Zimbabwe made gold legal tender and reintroduces gold standard

Welcome to the Precious Metals Bug Forums

Welcome to the PMBug forums - a watering hole for folks interested in gold, silver, precious metals, sound money, investing, market and economic news, central bank monetary policies, politics and more. You can visit the forum page to see the list of forum nodes (categories/rooms) for topics.

Please have a look around and if you like what you see, please consider registering an account and joining the discussions. When you register an account and log in, you may enjoy additional benefits including no ads, market data/charts, access to trade/barter with the community and much more. Registering an account is free - you have nothing to lose!

...
A yearslong currency crisis that forced the 2009 adoption of the U.S. dollar — one of the world’s most reliable assets — is changing shopper preferences in this southern African nation of 15 million. Many people are shunning brick-and-mortar stores, where prices must be charged in local currency and rise frequently.

On the street, costs are more stable because shoppers pay exclusively in U.S. dollars.

With greenbacks scarce at banks, many people and businesses get them on the black market, making the official exchange rate — 1,000 Zimbabwe dollars to one U.S. dollar — that retailers are required to use artificially low. It’s double that on the street, so to break even, stores are forced to make their products more expensive.

“Zimbabwe dollar inflation on the black market is on a rampage, so retailers have to constantly change their prices,” economist Prosper Chitambara said.
...
Similarly, manufacturers and suppliers are now pushing for payment in U.S. dollars from stores that are forced to sell the same products using the freefalling Zimbabwe dollar, said Denford Mutashu, president of the Retailers Association of Zimbabwe.

“It’s currently impossible to purchase goods in U.S. dollars and sell in local currency and recover the money spent,” said Mutashu, adding that manufacturers are increasingly preferring informal traders over formal retailers to avoid using local currency.

“The informal market is ready to pay in U.S. dollars. The Zimbabwe dollar is being squeezed out,” Mutashu said.

Zimbabwe’s economy is inching toward “full dollarization,” with the local currency facing collapse, local investment firm Inter-Horizon Securities said. It slumped by 34% in April alone.
...


It sounds like the situation in Zimbabwe is deteriorating and unless they stabilize things with full dollarization, they aren't going to have time for the digital gold project to reach a critical mass for market utility.
 
From June 7:
...
Gold tokens popular

The gold tokens only went on sale last month but it appears there have been more gold token purchases than there have been physical gold coin purchases – $35.2 billion vs $31.8 billion.

I doubt that those figures are inflation-adjusted and so they don’t capture the actual value of gold coins when they first went on sale, especially.

There is also the small matter of gold coins being harder to sell in larger quantities because they actually have to produce the coins. That means they need to have the gold and they need to mint it into coins.

With the tokens we are promised that the gold is there, somewhere. However, the RBZ does not need to mint any coins. They just store the gold in a vault.

Can we confirm that the gold really is there? We cannot. So there will always be more tokens to sell than coins. I’m just surprised people have been buying them this much.
...

 
Sounds like there is sustained weekly demand for the digital gold tokens:

 
Zimbabwe continues to build the infrastructure to support use of the digital gold token:

...
The Reserve Bank of Zimbabwe (RBZ) is in the final stages of establishing a peer-to-peer (P2P) platform to facilitate transactions involving digital gold tokens. As per a report by the Sunday Mail on June 17, the central bank intends to launch the platform by the end of the month, marking a significant step forward in Zimbabwe’s digital gold token initiatives.
...

 

Zimbabwe's Gold-Backed Digital Token Won't Fix the Country's Currency Woes, Economists Say​

Zimbabwe’s gold-backed digital token is not going to stabilize the country’s local currency as the central bank hopes, two economists told CoinDesk.

On May 8, the Reserve Bank of Zimbabwe issued gold-backed digital tokens, which are a form of electronic money backed by the country's gold reserves. Gold-backed digital token investors will be able to hold and exchange their tokens in the first phase of the project, and in the next phase be able to trade and make payments, the RBZ said.

An official at the central bank told the local Sunday Mail in April that the RBZ was issuing this digital token to try and stabilize the Zimbabwean dollar, which dramatically collapsed in 2008 setting record inflation rates at the time as high as 79,600,000,000% per month.

More:

 
It may not stabilize the Zimbabwean dollar, but it could possibly end up replacing it.
 
How many tokens do you need to buy a kilo of monkey meat at the farmer's market?
 
...
“The RBZ would like to notify the public of the results of Gold Backed Digital tokens Issue no. 8/2023 held on Thursday 29 June 2023 .The bank received 28 applications valued at ZW$246,5 million and US$155,01 to purchase gold backed digital tokens .

“Total milligrams of gold purchased 0, 55 kgs of gold. Cumulative milligrams of gold purchased 321, 62 kgs,” the RBZ said.

The amount signifies a significant decline from the figure of ZW$3,5 billion worth of tokenised digital tokens sold in the previous week, partly confirming the dwindling ZW$ usable balances in the economy.
...

