Posted on

Zimbabwe Launches Gold Backed Currency to Replace Dollar

FindBullionPrices.com

Despite being one of the most mineral rich nations in Central Africa, the economy of Zimbabwe has been a mess for decades.

To help battle the latest round of inflation, the Central Bankers and politicians are turning to the oldest form of money known to civilization. This week, Zimbabwe launched a new “structured currency” backed in part by gold.

The new currency is called the “Zim Gold”, or more simply “ZiG”, and will be backed by a basket of assets that includes foreign currencies, gold and other minerals.

John Mushayavanhu, the governor of Zimbabwe’s Reserve Bank said the ZiG would circulate alongside a basket of other currencies would also introduce a market-based exchange rate.

“With effect from today … banks shall convert the current Zimbabwe dollar balances into the new currency,” he said.

The moved is aimed at establishing confidence in the country’s central banking system which has been in an extended period of hyperinflation since 2007.

The new banknotes come in eight denominations ranging from one to 200 ZiG. The new notes feature a drawing of gold ingots being minted, as well as Zimbabwe’s famous Balancing Rocks, which already appeared on the old ones.

Zimbabweans have 21 days to convert their old cash into new money, Mushayavanhu said.

The ZiG appears to be culminating from developments within the BRICS related countries, which have been reportedly leaning towards a commodity basket common currency for trade between countries. The development of the ZiG mirrors what has been happening in other countries.

Brazil adopted the Chinese Yuan in 2023 for use in international trade and provided a proposal requesting that Argentina accept the backing of a trade deal with Yuan.

Although the dollar remains the dominant currency in both countries, the Yuan has become the second largest currency in Brazil, overtaking the Euro.

Posted on

Zimbabwe to Launch Gold-Backed Digital Currency

FindBullionPrices.com
central bank digital currency

Zimbabwe has had a long history of economic instability. From 2004 until 2009 the country experienced five years of hyperinflation.

During the period of hyperinflation the country had to halt the exchange of local currency to dollars due to a meteoric rise in prices.

In early 2009, the government had abandoned the local currency, instead favoring the US dollar for all official transactions.

By 2014, there were eight legal foreign currencies being used for day-to-day transactions throughout the country.

Almost ten years later, the economy is Zimbabwe is still in shambles. The Zimbabwe dollar was reintroduced in 2019. Periods of high inflation quickly followed.

In an attempt to curb inflation last year, government leaders began to issue gold coins to try to earn the trust of investors with a store of value.

The latest announcement from the African nation says that the central bank will begin to issue a digital token that is backed by gold.

The gold-backed digital is an attempt by the country’s central bank to provide a trusted hedge against the volatility of its local currency.

The country’s central bank reports holding just 350 kg of gold bars among its reserves and estimates that it will need $100 million dollars to support the digital gold token.

Royalties from the mining industry exceed $300 million dollars per year.

Posted on

Zimbabwe to Issue Gold Coins in New Weight and Currency Denominations

FindBullionPrices.com

Earlier this year the government of Zimbabwe released a one troy ounce gold coin as a tool for the Central Bank to help keep inflation under control.

For many years the Zimbabwe economy has not only been the butt of many jokes, it has served as a very public example of how rampant and out of control inflation can destroy an economy and a fiat currency.

The earlier trial release in the issuance of gold coins to help with their fiat problems has been deemed such a success that they have announced the upcoming release of additional denominations.

The new Zimbabwe fractional gold coins will be minted on demand and will include tenth ounce, quarter ounce and half an ounce denominations. The coins will be available for buy beginning in November.

Posted on

Zimbabwe debuts gold coins to fight inflation as local currency tumbles

FindBullionPrices.com

The Reserve Bank of Zimbabwe (RBZ) announced that it will begin selling gold coins this month as a store of value to tame runaway inflation, which has considerably weakened the local currency.

The announcement comes after the country’s banking regulators raised a key interest rate to 200%, the highest in the world.

Inflation in the country has been rising at such a high pace that the Monetary Policy Committee (MPC) “resolved to introduce gold coins into the market as an instrument that will enable investors to store value.”

Fidelity Gold Refineries (Private) Limited, which is owned by the central bank, operates as the only gold-buying and refining entity in the southern African country.

US dollars are in high demand in the struggling country which recently saw the central bank involved in negotiations with bakers and other food producers to reduce the cost of basic items like bread.

The central bank’s monetary policy committee’s announcement comes at a time of “great concern on the recent rise in inflation”, which increased by 30.7% on a month-on-month basis for June 2022.

The availability of gold coins will likely ease pressure on the US dollar in the country. After all, gold is a better long-term store of value than another fiat currency. It has no counter-party risk and it cannot be created out of thin air by central banks.

The economy in Zimbabwe continues to toil with as the crisis is characterized a rapidly devaluing currency, 90 percent unemployment, declining manufacturing output and by sky-rocketing inflation.

In order for the gold coins to be effective, government officials are encouraging those seeking to buy the gold coins should pay with Zimbabwe dollars and not US dollars to help the central bank remove some of the excess local currency in circulation.

The coins are expected to be minted in an alloy of 22k, which is the same composition as other government backed coins such as the British Sovereign Gold Coin.

“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,” RBZ Governor Dr John Mangudya said in an interview.

He continued to say that 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.”

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 emphasize is that gold is gold and it has an international value.”

The official designs for the coin have yet to be released and officials have stated that images currently circulating on social media and fake and should be disregarded.

The coins are set to be released and available for sale sometime in mid-July 2022.