Zimbabwe to introduce new gold coins

Started by Big_M, July 07, 2022, 01:26:26 PM

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Big_M

It is not clear from the statement whether these new one ounce, 22-carat 'Mosi-Oa-Tunya' gold coins will have legal tender status. They are to be introduced on 25 July 2022.

Direct link to the press statement

Webpage with a link to the press statement

Both links stored in Wayback Machine

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I have been following this news for some time. Very frustrating that it is not clear. However, I do not think that they are legal tender. I think it is a medal, similar to the gold medal issued in 2013 for Mugabe.

Zimbabwe Mosi-oa-Tunya.jpg

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#2
As expected, unfortunately just gold medals. Still somewhat interesting though. Every piece is numbered on its edge, and comes with a certificate. The medals are being sold by the Reserve Bank of Zimbabwe and local banks. There is also a buyback-scheme under which the Reserve Bank of Zimbabwe will buy it back in Zimbabwe dollars or US dollars at the prevailing bullion value. The pieces were minted outside of Zimbabwe, but it is planned for production to be transferred to Zimbabwe in the future. The piece is made of 33.93 grams of 22 carat gold, because of which it contains 1 oz of fine gold. Initially, 2.000 pieces will be launched.

Zimbabwe gold medal 2022.jpg

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#3
Surprisingly, I noticed that during the launch event on 25 July, the governor of the  Reserve Bank of Zimbabwe was showing a version of the medal to the media with a different reverse design (and also slightly different obverse design) than the one that was on 21 July officially unveiled by the Reserve Bank of Zimbabwe (here). The version that was shown at the launch event also depicts plants and what appears to be a goat on the reverse. I wonder whether they mistakenly showed an unchosen pattern piece, or whether this will be the next piece they will launch.

The information in the previous message was also updated to include other new information.

Zimbabwe gold medal 2022 (2).jpg Zimbabwe gold medal 2022 (3).jpg 

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#4
On 25 July, the first pieces also went on sale to the public. Below the packaging can be seen. They are being sold in a griplock bag with a numbered certificate of authenticity, that matches with the number on the edge of the medal. The piece itself is packaged in a capsule. More information about the pieces can be found in this press statement of July 25.

FYr1OlcXEAEl0YP.jpg

FYr3VV6WIAADBdM.jpg

©TheNewsHawks

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1,500 pieces were already sold last week and the Reserve Bank of Zimbabwe is planning release a further 2,000 pieces this week.

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Smaller gold coins set for release

Smaller Zimbabwean gold coins, as small as a tenth of an ounce, are expected to go on sale in November from the Reserve Bank of Zimbabwe so ordinary people can invest in them and store value for their local currency, RBZ Governor Dr John Mangudya said yesterday.

The smallest coin, containing just over 3,11g of gold, will cost US$188,48, or local currency equivalent at the interbank rate, at one tenth of yesterday's price of the one ounce Mosi-oa-Tunya. The actual price when it is introduced will be the world price of gold for one tenth of a troy ounce plus 5 percent minting and distribution fee. The new move of adding half ounce, quarter ounce and tenth ounce coins follows the very successful launch of the one ounce Mosi-oa-Tunya gold coins and its sales since July 25.

Banks have so far sold 4 475 Mosi-oa-Tunya since the launch on July 25, with 90 percent having been bought in local currency pulling a lot of surplus cash, probably close to $4 billion, out of the market and bank deposits that would otherwise very likely have been spent on fuelling the black market.

But a lot of ordinary people holding extra cash and liking the idea of investing 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. Yesterday the one ounce coin cost US$1 884.80 or $936 589.89, and few ordinary people have that sort of money in their bank accounts.

Excessive demand for US dollars for the import of goods or a store of value has been blamed for the volatility of the Zimbabwe dollar, with the pass-through effect of driving up inflation. The legal and safe alternative of gold coins as a store of value has already dampened the black market.