 
I've been checking periodically for more news on how Zimbabawe's gold coin / digital gold project is going, but the news cycle for Zimbabwe is dominated by reports on their recent elections. The incumbent won in a process that the global community (at least, the West) is calling out as ... deficient...

Zimbabwe’s government has declared incumbent Emmerson Mnangagwa the winner of the presidential contest. The opposition has rejected the result and outside observers have raised serious questions about the process. How flawed was this election?

No reasonable person would call these elections fair, which is why several observer missions, including the Southern African Development Community (SADC) and the European Union, issued statements pointing to profound flaws in the process. But the deck was stacked well before these missions arrived on the ground. The preelection climate featured draconian new legal restrictions on freedom of expression and a heavily biased state-run media. Opposition leaders and activists were harassed, assaulted, and in some cases arrested on spurious charges and tried by a compromised judiciary. The Zimbabwe Electoral Commission (ZEC), which is blatantly politicized and widely mistrusted [PDF], tilted the playing field in multiple ways, including undertaking a dodgy delimitation exercise that failed to account for the growth of Zimbabwe’s urban centers and neglecting to fulfill its legal duties around making an accurate electronic voters’ roll available to candidates.

Election Day itself was shambolic, with polling stations in opposition strongholds far more likely to experience significant delays and inadequate materials than others. Ruling party agents intimidated voters at “exit poll” tables where they recorded citizens’ personal details before they voted, while disinformation campaigns aimed to discourage people from turning up to vote. Independent journalists and election observers were denied entry to the country, and local observers working on the parallel vote tabulation were arrested.

When the ZEC announced that incumbent President Emmerson Mnangagwa had been reelected with roughly 53 percent of the vote, no one was surprised. The results of a parallel vote tabulation exercise are yet to be released. But the main opposition party, the Citizens’ Coalition for Change (CCC), has rejected the result and asserted that the country should redo the election.
...


If the results hold, it likely will mean that the gold coin / digital gold project will continue with incumbent President Emmerson Mnangagwa's support.
 
Zimbabwe’s President Emmerson Mnangagwa was sworn in for a second five-year term Monday, a week after securing an absolute majority in a disputed presidential vote.
...
Chamisa’s party rejected the results, alleging electoral fraud, and called for fresh elections. The hotly contested poll was also criticized by observers, who said the election process fell short of many regional and international standards.
...
“We are challenging the results politically and diplomatically,” Mkwananzi added. “We are calling for a fresh, free and fair election … We’ll be applying pressure at the diplomatic level and also locally in the country, in which we are saying the citizens must insist that their votes must be respected, and their votes must count.”
...

https://www.msn.com/en-us/news/worl...gwa-sworn-in-after-disputed-polls/ar-AA1gdGNR

Looks like Mnangagwa is going to "retain his seat on the throne".
 
Nepotism reigns:
Zimbabwe's President Emmerson Mnangagwa on Monday catapulted his son, 35-year-old Kudakwashe Mnangagwa — a first-time legislator – into his cabinet as the deputy minister of finance and economic development.

Kudakwashe, a venture capitalist, made it into parliament under a youth quota for the Midlands province.
...
Tongai Mnangagwa, a nephew of the president, is also a new entrant, as deputy minister of tourism.

Mnangagwa was not compelled to appoint opposition legislators "because I am in that category of people who do not want to do it," he said.
...


