Zimbabwe resorts to gold coins as local currency tumbles - page 2.

NeuroticFish

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Quote from: Taskford on July 06, 2022, 07:04:43 AM

USD is much safer currency for the to choose because it will be sustainable for their country to have this for now since the USD currency is doing strong and provably they can get advantage for taking this as another option.

Maybe they their government is experimenting on what will be the effect for doing that and for sure this is not sustainable for them for long term.

Actually Bitcoin may be a better choice - more future proof and has a very good chance to grow in value greatly in the following years.
USD is a choice only because they've had it and may have the infrastructure already set up and because with such troubles they may want to be in IMF's favors.

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Quote from: NeuroticFish on July 06, 2022, 03:14:29 AM

Quote from: LoyceMobile on July 06, 2022, 03:01:57 AM

I bet the average person in Zimbabwe can't afford one of those shiny new gold coins. And even if they could, it doesn't solve the problem. The coin is too valuable to buy groceries, so you're stuck with inflation money for that.

Well said. While I can easily see those shiny gold coins as wonderful collectibles, I don't think that they can be much more than that, since, as you said, it's too expensive for small denominations that would be useful for common people.
I guess that it's supposed to be some idiotic marketing stunt for their worthless currency. But if they can't do better, they'd better stick to USD (as they've been lately) or, why not, switch to bitcoin.

USD is much safer currency for the to choose because it will be sustainable for their country to have this for now since the USD currency is doing strong and provably they can get advantage for taking this as another option.

Maybe they their government is experimenting on what will be the effect for doing that and for sure this is not sustainable for them for long term.

romero121

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Zimbabwe is hit by inflation years back itself, and till date there is no big progress. The gold coin from the government is not gonna give them the expected results. Zimbabwe when hit by inflation, economist suggested to go for the adoption of bitcoin and make Zimbabwe the fintech centre. Fortunately nothing happened, if they've adopted bitcoin by then, now it could've come out of inflation atleast by a small margin.

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Quote from: LoyceMobile on July 06, 2022, 03:01:57 AM

I bet the average person in Zimbabwe can't afford one of those shiny new gold coins. And even if they could, it doesn't solve the problem. The coin is too valuable to buy groceries, so you're stuck with inflation money for that.

Well said. While I can easily see those shiny gold coins as wonderful collectibles, I don't think that they can be much more than that, since, as you said, it's too expensive for small denominations that would be useful for common people.
I guess that it's supposed to be some idiotic marketing stunt for their worthless currency. But if they can't do better, they'd better stick to USD (as they've been lately) or, why not, switch to bitcoin.

LoyceMobile

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I bet the average person in Zimbabwe can't afford one of those shiny new gold coins. And even if they could, it doesn't solve the problem. The coin is too valuable to buy groceries, so you're stuck with inflation money for that.

Hydrogen

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"Gold is money, everything else is credit." --JP Morgan

Gold being likely to appreciate in value during eras of high inflation and economic recession, solves the basic problem with inflation.

Which is poor to middle class earners lacking access to inflation protected assets which could protect their wealth from inflation devaluation.

Gold isn't a perfect solution. It can be prone towards scams. Metals like tungsten which have a similar density and volume to weight ratio as gold can be used to make counterfeit gold bars and coins. Gold has many known issues.

For the majority of applications gold is still a great candidate for inflation protection.

The big question now is whether other nations will demand support for gold based financial infrastructure and laws.

348Judah

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Quote from: Majestic-milf on July 05, 2022, 11:43:34 AM

Joining the list of countries who have been strongly hit by inflation, Zimbabwe see red. The Reserve Bank of Zimbabwe on Monday announced it's plan to introduce gold coins as means of value to tame inflation. The one-troy-ounce gold coins tagged the "Mosi-oa-tunya" meaning "smoke that thunders", has been elected as the torch bearer to show them the way.

