Gold-backed digital tokens bids steadily decline

THE number of bids for the gold-backed digital tokens has been steadily reducing from a high of 135 on its inception in May mopping $14 billion to 15 bids received last week on Thursday, an update for the Reserve Bank of Zimbabwe indicates.

Reserve Bank of Zimbabwe (RBZ)

The gold-backed digital tokens just like the gold coins have a vesting period of 180 days and can be redeemed afterward based on the international gold price as determined by the London Bullion Market Association (LBMA) PM fix payable in either local or foreign currency.

The gold-backed digital tokens follow the successful injection of Mosi-oa-Tunya gold coins in July last year, which started with higher denominations and was later followed up by smaller denominations in November due to high demand in the market.

The central bank has said gold-backed digital tokens will have prescribed asset status and liquid asset status and be accepted as collateral and tradable.

The first batch of gold-backed digital tokens on 12 May mopped $14 billion from 135 bids received. The second and third bids generated an average of $8 billion each from slightly above 100 bids with the third bid gaining ground 105 applications totalling $8 billion.

However, there was a drop in the fourth round on 1 June with 59 bids raising $4,5 billion and an improvement was registered on 8 June where 61 bids with $7.2 billion generated.

According to the central bank, 35 bids were made on 15 June raising $3 billion and 28 bids were made on 22 June with $.5 billion mopped.

The eighth issue raised $246 566 974 the lowest to date while last week $715 192 888 from just 15 bids.

The issuance and usage of the gold-backed digital tokens shall be in two phases.

Phase 1 entails that the gold-backed digital tokens will be issued for investment purposes with a vesting period of 180 days and redeemable in the same way as the existing physical gold coins.

Phase 2 entails the gold-backed digital tokens held in either e-gold wallets or e-gold cards being tradable and capable of facilitating Person-to-Person (P2P) and Person-to Business (P2B) transactions and settlements.

The Central Government has said through the RBZ, it shall continue to assure public confidence in both instruments by ensuring that at all times, gold coins and gold-backed digital tokens remain fully backed by physical gold reserves.

Gold coins

The economy has seen a resurgence of macro-economic instability, with domestic inflation being driven primarily by the skewed preference for US dollars as a savings currency. This has put enormous pressure on the exchange rate as the skewed preferences have continued to increase the velocity of the Zimbabwe dollar.

It has been noted by analysts that price stability is an added advantage of buying gold coins for investment 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 losing value.

Gold is viewed as 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.-chronicle