That quote though... :snidely:

~~~

Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya, has assured Zimbabweans that there is nothing to worry about, despite the value of the Zimbabwean dollar declining once more.

Both the official rate and the street rate have been comparatively stable in August but this week, the local unit fell to ZWL$4 712.16: US$1 from ZWL$4 604.62: US$1 three weeks ago.

Business Times quoted Mangudya as saying the central bank is in control of the situation. He said:

There’s nothing to worry about as the exchange rate remains relatively stable. I think Zimbabweans need prayers as they start panicking with something that is within reach. We have tools to ensure there is no excess liquidity in the market.

The central bank remains confident that the continued sale of gold coins and gold-backed digital tokens will sustainably take away steam from the store-of-value demand for local currency during the short to medium term, with positive spinoffs on the substance of obtaining price and exchange rate stability.
...
Meanwhile, Finance and Investment Promotion Minister Mthuli Ncube said that it is baffling that a foreign currency parallel market still exists in Zimbabwe.

Ncube said the parallel market “shouldn’t even exist” as “every piece of policy that is necessary for a stable currency has been put in place”.


On that last note:
Zimbabwe's current laws allow for the greenback to be used until 2025.

But President Emmerson Mnangagwa has, on several occasions, threatened to place it out of circulation.

“Although the government legislated the use of the US dollar until 2025, the question remains, what is going to happen after 2025? Are we going to see the use of the US dollar being banned through the issuance of another statutory instrument like in 2019?” Fincent said in its latest Zimbabwe post-election report.

“The local currency will remain in place with more efforts being made to make it more acceptable. There is a real threat of the US dollar being withdrawn even before the 2025 sunset period.”

It added: “This will have negative consequences to formal businesses, which will not be able to sell in hard currency. However, in the informal sector the US dollar will continue to exist without inhibitions.

“Without access to (the) US dollar from their trading operations, the formal businesses will have to look to the official channels for foreign currency. This will significantly limit their capacities.”

Fincent said the government was likely to seek more control of the currency through the monetary policy.

In addition, the research firm said the country's ability to sustain a fully dollarised economy is doubtful, with the Reserve Bank of Zimbabwe (RBZ) governor John Mangudya on record saying the country has no capacity to sustain a fully dollarised economy.

This is despite the economy having dollarised itself, with 60-75% of transactions in the economy being US dollar denominated.

“Furthermore, there is going to be another addition to the currencies used as a medium of exchange with the RBZ introducing the gold-backed digital tokens for transactions, known as Zimbabwe Gold (ZiG),” the report said.

“There is uncertainty on the success of this initiative as most of the population questions the existence of actual gold at the RBZ to back this token and the existence of infrastructure in the banking system.”

Fincent, however, said the economy is expected to continue functioning as a dual US dollar-Zimbabwe dollar system, with most economic activities conducted in greenback.

Informal markets and sectors like fuel predominantly operate in US dollar cash, leading to a parallel dollar economy outside the formal banking system.

“The Zimbabwean government is expected to encounter ongoing difficulties in managing the dollar cash economy, as traditional tools like interest rate policies and monetary instruments prove to be ineffective in this context,” it said.

“Most US dollar cash is held outside of banks, with an estimated US$2 billion being kept by the public at their residences. This situation restricts the central bank's control over the movement of US dollar in circulation.”

https://www.msn.com/en-xl/africa/other/govt-may-withdraw-us-dollar-use-before-2025/ar-AA1gNEnG

It sounds like they are still searching for some monetary/economic equilibrium.
 
Zimbabwe Gold (ZiG), the digital tokens backed by gold, has gained approval as a legitimate means of payment for domestic transactions, effective immediately. Transactions involving ZiG will be processed through the ZimSwitch and RTGS systems, similar to how transactions in Zimbabwean dollars and US dollars are handled, with the availability of swipe machines.

Each ZiG unit represents 1 milligram of gold, with a current value of $377.77 or 6.14 US cents. These tokens are supported by physical gold bars held by the Reserve Bank of Zimbabwe (RBZ). To ensure that the total number of ZiGs issued by the RBZ corresponds to the amount of physical gold in its vault, external auditors will conduct audits of these holdings.

ZiGs have previously been available as an investment or store of value. However, with the recent approval, if both the buyer and seller have ZiG bank accounts and agree to use these tokens for payment, they can use them for transactions.

According to Reserve Bank of Zimbabwe Governor Dr. John Mangudya, the value of ZiG will be aligned with the value of the physical Mosi-a-Tunya gold coin and will fluctuate with changes in the international gold price since it is backed by gold reserves held by the RBZ.

The Monetary Policy Committee of the RBZ approved the use of ZiGs for domestic transactions, in addition to their value preservation function.

Banks will maintain dedicated ZiG accounts and process transactions in ZiG similarly to local and foreign currency transactions. The intermediated money transfer tax (IMTT) for ZiG transactions will be half of the IMTT for foreign currency transactions, with relevant legal instruments to be published accordingly.