Well I don't know what to call this as either to term it a progress or a showcase of a crab move, Zimbabwe have tried in making its first move in realising the need to help its economy to survival but i think the approach used here isn't that an effective one since we have the globally and acceptable digital currency for an exchange which is bitcoin could have serve a dual purpose or more for them towards sustaining their economy against inflation and the present dip on bitcoin price is not a barrier to using bitcoin for the arrival of an expected result.

livingfree

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Quote from: Majestic-milf on July 05, 2022, 11:43:34 AM

Instead of adopting the US dollar as a legal tender, why not borrow a leaf from El Salvador and Central African Republic and use BTC?

They have to secure themselves first with the main currency where they'll be known and such as Zimbabwe. At least for this country, they're trying to resolve and finding a way to get out of inflation but this isn't just all about changing the legal tender.

How many currencies they've got right now aside from their own bank note/legal tender? They should be firm on this one before they resort to another possible solution because it will cost them a lot of loss.

Yeah, I may agree about doing the same thing about CAR and El Salvador of adding bitcoin as a legal tender while having those other currencies they think will save their economy.

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Quote from: hugeblack on July 05, 2022, 12:52:26 PM

If we compare the situation in Zimbabwe, it is similar to Venezuela

Actually, As Venezuelan I am pretty sure that our case is quite different from what is happening in Zimbabwe. They had banknotes of trillions of dollars; we removed 14 zeros to our currency: 3 on 2007, 5 in 2018 and 6 in 2021.

Our inflation has slow down significatively and thus we still use our local currency, together with USD, for example.
And we indeed have quite an important volume of crypto-currencies and Binance is becoming a very common custodial wallet to pay for goods an services with stablecoins.

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The use of gold will be good because they do not have an official currency, and therefore it will relieve pressure on the government, but how will gold be ensured? And how to ensure that fraud does not occur?

In my oponion if they plan to literally mint gold coins for circulation, that could create a challenge when comes to preventing counterfeits. I believe it would be enough and easier to relauch the national currency, using bills which are extremely difficult to counterfeit and peg the currency to the gold within the national treasury.

Crypto-currency as legal tender in such country with infrastructure problems and probably difficulties to access to internet sounds uneffective, at least for now.

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Quote from: fiulpro on July 05, 2022, 01:12:03 PM

There was a reason why gold coins went into oblivion, there was a time when people used both gold and silver coins but at the end of the day they stopped, the reason would be limited supply, inflation, what are they going to do with the capital tax as well, how are they going to handle it, then there comes the volatility as well. I do think that one can understand the fact why this plan won't go that good as well. I do think that they should actually work on making more jobs available for the people and at the same time make things better on a individual basis as well, instead of letting the government introduce new gold coins.

I see it as a desperate move, no government will let its fiat disappear and adopt gold unless they did not had too much of a choice, however if was one of the citizens of Zimbabwe I will be incredibly worried about this, since I will not trust at all those coins are actually made of gold or if those coins actually have the gold content the government claims, so in that situation it is better to keep whatever dollars and other foreign currencies people got as this seems to me as an effort by the government to try to get some foreign currency out of their citizens.

Husires

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Zimbabwe officially apply uses of multiple currencies which means is that any currency can be legally used in Zimbabwe if trading parties agree to it.
In other words, gold, bitcoin or any other currency can be considered legal tender.
Zimbabwe has its own coin Zimbabwe dollar (the RTGS Dollar) therefore Zimbabwe deserves to be an extreme example of how inflation can wipe out a country's economy.

Look at https://en.wikipedia.org/wiki/Zimbabwean_dollar#Devaluation_of_the_fourth_dollar

Fortify

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Quote from: Majestic-milf on July 05, 2022, 11:43:34 AM

Joining the list of countries who have been strongly hit by inflation, Zimbabwe see red. The Reserve Bank of Zimbabwe on Monday announced it's plan to introduce gold coins as means of value to tame inflation. The one-troy-ounce gold coins tagged the "Mosi-oa-tunya" meaning "smoke that thunders", has been elected as the torch bearer to show them the way.

John Mangudya, RBZ Central Bank governor intimated that the issuance and sale of these gold coins will take effect from the 25th of this month. The inflation in the Southern African country has been mounting pressure on a population struggling with shortages, severe water and sanitation crisis, forced evictions during the COVID-19 pandemic and child marriages to name a few.

