WEBVTT - As Gold Soars Nations Spot A Sparkling Opportunity 0:00:02.440 --> 0:00:07.160 Bloomberg Audio Studios, podcasts, radio news. 0:00:08.480 --> 0:00:11.920 And Israeli drone strike near the Lebanon Syria border has 0:00:11.960 --> 0:00:16.080 reportedly killed a prominent Syrian businessman, the first foreign incursion 0:00:16.120 --> 0:00:19.840 military incursion into Russia since World War Two. Tamas says 0:00:20.079 --> 0:00:25.360 Israel killed its political leader Ismaeohania in an airstrike on Tehran. 0:00:25.560 --> 0:00:29.320 Gold is back in fashion. Central banks around the globe 0:00:29.360 --> 0:00:33.400 are returning to the precious metal as geopolitical tensions increase, 0:00:33.880 --> 0:00:37.320 and many African nations are looking to build up reserves 0:00:37.360 --> 0:00:40.279 too as they look for stability at a time of 0:00:40.360 --> 0:00:43.920 growing uncertainty, and the price of gold is responding. 0:00:44.240 --> 0:00:48.000 Gold continues in terms of price. It's March ever higher. 0:00:48.120 --> 0:00:50.080 Gold is a great safe haven. 0:00:50.200 --> 0:00:53.160 The spot price of gold touched two thousand, four hundred 0:00:53.159 --> 0:00:56.280 and eighty three dollars and seventy three cents to us pronounce. 0:00:56.720 --> 0:00:58.560 That's its highest price ever. We've got to going to 0:00:58.600 --> 0:00:59.920 three thousand dollars seven next twelve. 0:01:00.440 --> 0:01:03.600 So what's behind the push for bullion and will this 0:01:03.760 --> 0:01:10.360 trend continue? I'm Jennifer Zabasaja and this is the Next 0:01:10.440 --> 0:01:13.960 Africa Podcast, bringing you one story each week from the 0:01:13.959 --> 0:01:17.280 continent driving the future of global growth with the context 0:01:17.400 --> 0:01:24.160 only Bloomberg can provide. Bloomberg's Ray Lovu has been following 0:01:24.200 --> 0:01:28.039 this rush for gold and he's joining us now from Zimbabwe. 0:01:28.319 --> 0:01:29.720 Thanks for joining us, Ray, how are you. 0:01:30.120 --> 0:01:31.600 Thank you for having me Jen, I'm very well. 0:01:31.640 --> 0:01:34.400 Events Thanks so much for being here. Listen, let's start 0:01:34.400 --> 0:01:36.880 maybe with the history if you can, if you could 0:01:36.920 --> 0:01:42.240 just take us back to really how this gold rush started. 0:01:44.319 --> 0:01:47.640 So we've seen a couple of African nations jumping on 0:01:47.720 --> 0:01:52.200 to gold basically two prop up the economies. That kicked 0:01:52.240 --> 0:01:56.400 off back in about twenty twenty two with Ghana basically 0:01:56.520 --> 0:02:01.440 swapping gold for oil to pay for oil because of 0:02:01.520 --> 0:02:06.760 an effects shortage, and then last year Madakasca as well 0:02:06.960 --> 0:02:09.480 jumping onto gold to try and prop up their. 0:02:09.560 --> 0:02:10.840 Reserves as well. 0:02:11.280 --> 0:02:14.160 Madakaska is the largest vie in the producer in the 0:02:14.200 --> 0:02:16.920 world and they saw a deep in production and so 0:02:17.040 --> 0:02:20.239 naturally the shift to gold was an attempt to try 0:02:20.280 --> 0:02:23.760 and ensure that they've diversfied their portfolio, have enough supply 0:02:23.960 --> 0:02:27.320 of for x and then particularly the CAA. We've seen 0:02:27.400 --> 0:02:32.160 several other African countries as well getting into that playbook, 0:02:32.320 --> 0:02:36.480 particularly Tanzania as well, buying about six tons of gold in. 0:02:36.440 --> 0:02:40.200 June, and you mentioned ray the four X reserves. Is 0:02:40.240 --> 0:02:44.720 that the main reason behind why a lot of these 0:02:44.760 --> 0:02:47.400 banks are looking to build up their gold reserves or 0:02:47.400 --> 0:02:49.880 are there other issues that they're maybe looking at and 0:02:49.919 --> 0:02:51.480 saying this is the opportune time. 0:02:51.960 --> 0:02:55.400 Well, that's one of the reasons, but much broader than that. 0:02:55.840 --> 0:02:58.520 One of the compelling reasons for the central banks is 0:02:58.560 --> 0:03:01.920 to diversify the app portfolio. The central bankers that we 0:03:01.960 --> 0:03:06.040 did manage to speak to South Sudan and Zimbabwe's cases 0:03:06.960 --> 0:03:10.600 in point