...
ZiG accounts will operate alongside nostro and local currency accounts in financial institutions, maintaining milligram units and conducting transactions in the same units. The RBZ has stated that there will be no account maintenance tariffs or charges for ZiG accounts.

Financial institutions are required to price ZiG transactions fairly and responsibly for the benefit of the public, with transaction pricing being the fee charged by a bank to facilitate the transfer.

Banks are not permitted to lend ZiGs or pay interest on holdings, as the RBZ is the sole issuing bank. Changes in the amount of ZiGs in circulation will only occur through issuance or redemption by the RBZ.
...


...
The central bank highlighted the key points to note when transacting with ZiG which are as follows:

1. As a bank customer you approach your bank to buy ZiG tokens (denominated in milligrams) payable in ZW$ or US$.

2. Minimum purchase of ZiG by individuals is US$10 and corporates is US$5 000 or the Zimbabwean Dollar equivalent.

3. Once ZiG has been purchased, the holder will, in addition to their existing bank account, now have a ZiG account denominated in milligrams of gold.

4. The bank client can now transact using their ZiG account through swipe and online payments.

5. A holder can keep ZiG balances for transacting or store-of-value purposes with a redemption option in US$ or ZW$ depending on their preference after a 180-day vesting period.

6. Goods and services will also be priced in ZiG.


So it sounds like this isn't exactly a crypto token - individuals aren't in control of a crypto wallet. The banks are the wallet holders and individuals have ZiG denominated bank accounts. Transactions are effected by requests to the bank just like with currency account (when you issue a check or use a credit card).
 
(Kitco News) - The Reserve Bank of Zimbabwe (RBZ) has announced that its Zimbabwe Gold (ZiG) gold-backed digital token is now officially endorsed as a payment method in the country.

According to a press release from the RBZ, the gold-backed token officially became an accepted payment method on October 5 and can be used to complete domestic transactions, “over and above its value-preservation purpose,” they said.

“The value of ZiG will be at par with the value of the physical Mosi-oa-Tunya gold coin and will remain informed by the international gold price,” RBZ said. “Banks will maintain dedicated ZiG accounts and intermediate transactions in ZiG in the same way they intermediate transactions in local and foreign currency.”

More:

 
...
Banks are seeing a slow uptake of gold-backed digital money almost a week after the central bank issued the so-called “ZiG” for use in domestic transactions and as an alternative store of value.
...
Although lenders can now open accounts, facilitate interbank transfers and offer card transactions in the new digital money, the demand from ordinary citizens is low, according to Lawrence Nyazema, president of the Bankers Association of Zimbabwe.

“I see more uptake by pension funds and high-net worth individuals with excess Zimbabwe dollars than the average person who is struggling to make ends meet,” he said in an interview on Tuesday. This was the same trend with the introduction of physical gold coins, Nyazema said.
...
At least 12 out of the country’s 19 lenders are so far certified to process transactions in the gold-backed money, said Zabron Chilakalaka, the chief executive officer of ZimSwitch, the national payments platform.
...


It seems to me that this report and Mr. Nyazema's comments are a bit premature. The program is not even a week old yet and only 2/3 of the banks in the country even offer access to the system. Every program like this will have some growing pains as it comes to maturity. If merchants start accepting it (or demanding it) for payment, adoption from the populace will rise IMO.
 
Oct. 13, 2023:
...
To date, 322 kilogrammes of gold was bought.

Speaking at the Zimbabwe National Chamber of Commerce breakfast meeting on Wednesday, the RBZ Economic Research Department deputy director William Kavila pleaded with delegates to buy ZiG.

“Please, come and buy those tokens. Put your money there. They are backed by gold. As the governor (RBZ governor John Mangudya) promised in his monetary policy statement, the gold amount we have is going to be audited for your comfort,” he said.

However, delegates laughed off the notion of trusting the digital token.

Economist Ashok Chakravarti said confidence in ZiG was low considering that the bond notes collapsed despite authorities saying they were pegged at 1:1 to the dollar when they were introduced in 2016.
...
“As we increase our gold reserves, it will also increase. Once the banks work on the platforms, US dollar codes will be accessible even in rural areas. They will be able to go and get the cards from their banks,” Mnangagwa said.


The RBZ appears to have a confidence problem. An independent auditor may or may not overcome that issue.

I'm still trying to decode what the last paragraph quoted above actually means, "US dollar codes"? Wat? But it is clear that the ZiG program is not fully accessible to the public yet.
 
The coins remind me of these:

latest
 
Growing pains:
THE introduction of the Zimbabwe gold-backed digital token (ZiG) is likely to cause more headaches for the accounting and auditing professionals over its uncertainty as to whether it is a currency, an expert has warned.
...
Kreston Zimbabwe Audit and Advisory Services head Tinashe Murerekwa said it was not clear whether ZiG was a currency or an investment instrument.

“When you look at the ZiG, we ask ourselves if it is an investment instrument or if it is a currency. What is happening here? But, when you look at the volumes of it, you see that these are just government open market operations where government is trying to mop up liquidity and make people stop speculating of currencies,” he said, at the just ended Zimbabwe Association of Pension Funds Principal officers and Chairpersons convention.

