The Sunday News
Vusumuzi Dube and Robin Muchetu
GOLD coins that were announced last week as a new measure and alternative to store monetary value, will be introduced into the market mid-this month and will be purchased using both foreign and local currency.
In addition, the coins will be exchangeable locally and outside the country as authorities have already engaged international financial partners on the new development.
Since the Government announced that it will introduce gold coins that will be minted by the Reserve Bank of Zimbabwe’s Fidelity Printers and Refiners, there has been a lot of speculation on how the new monetary measures would work.
When the Government announced the new measures it noted that the gold coins would provide an investment instrument that will allow investors to store value. It is expected that they will provide locals with an alternative investment instrument.
RBZ Governor Dr John Mangudya told Sunday News in an interview yesterday that contrary to assertions that the gold coins will only be purchased in USD, they will also be available to those wishing to buy using local currency.
He said the coins will be purchased in “all currencies in circulation in Zimbabwe including the Zimdollar.”
“Basically the gold coins will be an instrument for storing value and they will be purchasable in both foreign and local currency. Once minted they will be distributed by Fidelity Printers and Refiners, local banks and international banking partners that we will announce in due course.
“These gold coins will be usable both locally and internationally because we have engaged with international banking partners. What I must emphasise is that gold is gold and it has an international value.”
He said those who will purchase the coins will also get bearer certificates.
“Since these coins are essentially meant to store value they can be used for the purpose of trading and also can be used as collateral. The purchaser can also convert them to cash if need be.
“Our starting point for purchases will be one ounce of gold which will be representing approximately 22 carats,” he said.
Dr Mangudya also took a swipe at unscrupulous individuals who have been circulating images purporting to be the gold coins on social media, revealing that samples have not yet been released.
“As we have said, these coins will be minted at Fidelity Printers, who will be in charge of the distribution together with the banks and international banking partners. The images that have been circulating are fake and the public should stand guided.
For now Fidelity has been given the green-light to start minting the coins so we expect that the coins will be available in the market by mid-July,” said Dr Mangudya.
According to online reports, a gold coin 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, such as the Britannia, Canadian Maple Leaf, and American Buffalo. Typically, gold coins have been used as an instrument of investment around the world.
A considerable population in world economies see gold as an alternative to currency and gold coins are reputed to be a low-risk investment option as they offer better security, particularly in instances where the native currency loses its value.
In other countries, gold coins have not only been used as a mechanism to tame inflation or stabilise currency, but have been used as investment vehicles as well.
Meanwhile, some wholesalers and retailers in Bulawayo and Harare are shortchanging consumers by charging some basic goods strictly in foreign currency and refusing to take local currency, a situation that has been described as unfortunate as consumers are now being forced to go to the black market to secure foreign currency.
Some manufactures of the goods are, however, accessing the foreign currency at the RBZ’s auction system. This followed announcement by the Government that it was now officially adopting a multi-currency system that will see the US dollar in use alongside the local currency until 2025. Deputy Minister of Finance and Economic Development Hon Clemence Chiduwa confirmed that they have received such reports.
“Indeed, it is very true, we have been getting reports regarding wholesalers and such business entities which come to the auction. They get money to buy their goods in US dollars but do not take local currency. Working together with the Financial Intelligence Unit, our ministry has been seized with the issue,” he said.
However, Confederation of Zimbabwe Retailers president Mr Denford Mutashu defended the stance by the retailers saying their source of foreign currency determined how they priced their goods.
“We are in a multi-currency system and both the ZWL$ and the USD are official legal tender. Retailers and wholesalers price goods and services according to the currency they use to source products from manufacturers. Very few manufacturers and suppliers can release goods in local currency as a way of using their product to source forex and augment that which they get from the auction, which constitute an average of 20 percent to 40 percent of their total requirement. Instead of buying forex from the parallel market, businesses are using their products to source forex as a survival means,” he said.
Mr Mutashu said the pricing systems were informed by market realities and the retailers were not entirely out of order. — @NyembeziMu