points out that their strategy to diversify their 0:03:10.639 --> 0:03:13.919 portfolio and their holdings. But U knowally, given the global 0:03:14.120 --> 0:03:17.200 attentions that are at play at the moment, the war 0:03:17.760 --> 0:03:20.600 in Ukraine and what we're seeing in the Middle East 0:03:20.639 --> 0:03:24.120 as well, so most of these African countries are nervous 0:03:24.160 --> 0:03:27.720 at what the implications of some of these events mean 0:03:27.880 --> 0:03:31.720 for them domestically. So using gold, which historically has always 0:03:31.800 --> 0:03:34.679 been a safe haven, offers them comfort. And I would 0:03:34.680 --> 0:03:36.840 also add on and say some of these African countries 0:03:36.880 --> 0:03:40.120 actually produce gold, so they do have a channel where 0:03:40.720 --> 0:03:44.240 they have within country the ability to buy gold from 0:03:44.440 --> 0:03:48.560 atisanal miners buy it in local currency and they keep 0:03:48.560 --> 0:03:50.800 the holdings and then sell it off for effects at 0:03:50.800 --> 0:03:54.720 whatever stage they may then require to show up their reserves. 0:03:54.880 --> 0:03:59.360 So it's really a diverse mix of reasons why we're 0:03:59.400 --> 0:04:02.640 seeing many of these countries jumping onto the cold rush, 0:04:02.720 --> 0:04:03.440 as it were. 0:04:03.600 --> 0:04:06.800 And especially when it comes to commodities, we are hearing 0:04:06.800 --> 0:04:10.680 more and more African nations trying to at least reap 0:04:10.760 --> 0:04:13.960 some of the benefits right that global investors are getting 0:04:14.120 --> 0:04:17.240 with commodity prices right now. Right when it comes to 0:04:18.320 --> 0:04:21.520 this gold rush, and specifically maybe we talk about Zimbabwe. 0:04:22.080 --> 0:04:26.560 Zimbabwe of course has a long history with the US dollar, 0:04:27.080 --> 0:04:30.440 and the reporting says that the attempt was maybe to 0:04:30.520 --> 0:04:33.520 try to dedollarize the economy. Right, how much is the 0:04:33.640 --> 0:04:36.200 dollar and the usd and what's happening in the US 0:04:36.279 --> 0:04:39.280 sort of playing into this gold rush. 0:04:39.800 --> 0:04:43.360 I think it's effect for different countries. In zimobwez case, 0:04:43.520 --> 0:04:48.839 Zak definitely an outlie. I think the overall strategy and 0:04:49.240 --> 0:04:53.119 focus is to deterlarize. They've not been shy about saying 0:04:53.160 --> 0:04:55.719 that openly. Whether it will succeed or not is something 0:04:55.760 --> 0:04:58.480 that we keep an eye on. But for other countries, 0:04:58.760 --> 0:05:01.719 I don't get the sense that it's necessarily slanted towards 0:05:01.760 --> 0:05:04.600 appending the dollar, because the dollar still plays a pivotal 0:05:04.800 --> 0:05:07.760 role in terms of the mix of reserves. But I 0:05:07.760 --> 0:05:10.920 think for countries like Uganda is another example which has 0:05:10.960 --> 0:05:15.039 also moved to the cold rush, buying William is purely 0:05:15.480 --> 0:05:19.800 a way to diversify given some of the domestic issues 0:05:19.800 --> 0:05:23.880 that are happening in Uganda, the LGTQ situation that took 0:05:23.920 --> 0:05:27.800 place where basically, you know, there's a new legislation that 0:05:27.839 --> 0:05:30.559 came on board and then Uganda was then cut off 0:05:30.600 --> 0:05:33.279 from funding. So they are looking at that and saying, look, 0:05:33.600 --> 0:05:36.040 they may be a possibility that we may not have 0:05:36.400 --> 0:05:39.880 finance accessible to us because of the laws that we've elected. 0:05:40.240 --> 0:05:43.880 Therefore gold could offer us some room to continue the 0:05:43.880 --> 0:05:44.760 smooth running. 0:05:44.480 --> 0:05:44.960 Of the economy. 0:05:45.000 --> 0:05:48.120 So I think for different countries there's different reasons why 0:05:48.160 --> 0:05:51.080 they are moving to go, but certainly Zimbablos case, it's 0:05:51.120 --> 0:05:53.880 clear cut it's an attempt to try and move away 0:05:54.000 --> 0:05:54.599 from the dollar. 