“But, what has happened is that the actual currencies are going to change because of that. There has been a lot of dollarisation that has been happening. You start asking if ZiG is becoming the dominant currency? If it becomes the dominant currency, how then do we start reporting? Do we start restating (accounts) from last year? What sort of measures are we going to be using in order to restate last year using the ZiG currency?”

Murerekwa said there were issues with the ZiG currency itself that even the accountancy and auditors were fretting in terms of validating the digital currency.
...


lulz.

Another take on the issue:
The unraveling of Zimbabwe’s nascent digital economic frontier has been marked by an unexpected guest – the Zimbabwe gold-backed digital token (ZiG). Announced with much fanfare, ZiG has sown seeds of confusion among accounting and auditing professionals, leading to a discourse rife with ambiguity. Pegged not as a currency, but a store of value, ZiG is nonetheless intended for use in domestic transactions and is transacted electronically – a paradox that has left many scratching their heads.

The Reserve Bank of Zimbabwe (RBZ) has now officially launched the ZiG digital token as a payment option for retail use nationwide. What this means is ZiG is not just another digital asset; it’s a legal tender that banks and enterprises are mandated to accept. The move signifies RBZ’s intent to integrate digital currencies into the economic landscape while leveraging their potential benefits.
...
In a bid to incentivize the adoption of ZiG, the RBZ has decided to take only half of the applicable intermediated money transfer tax (IMTT) when the digital currency is used. This is an astute move to set ZiG as a viable payment method, further solidifying its position in the digital currency landscape.
...

https://www.msn.com/en-xl/news/othe...n-a-leap-into-financial-ambiguity/ar-AA1ihxRm
 
Oct. 13, 2023:
...
To date, 322 kilogrammes of gold was bought. ...
...

I found this report from October 10 (3 days prior to the report quoted above):
... According to the bank, on Sept. 28, investors bought the equivalent of 17.65 kilograms (kgs) in ZiG, paying with Zimbabwean and U.S. dollars. The total amount of ZiG sold since the previous rounds of digital token sales stands at around 350 kg of gold.
...


28 kg difference. Seems like media should get the number right if they are just reading it off a central bank report/statement. In any event, this report links to the RBZ website, which I just looked at and found this report posted two days ago:


They have sold a cumulative total of 373.77 kgs (11,992.23 troy ounces) worth of gold with the zig tokens so far. I was not successful in finding a report on total sales of the Mosi-oa-Tunya gold coins.

Also, I see on the RBZ home page a section announcing the daily gold fix and Mosi-oa-Tunya gold coin prices listed in various foreign currency.
 
GOVERNMENT has gazetted Statutory Instrument (S.I.) 218 of 2023, which effectively extends the use of the multiple currency system to December 2030 — putting to rest the anxiety by businesses and potential investors over the currency debate.

Initially, the Treasury had stated that the prevailing dual currency model in which the local dollar is used alongside a basket of currencies would end in 2025 with a full return to the Zimbabwean dollar.
...
The extension of the multi-currency system essentially assures financial institutions and guarantees them leeway to provide long-term loans, which are critical for business growth.

This means up to 2030, registered lenders, banks, or any financial institution that lends foreign currency would receive repayment of the loan or credit in that foreign currency.

While the Government and business leaders agree on the inflation-stabilising effect of multiple currency system, there is a clear consensus on the need to mainstream the use of the local currency in the long term given the need to promote effective domestic monetary policing, which buttressing production efficiencies with a focus on export competitiveness.
...
“The work of a dignified, fungible and stable local currency still remains to be mapped out carefully and effectively,” United Refineries Limited chief executive officer, Mr Busisa Moyo, commented.
...
“Evidence-based research has confirmed that multiple currencies shall at best save our country very well for now while building the value of our currency until such a time it can be a world-class currency of national pride and value among our business and citizens.

“This effort is indeed being done through Central Bank digital products such as gold coin and gold back digital tokens, now called ZIG.”
...

 
Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya has reported ... "Gold coins have been a great success, with a cumulative 38,325 gold coins sold to the public as of October 31, 2023. Since the first issuance on May 12, 373.47kg of ZiG have been purchased, with a cumulative value of ZWL$80.14 billion."
...


They reported 31,866 gold coins sold at the beginning of April, so they have only sold about 6,500 coins in the last 7 months.

Looking back through this thread, the last time I saw a report on the sale numbers for the Mosi-oa-Tunya gold coins, I saw in post #34 from April 24:
...
State-owned media reported earlier this month that the country had 350 kilograms (12,346 ounces) of gold in reserves, citing John Mangudya, the central bank governor.
...

They reportedly had 350kg gold in reserves back in April (before the Zig program started). They have sold 373.x kg of Zig digital gold claims through the end of October. It's not clear how many kg of gold was sold in the form of Mosi-oa-Tunya gold coins since that April 24 report*, but it does seem to explain the slowdown in sales for both if the folks there are keeping tabs on this stuff and know the government might have already sold all their reserves and whatever production they get monthly.

