THE Reserve Bank of Zimbabwe (RBZ) sold gold coins worth more than ZW$20 billion as of mid-January, helping to mop up liquidity while contributing to exchange rate and price stability.
The central bank introduced gold coins in July 2022 as an alternative retail investment product for value preservation in the dual currency system and a liquidity mopping instrument over and above the foreign exchange auction system.
In his 2023 Monetary Policy Statement released yesterday, RBZ governor John Mangudya said: “The gold coins introduced by the Bank in July 2022 also significantly contributed to exchange rate and price stability. The coins have proved to be an effective open market instrument for mopping up excess liquidity in the economy and a retail investment product for preserving value for investable funds.
“The combination of tight monetary policy through high policy rates and the liquidity-mopping effects of the gold coins and the foreign exchange auction system played a pivotal role in achieving price and exchange rate stability in the economy.”
Mandudya said the gold coins had been well received, with 25 188 coins valued at ZW$20 billion having been sold as at 13 January 2023.
“The bulk of gold coins, 84% were bought by corporates while purchases by individuals accounted for 16%,” he said.
“The gold coins have a vesting period of 180 days after which the Bank can buy them back from the investors.”
The central bank introduced smaller denominations in November 2022 to cater for people with lower savings.
“As at 13 January 2023, the smaller denominations accounted for 38% of all sales,” Mandudya said.
He said the central bank would continue availing gold coins on a demand-driven basis as it seeks to promote a savings culture and provide alternative investment instruments to the public in the dual currency system.
Last month, a local asset management firm, Bard Santner, made good on the call to make gold in Zimbabwe — through gold coins — an investment asset class.
Bard Santner Investors made the first move in promoting the RBZ initiative by launching a unit trust, the Bard Santner Gold Coin Unit Trust. The instrument is designed to ensure financial inclusion and contribute to the resuscitation of a savings culture in Zimbabwe.
The underlying asset of the unit trust is the Mosi-oa-Tunya Gold Coin issued by the RBZ.
The gold coin, due to its price, has generally not been accessible to the majority of Zimbabweans, especially those with lower amounts to save.
In this initiative, Bard is the fund manager responsible for investing unit holder funds, while CABS is the trustee. The trustee keeps the fund assets in custody on behalf of unitholders.
The minimum investment is set at US$120. Alternatively, investors can invest in monthly instalments of US$15 or equivalent in Zimbabwean dollars at the bank rate, making gold accessible to all as an investment asset class.