According to Finance Minister Mthuli Ncube over $8 billion ZWL worth of gold coins have been sold so far by the government. He also revealed that the more portable gold coins are proving to be a very popular alternative to cash with those buying gold coins coming from different segments of the Zimbabwean population. The Finance Minister also reiterated the government’s promise that they will introduce smaller denominations of gold coins.
We are happy with the uptake of the gold coin and we so far sold in excess of Z$8 billion since their introduction. Many people are happy with hedging their investments against the gold coins instead of holding onto cash as they have been doing in the past. We are now looking at introducing a smaller denomination to make these gold coins more inclusive across the entire Zimbabwean population. We want every Zimbabwean not to be left behind in our efforts to manage our economy. Every Zimbabwean will be afforded a chance to acquire these gold coins.Finance Minister Mthuli Ncube on gold coins
The government is making fewer losses on gold coins
When the government began selling the coins back in July we pointed out that the government was making terrible losses on the sale of each gold coin thanks to the official rate being almost half of the unofficial rates. A lot has changed since then, the government is still making losses on the sale of each coin as the official rate is still less than what the unofficial rate is. However, the gap between the official rates (what we are calling the gold rate) and the black market rates is now very close. This means that the government is now making less loss per sale of each gold coin.
Gold coins are helping deepen the current ongoing liquidity crisis by offering an attractive avenue to store value. While street dealers are demanding rates of $800 ZWL or more per 1 USD gold coins are being sold at a rate of around $630 ZWL. It is little wonder that a lot of investors are preferring to invest in gold coins instead of USD. These investors figure they can leverage the differences between the official rate and the unofficial rates to make a profit in addition to them being able to conserve the value of their savings. The truth though is that there are just not enough coins around for them to be able to account for the current liquidity crunch we are seeing. That can only be attributable to a drastic drop in spending by the government even though they continue to deny this is not the fact.