* 6,500 coins from ~April 4... 210 days between April 4 and October 31. Assuming an even sales distribution (which is most likely *not* a safe assumption, but I'm just doing some back of the hand maths here...) that would be ~31 coins per day. Subtracting out average sales for the 20 days from April 4 to April 24 yields around 5,881 coins sold from April 24 to October 31. Coins could be either 1 or 0.1 toz, so we can estimate that they sold anywhere from 5,881 toz (182.9 kg) to 588 toz (18.29 kg) in coins. So Zimbabwe would have need to add a minimum of 18.29kg (coins) + 23kg (Zigs) = 41.29 kg of gold (and a maximum of 205.29 kg) to their reserves to cover production/sales of coins and Zigs through October 31.
 
I still want one of the gold coins but can't find a way to acquire one.
 
I have not seen any dealer offering them.

...
According to the guidelines released by the central bank on Monday last week, the apex bank said residents and international buyers should be allowed to take out (export) the gold coins supported by the bearer certificate for each coin.

“Exporting entities shall buy Mosi-oa-Tunya gold coins in foreign currency from their retained export portions. Notwithstanding this requirement, exporters whose annual export receipts in 2021 were less than US$1 million shall require a specific exchange control approval to be permitted to utilise a portion of their surrender portion that is payable in local currency to purchase the gold coins,” they said.
...


It sounds like they are tightly restricting (allowed, but restricted) export agencies. Just a guess, but for a domestic dealer (even a big one like Apmex) to get a quantity for sale domestically would incur a huge premium for Zimbabwe red tape, export agency fee and transportation. That and insurance risk of handling a large value sale with a Zimbabwe agency...
 
The ZiG got a public endorsement from what appears to be a prominent industry group:
THE Confederation of Zimbabwe Industries (CZI) is optimistic the recently introduced Zimbabwe Gold (ZiG) currency will go a long way in easing excessive demand for the US$ in the economy.
...

 
... we can estimate that they sold anywhere from 5,881 toz (182.9 kg) to 588 toz (18.29 kg) in coins. So Zimbabwe would have need to add a minimum of 18.29kg (coins) + 23kg (Zigs) = 41.29 kg of gold (and a maximum of 205.29 kg) to their reserves to cover production/sales of coins and Zigs through October 31.

Around 60% of the country’s gold output comes from artisanal and small-scale miners.
...
The country produced 35 tonnes of the yellow metal last year and is targeting to produce at least 40 tonnes this year, although there are indications that the sector could produce up to 50 tonnes.
...
The Mines ministry recently dispatched teams from the Gold Mobilisation National Taskforce to the country’s eight mining provinces in a move meant to boost gold deliveries to Fidelity Gold Refinery.

The unit’s main responsibility is to ensure that all gold generated in the country go to Fidelity.
...
“For 2023 from January to August, the gold deliveries to Fidelity sit at 19,3 tonnes against a target of 40 tonnes by the end of the year. In 2022, for January to August a total of 22,29 tonnes was delivered, this represents a 13,2% decrease.”
...

https://www.msn.com/en-xl/africa/zimbabwe/gold-mobilisation-unit-in-dire-straits/ar-AA1k7ZLt

So those numbers are all over the map and don't correlate exactly with the window of gold coin and ZiG sales, but it does yield some ballpark framework for guesstimating. We can estimate on the conservative side that they might have delivered 20 tonnes of gold to the refinery through October (they have delivered ~2 tonnes per month through August, so adding just 0.7 tonnes for the month of October seems conservative).

20 tonnes = 20,000 kg. I'm not sure how much of the mined gold goes from the Fidelity Gold Refinery to the Reserve Bank of Zimbabwe (RBZ), but they definitely have the national production to potentially increase the central banks reserves for the Mosi-oa-Tunya gold coins and/or ZiGs depending upon how much of that gold production the central bank is selling/exporting .

This report (from 2021) seems to indicate that gold sent to the Fidelity Gold Refinery is bought by the central bank:
...
Total gold output tumbled nearly a third to 19 tonnes last year after small-scale producers diverted the metal to illegal private dealers who pay more than the central bank gold refining unit, which is the country's sole buyer of bullion.

 
Related to my last post:
MONTHLY gold deliveries are expected to go down by almost half of the usual two tonnes as artisanal and small scale miners protest government’s November 1 proclamation that they be paid 75% in US dollars and the remainder in Zimbabwe’s currency.

Artisanal miners and small scale miners had been receiving payments 100% in hard currency before the policy shift widely believed by small scale miners to have been driven by government attempts to raise civil service bonuses.

Popularly known as Makorokoza/Amakorokoza, artisanal and small scale miners contribute about 60% of national gold output.

Sources at government owned Fidelity Gold Refinery (FGR) have told NewZimbabwe.com deliveries are yet to get beyond a tonne, just 14 days to month-end.

Although a decade long economic crunch has forced government to stagger payment of the thirteenth cheque, bonuses are usually paid in November.

“The situation is not looking good, deliveries have considerably gone down and this will definitely have an impact on the national purse,” said a source who declined to be named.
...

 
History shows most people used silver to conduct regular daily transactions. They used gold for larger purchases and often changed gold coins at the bank for silver.
 
