Following the Zambian Government’s declaration of gold as a strategic resource, the Central Bank has now signed a deal with the investment group that has been bestowed the honor and responsibility of consolidating gold mining efforts in Zambia, according to an announcement from the Bank of Zambia.
“The Bank of Zambia agreed on Friday to purchase gold from locally-listed miner ZCCM-IH”, read a report published by Reuters on Friday 11 December. This was confirmed by a tweet from the central bank posted earlier in the day. “The Bank of Zambia has this morning signed a Gold Purchase Agreement with the Zambia Gold Company Limited, a subsidiary of ZCCM Investments Holdings (ZCCM-IH)”.
According to the Central Bank, “this Agreement will take the Bank’s efforts to build the country’s gold reserves a step further”.
What now appears to have been a busy day for the new Governor of the Central Bank, the reserve bank had signed a deal with First Quantum Minerals to secure more gold bullion. “The Bank of Zambia will begin buying gold from Canadian miner First Quantum Minerals and the state mining firm as it resumes holding the precious metal as part of its foreign reserves”, the central bank governor said on Friday as reported by mining weekly.
“During periods of market stress – when assets would be losing value – gold would be adding value, thereby shielding the whole portfolio from large losses,” Bank of Zambia Governor Christopher Mvunga said as reported by mining weekly. The report further indicated that “under the agreement signed between the central bank and First Quantum, a Toronto-listed copper miner, Zambia will buy gold produced as a by-product of the company’s Kansanshi copper mine.
Gold is considered a safe investment. Furthermore, it has long been considered a durable store of value and a hedge against inflation. It is supposed to act as a safety net when markets are in decline since the price of gold doesn’t typically move with market prices. Therefore, it’s no wonder that the central bank is seeking to build up its gold reserves following a sovereign default as alluded to by the central bank governor.
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