Some economic analysts had noted that ordinary individuals, despite squeezed incomes for many, still have the critical mass to push the parallel market rates higher as they buy bits and pieces and creating the smaller coins will help stop that as many more people can go for gold. With the economy largely informal, the smaller gold coins are also expected to encourage the wider use of the Zimbabwe dollar as the coins present a relatively safe haven for investors given the traditional status of bullion, as a good hedge during inflationary periods.

In his Mid-Term Monetary Policy statement released yesterday, Dr Mangudya said the RBZ would be releasing smaller gold coins mid-November to allow more buyers. "Following the successful launch of the gold coins on July 25 2022 and in response to public demand, the bank shall introduce and release into the market gold coins in smaller units of a tenth ounce, quarter ounce and half ounce for sale with effect from mid-November 2022," he said.

The features, characteristics and the sale terms and conditions shall remain the same as the present trading arrangements. Old Mutual said the gold coins could be an effective instrument in curbing inflation and currency depreciation on savings as they offer a proven value preservation avenue. The introduction of gold coins, added Old Mutual, comes at a time when market confidence is inherently weak, thus calling for transparency in adopting a global spot pricing system, a position it argued would encourage subscription for gold coins at the same time deterring speculative buying.

In its recent analysis, local stockbroking firm Morgan and Co, said inflationary pressures and currency instability in the country "cements" the investment case in gold coins. "Gold is a safe haven asset," it said. "Global investors typically look at gold as a haven during times of political and economic uncertainty." The stockbroking firm added that history was full of collapsing currencies and "during such times, investors who held gold were able to successfully protect their wealth".

Ms Sharon Sangarwe, who owns a clothing shop in central Harare, said since the release of the gold coins in the market, the black market exchange rate has been generally stable. "For the past one or so weeks, the rates are stable and if it continues like this, we will be able to accept local currency and invest the profits in gold coins," said Ms Sangarwe.

Dr Mangudya said the obtaining tight monetary policy stance, coupled with the favourable uptake of gold coins and for mopping up excess liquidity, would continue supporting the stability of the exchange rate and sustain dis-inflation. With month-on-month inflation declining from 30,7 percent in June to 25,6 percent in July, the central bank anticipates the monthly inflation to further decline by between 3 percent to 10 percent.

However, the downside risks to inflation in the outlook period include the continued geo-political tensions in Eastern Europe, global pandemics and climate change, which continue to drive the surge in international food, fertiliser and oil prices, said Dr Mangudya.

The central bank kept the policy rate at 200 percent saying it would be reviewed in line with developments in monthly inflation. The high rate is to ensure that it is not viable to borrow local currency to speculate in the black market or even buy gold coins.

[...]

©The Herald

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#7
RBZ starts disbursement of 4500 small gold coins

10 November 2022

THE Reserve Bank of Zimbabwe (RBZ) will tomorrow start disbursing 4 500 smaller units of Zimbabwe's Mosi-oa-Tunya gold coins to banks ahead of planned release of the bullion coins in the market on Tuesday next week. RBZ Governor Dr John Mangudya said at the Chamber of Mines of Zimbabwe (CoMZ) breakfast meeting on the state of the mining industry and prospects for 2023 that a total of 4 500 smaller denominations gold coins will be released from tomorrow.

However, he would not be drawn to divulge details on the purchase price per unit. "For now we are starting with 4 500 and the value now depends (on the prevailing market price) because they are coming in as small as a tenth of an ounce," he said. The monetary authorities are releasing small gold coins so that ordinary citizens with excess liquidity can also invest in an alternative store of value other than the US dollar, the same way big investors were awarded an opportunity.

The gold coins were introduced for sale to the public in both local currency and United States dollars (and other foreign currencies) at a price based on the prevailing international price of gold plus 5 percent to cover the cost of production and distribution. In July this year, RBZ introduced bigger denominations of gold coins as part of measures to ensure investors, mostly cash-rich institutions, have alternative means to preserve value.

