The Bank of Ghana (BoG) has expressed optimism of meeting the target of 540kg of gold by the end of December this year.
So far the BoG has purchased 280KG ounce of gold in just three months after the launch of the domestic gold purchase programme.
Director of Financial Market Department at the BoG, Steve Opata told TV3’s Etornam Sey in interview on Monday September 27 after the Monetary Policy Committee press conference in Accra that, the strategy is to double the quantity in five years as a measure to boost Ghana’s gold reserve.
“I am fairly optimistic that we will be able to meet our target for this year.
“The strategy here is to build the gold reserve. We have announced that we will double our gold reserve in the five years and I believe we are on track to doing that.
“Next year, we are even going to increase the quantity to 2050KG. In terms of how much it will add to our reserve this year, we have to look at the numbers.”
The Governor of the central bank Dr Ernest Addison launched the domestic gold purchase programme on June 17 2021.
He stated that the BoG’s foreign reserves had grown steadily over the last fifteen (15) years to current levels of almost US$11.00 billion, but the portion of gold reserves has remained unchanged at 8.77 tonnes, with the average value of gold reserves held as a percentage of Gross International Reserves (GIR) at 6.14 percent.
A cross country comparison shows that contrary to Ghana’s static gold holdings in its reserves, the USA and other industrialized countries in the Eurozone have continued to hold large gold reserves, post the gold standard era.
According to the International Monetary Fund (IMF) and the World Gold Council, major industrialized countries held the largest volume of gold reserves as of April 2021, followed by major emerging markets with major developing countries lagging behind the curve.
Globally, Central Banks demand for Gold, over the past decade, ranks third behind Jewellery, Technology and Investment sectors.
These trends are revealing because Ghana has mined gold for over three centuries and for the most part, the gold is exported. In 2019 for instance, Ghana has adjudged the largest producer of gold in Africa and the 7th largest in the world. Yet, in that same year, other central banks acquired a record level of 670 tonnes of gold to boost their reserves according to the World Gold Council.
The statistics show that the pandemic period saw a marginal decline in central banks’ gold demand but, the number of central bank buyers outweighed the number of sellers over the period.
Most of the buyers were from emerging market countries which had lower ratios of gold to total reserves. For instance, Turkey was the largest annual gold net purchaser, adding 134.5 tonnes to its official gold reserves in 2020 alone.
Other large net purchasers of gold during the pandemic year were, India, Russia, United Arab Emirates, Qatar, Colombia and Cambodia, among others. Ghana added nothing to its gold reserves over the period.
The programme we are launching today, therefore, sets the stage for Ghana to purchase gold as part of efforts to build its reserves. This initial step will enable the Bank of Ghana (BoG) to buy domestically produced gold from selected gold aggregators and mining firms and pay in the local currency at the prevailing market price. Through this programme, the BoG expects to double its gold holdings in the next five years.