Small gold coins will bring inclusivity: ZB
ZB Financial Holdings says the proposed introduction of small Mosi-oa-Tunya gold coins would bring inclusivity to the market as that would accord previously excluded potential buyers a chance to invest in them and store value for their local currency.
In November, the smallest coin, containing just over 3,11g of gold will be introduced to the market and would cost US$188,48, or local currency equivalent at the interbank rate.
In an economic presentation at the recent Zimbabwe Agricultural Show in Harare, the financial institution said the gold coins have intrinsic value, which cannot be said about fiat money.
“The initiative presents a value preservation investment alternative for economic agents in the face of hyperinflation. By introducing smaller denomination gold coins, the authorities seek to include the rest of the economy, who may have felt excluded given that not everyone has capacity to purchase the 22-carat gold coin at US$1 800 or +/-ZW$900k,” reads part of the presentation shared with Business Chronicle.
The financial group also said the gold coins have a potential towards stabilising the exchange rate by reducing pressure on demand for USD as a store of value.The presentation further highlighted several investment options that include investing on the stock market so as to preserve value, investing in life insurance and in mutual funds, buying bonds such as corporate bonds, municipal bonds and treasury bonds.
According to the Reserve Bank of Zimbabwe (RBZ), a total of 10 000 Mosi-oa-Tunya gold coins have been minted to date while 6 799 gold coins had been sold out as of last Friday from 8 076 distributed by various agents.
Corporates are buying the bulk of the coins, which have attracted a huge market response and are a solid store of value and savings, a latest report following a recent Monetary Policy Committee meeting said.
As of August 26, corporations had snapped up 75 percent of the coins and 25 percent by individuals.
The RBZ introduced the coins to help cushion corporates and individuals from the negative impact of declining cash values and mop up large sums of Zimbabwe dollars sloshing in some bank accounts of corporates and wealthy individuals. Local banks are temporarily not allowed to buy the gold coins for their own portfolios until the RBZ decides otherwise in line with developments in the economy.
Banks can only receive the coins from the RBZ for onward selling to their customers on behalf of the apex bank. But a lot of ordinary people holding extra cash and keen to invest in gold or preserving the value of some of their savings in gold, have complained that the one-ounce coins are far too expensive and have called for the smaller coins.-chronicle