Looks like the gold miners in Zimbabwe are protesting the new payment policy mentioned above in post #66:
FIDELITY Gold Refineries (FGR) has reported a 75% decline in monthly gold deliveries from artisanal miners at 552kg as compared to 2,643kg in October.

This represents the lowest contribution by small-scale and artisanal miners in years.

Last year FGR received 2,960kg from the sector in the same period under review.

Although FGR did not explain the decline, earlier reports by NewZimbabwe.com which predicted the decline, indicate artisanal and small-scale miners were up in arms with the government's move to pay them partly in Zimbabwe's weak dollar.
...

https://www.msn.com/en-xl/africa/to...onnes-75-drop-the-lowest-in-years/ar-AA1l9oHa

That's got to hurt! I'm wondering why they don't pay them back with ZiGs....
 
I did not see this coming...:
THE World Bank (WB) has commended the Reserve Bank of Zimbabwe (RBZ) for putting in place a tight Monetary Policy alongside other interventions which have managed to ease inflationary pressures.

The latest WB report titled, "Zimbabwe Economic Update" acknowledges that the country's economy has seen a strong rebound since the COVID-19 pandemic on the back of adequate policy measures.
...
"The RBZ has been proactive in tightening monetary policy; increasing reserve requirements for the banking sector, and raising the bank policy lending rate. Furthermore, reserve money growth was curbed by issuing non-negotiable certificates of deposits (NNCDs) and Gold-Backed Digital Tokens to absorb excess Zimbabwe dollars.
...


Also in the report (and more in line with what I would have expected from the World Bank):
... Rebuilding the RBZ’s foreign exchange reserves will be essential if the impact of further global volatility on the economy is to be reduced. Yet, the RBZ has chosen to use Zimbabwe’s gold assets to issue gold coins and gold-backed digital tokens (ZiG), to allow the wider public to have access to an instrument for store of value and to stabilize the ZWL. As such, it may prevent the build-up of international reserves, and the economy remains exposed to external shocks.
...


It really seems short sighted to me to be discouraging gold production with the payment policy at a time when they really need production to kick into high gear to feed both the Zig for local investment and their international reserves.
 
Hmmm...
...
A host of activities have been lined up and new policies crafted, including the requirement for extractors of gems and precious metals to pay half of their mining royalties to the Government through minerals, as the country heightens moves to build its mineral reserves.

Previously, miners were only paying monetary tax but the new new measures compelling them to remit physical minerals are set to be a game changer.
...

 
GOLD output for the third quarter of 2023 rose by 0,4% with Artisanal- Small-Scale -Gold-Miners dominating the list as the largest producers, the Reserve Bank of Zimbabwe (RBZ) third-quarter 2023 report has revealed.
...
However, during the same period gold deliveries to Fidelity Gold Printers (FGP) fell 13% to 19.335 tonnes in the first eight months of this year from 22.289 tonnes in the prior comparative period.

Given that the government pays within a week, it is claimed that the miners are diverting the yellow metal to alternative markets that pay instantly.
...


So the Zimbabwe government missed out on at least 3 tonnes of gold because of unattractive payment policy. Seems very short sighted if you are pinning monetary stabilization plans on gold reserves.
 
ZIMBABWE’S gold deliveries declined by 14,7 percent last year to 30,1 tonnes compared to a record high of 35,3 tonnes realised in 2022 official figures show but small scale miners still dominated volumes in the production of the precious mineral.

Gold is the country’s major foreign currency earner whose output was this year projected to reach 40 tonnes last year having missed the same projection in recent years largely due to factors such power supply challenges.

In 2019, stakeholders in the gold sector set themselves a 40-tonne target, which is yet to be achieved due to a cocktail of challenges including smuggling of the mineral and intermittent power supplies that affected production.

Latest statistics from the country’s exclusive buyer of the metal, Fidelity Gold Refinery (FGR), indicate that of the 30,1 tonnes delivered last year, small-scale miners who traditionally produce the bulk of the gold, again last year maintained the momentum producing 18,7 tonnes.

In 2023, primary producers who are the large-scale miners delivered 11,4 tonnes.
...


So if the previous news report and this report are both correct, they mined ~11 tonnes in just Q4 after mining 19.3 in the first three quarters combined. If they can sustain a >10 tonnes in a quarter output, they could definitely reach their 40 tonnes a year goal. Sustaining the output seems to be problematic though.
 
December 21 and January 11 results of the ZiG program were posted.

December 21:


36.87kg worth of gold were sold for a cumulative total of 447.63kg.

January 11:


46.92kg worth of gold were sold for a cumulative total of 494.55kg.

Looks like gold (ZiG) buying has picked up a lot. :popcorn:
 
The Zimbabwean government has advised small-scale and artisanal miners to stop mining until the rainy season ends.

In addition, all miners including large and medium-scale miners should take precautionary measures to safeguard their operations during the current rainy season due to heightened risks of flooding, drowning, weakened ground and ground subsidence, Minister of Mines and Mining Development Zhemu Soda said in a statement on Monday.

His call comes after 15 artisanal miners were trapped for four days at the Redwing Gold Mine in Mutare. The collapse of a shaft led to their entrapment, with rescue efforts initially hindered by unstable ground. They were successfully rescued on the fourth day.