0:05:56.000 --> 0:05:56.480 Is there a. 0:05:56.520 --> 0:06:00.120 Risk to the strategy and this approach, And I know 0:06:00.000 --> 0:06:03.160 you're saying it's different depending on which country we're looking at, 0:06:03.240 --> 0:06:05.800 but can you make the statement that maybe having too 0:06:05.880 --> 0:06:09.160 much gold reserves could potentially be a downside for some 0:06:09.200 --> 0:06:11.440 of these central banks, or you know, is there a 0:06:11.480 --> 0:06:14.160 perfect balance that these countries really need to strike. 0:06:14.720 --> 0:06:17.400 So the indication that we have for now, and also 0:06:17.440 --> 0:06:21.120 coming from the World Gold Council, they expect central bankers 0:06:21.200 --> 0:06:24.200 right around the world to increase their holdings for the 0:06:24.240 --> 0:06:27.839 next twelve months. So there isn't any immediate risk in 0:06:27.920 --> 0:06:31.679 terms of accumulating gold right now. The price of gold 0:06:31.720 --> 0:06:35.400 has been very high. It's record highed this year and 0:06:35.480 --> 0:06:38.239 some of the forecasts putting it at twenty seven hundred 0:06:38.640 --> 0:06:41.119 by the end of the year, and some analyst also 0:06:41.120 --> 0:06:44.599 think it could preach three thousand dollars by early next year. 0:06:44.880 --> 0:06:48.560 So I think the outlook definitely is favorable at the moment, 0:06:48.880 --> 0:06:52.520 and the countries that are on this cold rush of Polish, 0:06:52.600 --> 0:06:55.320 they feel that they're not going to lose out or 0:06:55.480 --> 0:06:58.320 they're going to have any risk whatsoever at this point 0:06:58.440 --> 0:07:02.440 because I think of indications really point to a positive 0:07:02.440 --> 0:07:03.440 focused for gold. 0:07:03.680 --> 0:07:05.680 Stick with me, Ray when we come back, We're going 0:07:05.760 --> 0:07:08.120 to look at which other countries are building up their 0:07:08.160 --> 0:07:12.200 reserves and how long this trend might actually continue. 0:07:12.360 --> 0:07:20.440 We'll be right back and welcome back. 0:07:20.600 --> 0:07:22.880 Ray in Lovu is still with us and we are 0:07:22.920 --> 0:07:26.440 talking all things gold and gold reserves. Ray, we talked 0:07:26.440 --> 0:07:29.320 about a few of the countries there that are building 0:07:29.400 --> 0:07:32.000 up their gold reserves. Are we seeing more and more 0:07:32.040 --> 0:07:36.360 countries really joining this trend? Are they seeing countries like 0:07:36.480 --> 0:07:39.800 Uganda and zim benefiting off of it and coming out 0:07:39.800 --> 0:07:42.040 and making their own statements about how they want to 0:07:42.040 --> 0:07:43.400 maybe get into this as well. 0:07:43.840 --> 0:07:48.800 Yeah, I think the countries themselves are certainly bullish about 0:07:49.120 --> 0:07:52.440 getting into gold and their main driver right across the 0:07:52.480 --> 0:07:57.440 central theme is basically diversifying their portfolios. And some of 0:07:57.440 --> 0:08:02.240 these countries, Uganda and Zimba, particularly in Zimbabwe, they do 0:08:02.360 --> 0:08:05.840 have the gold in country, they produce gold, they have 0:08:05.920 --> 0:08:08.960 gold mines, so for them it's almost like a no 0:08:09.120 --> 0:08:12.520 brainer in a sense to say, look, we have the commodity, 0:08:13.080 --> 0:08:17.960 why not build reserves using the commodity which is available 0:08:18.000 --> 0:08:20.680 in country. Ycana is not a major goal producer, but 0:08:20.840 --> 0:08:24.080 they do have several minds as well. We do expect 0:08:24.320 --> 0:08:28.120 and see other countries jumping on board. South Sudan, like 0:08:28.160 --> 0:08:31.600 I mentioned earlier, the governor they did say he's looking 0:08:31.640 --> 0:08:34.240 at what's happening at the moment and will be bringing 0:08:34.320 --> 0:08:37.679 legislation to Parliament and to try and see if that 0:08:37.760 --> 0:08:41.200 could be something that could be approved in Nigeria as well. 0:08:41.559 --> 0:08:45.600 Recently or so, lawmakers they ask the Central Bank to 0:08:45.679 --> 0:08:48.480 begin to look at using gold to show up the economy. 0:08:48.640 --> 0:08:52.240 So there's definitely I think some trend or some team 0:08:52.280 --> 0:08:56.080 that's playing out along across the continent in different measures. 