"Also, just to advise you that starting on the 15th of this month gold coins of lower denominations of a tenth, a quarter and half of an ounce will be on sale starting Tuesday next week. We are going to be taking them to the banks on Friday (tomorrow) and Monday so that the public will start buying them on Tuesday. "So, why are we doing this, so that we do not leave no-one behind and any place behind because we know that the bigger denominations were elitist and we have listened and therefore we are bringing these smaller denominations," he said. Further to that, the central bank released a statement yesterday evening updating the market on the planned introduction of the smaller denomination gold coins into the market as advised in the mid-term monetary policy statement of August 11, 2022

"The features and characteristics of the smaller units shall be similar to one-ounce gold coins in circulation save for the following aspects:  one-tenth ounce with a diameter of 16mm, weight of 3,39g, edge type (fully needed with serial number on face of the coin) and a thickness of 1,2mm. "A quarter of an ounce will be 21mm in diameter with a weight of 8,48g, edge type (reeded with serial number engraved) and a thickness of 1,65mm. "Half an ounce will have a diameter of 25mm, weight of 16,97g, edge type (reeded with serial number engraved) and a thickness of 2,25mm."

The RBZ Governor said the sale terms and conditions of the latest edition of gold coins shall remain the same as those of the one-ounce gold coins that have been in circulation since July 25 this year. The bank indicated earlier that once payment has been received by the selling agent, the buyer of the gold coin takes physical possession of the gold coin or opts to keep the gold coin through bankers of their own choice (custodial services) on terms and conditions of the custodial service provider.

At the discretion of the holder of the gold coin, the RBZ said, the bank or its agents would buy back the gold coins after a vesting period of 180 days in line with the need to promote a savings culture in the country. For the buy-back, the bank or its agents (including Fidelity Gold Printers and Refiners and Aurex Jewellery) would request the bearer to surrender the original bearer certificate for the specific coin. Coins shall be purchased at the prevailing international spot price of gold. On redemption, both residents and non-residents (international buyers), will have a choice to request payment in US or Zimbabwe dollars.
 
A gold coin is a coin that 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. More than 11 000 Mosi-Oa-Tunya valued at $11,4 billion have so far been sold.

Dr Mangudya told the miners yesterday that monetary authorities would continue with a tight monetary policy stance coupled with the favourable uptake of the gold coins and mopping up of excess liquidity will continue supporting the stability of the exchange rate and sustain disinflation.

The coins, which are also known as the Mosi-oa-Tunya gold coins just like their forerunners, are among a plethora of interventions introduced by authorities to stabilise the economy, including a sharp rise in the bank policy rate from 80 percent to 200 percent.

The Zimbabwe National Statistics Agency (Zimstat) has indicated that in October 2022, the month-on-month non-food inflation rate stood at 3,2 percent, shedding 2,0 percentage points on the September 2022 rate of 5,2 percent. Zimstat also indicated that on a year-to-year basis, annual inflation slowed to 268,8 percent in October 2022, from 280,4 percent the previous month and 285 percent in August 2022.

The interventions by the monetary authorities complement measures introduced by the Government earlier this year where Treasury has been implementing the value for money audits to do away with overpricing on public contracts and fronting loading exchange rates. The greedy practice resulted in companies pocketing huge sums of Zimbabwe dollar liquidity, which they offloaded on the parallel foreign exchange market, driving interest rates that fuelled inflation resurgence.

On its part, the central bank also hiked the bank policy rate, which determines the minimum level of interest rates charged by banks, from 80 to 200 percent, as it sought to discourage speculative borrowing, which was hurting the local currency. Since the monetary authorities and Treasury started implementing the raft of interventions aimed at anchoring inflation and exchange rate stability, Zimbabwe has witnessed more than four months of monthly inflation decline.

Economist Prosper Chitambara said earlier this week that the gold coins had been effective in mopping up excess liquidity from the market while at the same time providing an alternative investment instrument. He said since their introduction, the response by the public had been very positive. "We are already seeing stability in terms of inflation numbers. Obviously, it is part of the cocktail of reforms that the Government has been implementing. So I think the response to smaller denomination gold coins by smaller investors will be positive for ordinary citizens to also be able to invest," he said.

Source: The Herald