Zimbabwe is expected to experience a "short and sharp" rainfall season this year owing to the El Nino weather phenomenon. Authorities said the rains, which started in late December, could end by February.


So they might lose about 2 weeks of production from the small-scale and artisanal miners which actually mine the most gold.
 
The Government says it will continue implementing a cocktail of measures to boost gold production to achieve the 40-tonne target stakeholders in the sector set in 2019.
...
Since 2019, the country is yet to achieve the projected 40 tonnes largely weighed down by erratic power supply and smuggling of the mineral to countries such as South Africa and the United Arab Emirates among others.
...
On account that the gold sub-sector is the anchor of the mining industry, which is Zimbabwe’s major economic mainstay, the Second Republic under President Mnangagwa, has of late been putting in place a host of initiatives to curb leakages and boost deliveries.

Such initiatives include gold mobilisation exercise, the setting up of gold service centres across the country and adopting the Responsible Mining Audit Initiative.

As a way to mitigate the challenges, the Government set aside US$5 million towards capacitating small-scale miners and another US$5 million that was channelled into the establishment of five gold service centres.

A gold service centre is a one-stop shop that offers technical services to miners, access to milling, access to capital and a ready market for the commodity for small-scale miners.
...
The Government also launched the Responsible Mining Audit Initiative through which the Government will increase oversight over all mining activities in the country and will not condone malpractices.
...
“As a way to mitigate the challenges, the Government set aside US$5 million towards capacitation of small-scale miners and another US$5 million into the setting up of five gold service centres,” he said.

Minister Soda said one of the requirements of the Mines and Minerals Act is that mines should employ a mine manager who is a qualified engineer.

This, he said, is on account that most of the artisanal and small-scale miners do not have the technical skills to engage in safe mining methods.
...
Mr Nhepera said another innovative proposal to be considered in the short to medium-term is to establish a “mining bank” similar to what has happened in the agriculture sector.

“In my view, if mining is part of our growth strategy, then we need a well-structured mining bank with capacity to issue both loans and bonds on the international market for onward support of the mining sector.

“I am sure our regulators, the Reserve Bank of Zimbabwe will find it good in the public interest to issue such a licence to any interested investor to set up such a mining bank in partnership with the Government,” he said.


make-it-so-picard.gif
 
I checked the RBZ website and they report ZiG sales through Feb 2 (5 tranches since the last time I looked):

Jan 25 - 73.05 kgs
Jan 30 - 6.70 kgs
Jan 31 - 2.78 kgs
Feb 1 - 22.45 kgs
Feb 2 - 17.24 kgs

Total (cumulative) currently sits at 616.77 kgs. That's a pretty big jump in ZiG buying. Over 100kg in 2-3 weeks - that's about double the pace it was selling previously.

The RBZ used to publish an application form for every tranche with several weeks notice before the sale (ie. the window/period between tranches used to be anywhere from 2-4 weeks). What I'm seeing today is a whole slew of tranches just days apart and there is no application form published on the RBZ (at least, not in the press release section where they used to be). Looks like something has changed with how they are handling the ZiG sales.

Inflation in Zimbabwe surged as a currency rout pushed up the prices of goods and services, adding to pressure on the central bank to act.

Consumer prices rose an annual rate of 34.8% in January from 26.5% in December, according to data released by the Zimbabwe National Statistics Agency at an online briefing on Monday. Prices advanced 6.6% in the month compared with 4.7% in December. The major drivers of the inflation surge were food and services including housing and electricity, the statistics agency said.

This month’s pick-up is the third in a row since the statistics agency changed its price measure on Sept. 28 to better reflect the use of US dollars in the economy. The greenback is employed in about 80% of transactions and is favored over the Zimbabwean dollar, which has been extremely volatile since its reintroduction in 2019 following a 10-year break after hyperinflation wiped out its value.
...


The local fiat looks to be a failure. US Dollars will continue to be dominant in trade and I suspect the ZiG will remain popular for investment (as long as there is faith that the gold backing it actually exists).
 

Zimbabwe to link exchange rate to hard assets, create currency board​

Zimbabwe is working on new measures to stabilise its local currency including linking the exchange rate to hard assets such as gold and creating a currency board, Finance Minister Mthuli Ncube said on Monday.

The Zimbabwean dollar has fallen about 40% since the start of the year, hurt by increased foreign-currency demand from civil servants being paid December bonuses and weaker commodity prices denting inflows.

Last week President Emmerson Mnangagwa said authorities were looking to introduce a "structured currency", without explaining how that would work, and the central bank governor said that work was ongoing.

"The idea going forward is to make sure that we manage the growth of liquidity which has a high correlation to money supply growth and inflation. The way to do that is to link the exchange rate to some hard asset such as gold," said Ncube.

"To do that you have to have some sort of currency board type system in place where the growth of the domestic liquidity is constrained by the value of the asset that is backing the currency," he said in a press briefing.

More:

 
Back
Top Bottom