The Zimbabwean dollar (ZWD) was the country's official fiat from 1980-2009, but was abandoned due to its inflation ravaged nature for other foreign currencies like the dollar. Plans to make the US dollar a legal tender for five years, probably to help boost their economy.

Instead of adopting the US dollar as a legal tender, why not borrow a leaf from El Salvador and Central African Republic and use BTC?

It seems like deja vu with the previous Zimbabwe currency crash - in turbulent times weaker currencies like these are the first to go down as people flock to much safer places. With inflation spiraling out of control in many countries, people simply do not want it and cannot trust the Zimbabwe government to act responsibly. At least it has not reached the dismal lows of hyper inflation which saw trillion dollar notes created which lost value very quickly. One day it'll be nice if people don't step in and wave Bitcoin around like it is some magic bullet to every currency crisis, it simply is inaccessible to many people in poorer countries and cannot handle anywhere near the transaction loads that are required.

fiulpro

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There was a reason why gold coins went into oblivion, there was a time when people used both gold and silver coins but at the end of the day they stopped, the reason would be limited supply, inflation, what are they going to do with the capital tax as well, how are they going to handle it, then there comes the volatility as well. I do think that one can understand the fact why this plan won't go that good as well. I do think that they should actually work on making more jobs available for the people and at the same time make things better on a individual basis as well, instead of letting the government introduce new gold coins.

hugeblack

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If we compare the situation in Zimbabwe, it is similar to Venezuela, and if we look for the level of Bitcoin usage after adoption, we will find that it is less than 5%, so I do not expect the adoption of Bitcoin in that country to change, is there a good electricity infrastructure? Is there a stable internet? Is there knowledge of digital cash?

The use of gold will be good because they do not have an official currency, and therefore it will relieve pressure on the government, but how will gold be ensured? And how to ensure that fraud does not occur?

naira

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Zimbabwe is beset with uncertainty. Adopting any currency because of the impact that has lost public confidence in the government's failure to deal with inflation will continue to have a long tail. Whether using gold or dollars, in fact for now it will only be temporary. The main task remains to restore the value of fiat to a better level. The government there is confused about where to start, based on the hampered economic movement, getting out of the zone of destruction can no longer be contained.

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I'm failing to see how this approach can actually help with inflation. Gold is used globally by individuals as a hedge for inflation, making gold a legal tender would not necessarily affect spending or inflation rates; It is just sort of a reminder to the citizens that they can explore other hedges against inflation, while the currency collapses.

It also comes as no surprise that the citizens are actually not bought into the idea of trading off their local currency for gold coins. The country has shown inability to maintain the economy over the years and has been unable to instill any sort of confidence in the populace, and even switching to USD and abandoning their local currency again would do little to change that.

Majestic-milf

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Joining the list of countries who have been strongly hit by inflation, Zimbabwe see red. The Reserve Bank of Zimbabwe on Monday announced it's plan to introduce gold coins as means of value to tame inflation. The one-troy-ounce gold coins tagged the "Mosi-oa-tunya" meaning "smoke that thunders", has been elected as the torch bearer to show them the way.

John Mangudya, RBZ Central Bank governor intimated that the issuance and sale of these gold coins will take effect from the 25th of this month. The inflation in the Southern African country has been mounting pressure on a population struggling with shortages, severe water and sanitation crisis, forced evictions during the COVID-19 pandemic and child marriages to name a few.

The Zimbabwean dollar (ZWD) was the country's official fiat from 1980-2009, but was abandoned due to its inflation ravaged nature for other foreign currencies like the dollar. Plans to make the US dollar a legal tender for five years, probably to help boost their economy.

Instead of adopting the US dollar as a legal tender, why not borrow a leaf from El Salvador and Central African Republic and use BTC? https://www.google.com/url?q=https://www.reuters.com/business/zimbabwe-introduce-gold-coins-local-currency-tumbles-2022-07-05/&sa=U&ved=2ahUKEwj81uKAkeL4AhWCyKQKHU-dBN4QFnoECAAQAg&usg=AOvVaw2fXRK8BL4WQRSOH2YlpqVB

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