Chris BishopBy Chris Bishop|July 11, 2022|4 Minutes|In Editor's Desk

Editor’s Desk

Zimbabwe and the golden currency of fear.

You couldnt make this stuff up. I have been writing on Zimbabwes economy for more than a quarter of a century and was hoping for economic revival in the wake of President Robert Mugabes outdated and boneheaded approach to economics.

Instead Zimbabwe is perched on the cusp of economic turmoil with raging inflation and currency confusion. Now it is planning to throw gold into the wind by issuing a coin that most of the population can’t afford.

The Reserve Bank says it will issue a 22-carat troy ounce gold coin, on July 25, as its own propped up and beleaguered currency slumps . The authorities say the glittering new coin will help curb inflation and help people, like you

entrepreneurs, store their wealth.

The coin will be called Mosi-oa-Tunya – the smoke that thunders – the original name for  Victoria Falls, one of the shimmering wonders of the world on the Zimbabwe- Zambia border.

Gold is the world’s currency of fear; a hedge that investors go to when there is trouble and uncertainty. It could have been made for Zimbabwe as it grapples with currency difficulties and soaring inflation.

“Two hundred per cent and flying!” says an entrepreneur I spoke to in Harare this week.

“It feels like 2008 all over again!” He said alluding to the devastating days of hyper-inflation when billions bought  you next to nothing and prices changed every hour. Pensions and fortunes wiped out overnight; business in chaos.

Prices are on the rise again as a shortage of grain from war torn Ukraine and the rise in the cost of fuel take their toll. Oh, for the days when Zimbabwe grew enough grain for its people and for export to the rest of the region.

To make matters worse, there is uncertainty over the currency – the RTGS dollar. The feeble currency suffers from  plunging value and black market dealing. The official rate for the RTGS is 400-1; whereas the black-market rate  is 700 to 1. You have to have deep pockets, as well as patriotism, if you want to support your currency in this  land.

Now the gold coin has been pitched into this mess of dollars and cents. The cruel irony is that – even though they need a strong hedge against inflation more than ever – an estimated 70 percent of Zimbabweans  won’t be able to afford it.

Given that the coins are going to cost at least $1800 each – based on the world gold price and production costs – you would need a middle management job, in a fairly big company, to earn that much in a month. At least, the government has allowed the trade in US dollars for another five years, otherwise, the new gold coin could have been more out of reach.

How the new gold coin will help the health of the Zimbabwe economy – God only knows. From July 25, we will see.


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