Prof Mutambara, you can’t do feja feja with the gold coin!
Nevanji Munyaradzi Chiondegwa
The gold coins came and along with them have sprung up a high number of ‘financial and investment analysts’ and I have of course heard the most embarrassing of things about the coins
Most of the statements came from people one would expect by virtue of their titles of ‘Doctor’ or Professor to at least speak from a position of knowledge but have displayed an obscene amount of ignorance that one begins to question whether academic credentials should be grounds for commenting on issues.
While I can forgive the man on the streets who speaks from a position of bitterness and misunderstanding, I certainly cannot give the same leeway to the fundis.
The common man assumed that the coins were for transactional purposes and hence misinformed statements on the whole issue.
I do not blame the man on the street mind you, after all, it is the duty of the authorities to fully inform and educate the public on new policies.
This was not done as has not been done previously rendering what could have been successful policies useless.
But for one Prof Arthur Mutambara to pen what he termed an exposé of how ZANU PF is going to ‘loot’ the gold in the country via gold coins is unforgivable.
If it had come from anyone other than a former Deputy Prime Minister and a Professor, I certainly would not have ignored it.
But anything other than a rebuttal of his assertions would be suicide.
Now Professor Mutambara, instead of calling on his fellow Mutambara villager, Dr John Mangudya, the Reserve Bank Governor to ask for clarity on the pricing of coins decided to be like the excitable Hopewell Chin’ono and speak politics about an investment instrument sans any information.
The gold coin was explained nicely to be a store of value and is supposed to easy pressure on the US Dollar as a store of measure.
It is not really for the common man nor for small time players.
Its serious business and it’s for people with more than a few million dollars in local currency or a couple of thousands to a million in USD.
The price alone and the measures around its trade from buying it, to the period you keep it without selling it to its securitisation says a lot.
We certainly do not have any small time players with USD1800, R30 000 or ZWL 805 600 lying around and to keep out of circulation for the next 180 days or six months for the less mathematically inclined.
Now Prof Mutambara alleges the connected will go to the Forex Auction and buy USD at 320 to the dollar, burn it on the streets then buy the gold coin at the WBWS rate from the agents thus an arbitrage.
This may sound true at face value without taking into consideration other measures recently enacted by the authorities to curb the arbitrage measures.
It is sad that for an ex-Dep PM, Prof Mutambara is so uninformed of the measures in place as to make such presumptuous assumptions.
One would have thought he is aware that banks were recently banned from giving loans, and others from the forex auction system and the reasons were given.
The measures taken were announced meaning there are measures in place to curb illicit trade.
The Know Your Client measures in place at banks means you cannot burn a million into your bank and then transfer it to buy a gold coin.
Such a transaction will be flagged not only by the Financial Intelligence Unit but even by your bank.
Banks themselves were penalized and they are certainly not willing to take the risk of repeating the error.
So this eliminates the feja feja financial system suggested by Professor Mutambara and other doomsayers.
In fact, the one question that will be central to transactions involving the coin is: “Where did the money come from?” This alone limits small time players who by the way do not have enough to upset the rate or the economy at all.
Now what has actually happened here will not only benefit the rich but the poor common man as well.
The move has first and foremost removed pressure on the need to preserve value for the rich via buying USD.
This means rates will stabilise ceteris paribas.
The second issue is we have basically locked the value of the ZWL against an ounce of Gold.
ZWL805 745.35 is equal to an ounce of gold as it stands. Meaning 31.1g is equal to that and therefore goes down to a gram being equal to ZWL25 908.21. A gram of gold costs between USD50 to USD64.
This means 1USD will become equal to between ZWL404,82 at the highest value of gold or ZWL518.16 at the lowest value possible.
Whatever the cost of gram of gold, the value of the ZWL has been locked at the value of a precious mineral.
One that is not likely to see any turbulence in value.
This not only stores the value of one’s money but ensures that come six months that down the line, one is guaranteed of his money back with some profits too.
This is not a first nor is it unique to Zimbabwe, it’s basically what Russian President Vladimir Putin did when hit by European sanctions.
Russia being a producer of gold, Putin simple fixed an ounce of gold at 10 000 rubles and let the market stabilize till the ruble became the best performing currency.
Now we await the other fundamentals to kick in and policies to support this measure and hopefully the agents and authorities will all play ball n not waver on set out measures.
If followed through, it means we have firming of prices, we have firming of the ZWL.
Recent Comments