bank later introduced gold-backed digital tokens, offering smaller denominations at a more affordable price.

As of March 31, 2024, a total of 39,103 gold coins had been sold, with a cumulative value of ZW$63.47 billion (ZiG25,388,000) and US$0.8 million.

During the same period, 1,624 coins were redeemed by customers, with 1,447 coins redeemed for US$2.46 million and 177 coins for ZW$700.4 million.

The central bank also issued Gold-Backed Digital Tokens (GBDTs) on a continuous basis. As of March 31, 2024, a total of 1,163 applications had been processed, resulting in the purchase of tokens valued at ZW$466.99 billion (ZiG186.8 million) and US$5.0 million.

The total amount of gold purchased through these instruments reached 917.28 kilogrammes.

Furthermore, only a small portion of GBDTs have been redeemed (under 10 percent), indicating their primary use as a store of value.

This suggests that the gold coins and GBDTs have successfully served their intended purpose, providing a stable and secure investment option for Zimbabweans.

Pension Funds have been notable buyers of the gold coins.

As at 31 December 2023, the industry had acquired 1,995 gold coins of varying denominations.
The industry also acquired 4.99 million milligrammes of the gold-backed digital tokens.

The Insurance and Pension Commission (IPEC), in its 2023 fourth quarter report, encourages pension funds to invest in value preserving instruments, which can facilitate Person-to-Person (P2P) and Person-to-Business (P2B) transactions.

The gold backed digital tokens are tradable as a means of payment, used as a store of value and also bear prescribed asset status,” said IPEC.-ebusinessweekly