0:08:56.120 --> 0:08:59.040 But I think the entire sort of like framework is 0:08:59.080 --> 0:09:03.520 about divers fine and supporting the different economies ultimately. 0:09:05.520 --> 0:09:09.480 And Ray, you have a story out now about how 0:09:09.640 --> 0:09:14.240 Zimbabwe's gold back currency is actually being used potentially that 0:09:14.400 --> 0:09:19.479 is coming from the central Bank governor telling that two reporters. 0:09:19.720 --> 0:09:22.320 Is this a success story already? Is it too early 0:09:22.440 --> 0:09:24.800 to know whether or not this will be a success 0:09:24.840 --> 0:09:26.600 for a place like Zimbabwe. 0:09:27.080 --> 0:09:28.400 Yeah, so definitely. 0:09:28.400 --> 0:09:32.240 We had a chance to interview the Central Bank Governor, 0:09:32.280 --> 0:09:38.079 John Mischavan, and he's Polish in terms of what the 0:09:38.240 --> 0:09:41.120 go back currency, the zeke is the short for Zimbabee 0:09:41.120 --> 0:09:44.560 gold is down to the economy. Inflation has been tamed, 0:09:45.080 --> 0:09:49.480 exchange rate volatility has ended. So from that standpoint, in 0:09:49.559 --> 0:09:53.080 terms of the immediate visible turnaround of the economy who 0:09:53.200 --> 0:09:55.920 is very polish about it, and what he's seeking to 0:09:55.960 --> 0:09:59.360 do now is to increase the gold reserves. When the 0:09:59.440 --> 0:10:02.360 Zeke was launched in early April, it was backed by 0:10:02.360 --> 0:10:05.280 two point five tons of gold and about hundred million 0:10:05.320 --> 0:10:08.319 dollars in foreign currency. So the Governor when we spoke 0:10:08.360 --> 0:10:11.440 to him, his targeting to have over three tons by 0:10:11.440 --> 0:10:14.199 the end of the year in terms of the gold. 0:10:14.040 --> 0:10:16.319 Holdings of physical gold holdings. 0:10:16.440 --> 0:10:18.800 So ready, that signals that this is the path that 0:10:18.880 --> 0:10:22.840 Zimbabwe is committed to and they're seeking to continue on it. 0:10:23.000 --> 0:10:26.480 And I wondered are people actually using the zig Is 0:10:26.520 --> 0:10:29.520 it now being used more than the dollar was? 0:10:30.240 --> 0:10:34.360 So the years dollar is still the dominant currency of 0:10:34.360 --> 0:10:37.439 transaction in the economy. It's as of the related statistics 0:10:37.440 --> 0:10:40.640 that we have, it's holding about seventy percent of all 0:10:40.760 --> 0:10:44.880 transactions are donion dollars and about thirty percent in the zeke. 0:10:45.240 --> 0:10:47.160 So initially when the Zeke was. 0:10:47.160 --> 0:10:50.600 Launched and took over from the defunct Zimbabwe Dollar, it 0:10:50.720 --> 0:10:55.000 accounted for about fifteen percent. So it's doubled in just 0:10:55.200 --> 0:10:57.760 over three months in terms of its usage and the 0:10:57.800 --> 0:11:01.120 government is also created The Minister Nance Minister last week 0:11:01.280 --> 0:11:06.240 announced his budget, where is basically ordered government departments to 0:11:06.280 --> 0:11:09.040 accept payments in local currency in the z and not 0:11:09.200 --> 0:11:13.480 in US dollars. So they're creating these pockets of demand 0:11:13.679 --> 0:11:16.760 to have that demand or to create demand for the currency. 0:11:17.120 --> 0:11:19.360 But in terms of the numbers, there's certainly a lot 0:11:19.360 --> 0:11:23.400 of usage now on paper, but day to day, I 0:11:23.400 --> 0:11:27.120 think the preference for ordinary people is to transact in 0:11:27.240 --> 0:11:30.600 US dollars. That's what people left access to easily. ZG 0:11:30.679 --> 0:11:33.360 banknotes not so much. I've when you come across one 0:11:33.440 --> 0:11:37.000 ten ZG note, which is about seven US cents since 0:11:37.040 --> 0:11:39.079 the time the currency was launched. 0:11:39.000 --> 0:11:41.960 Wow, just one in a few months, let's just And 0:11:42.160 --> 0:11:45.600 then on on gold, you were mentioning the price of gold. 0:11:45.600 --> 0:11:48.000 You were just taking a look at it. It's constantly changing. 0:11:48.480 --> 0:11:53.920 You said, it's pretty pretty bullish forward outlook for gold. 0:11:54.280 --> 0:11:56.440 Is there anything maybe that could get in the way 0:11:56.480 --> 0:11:57.640 of that. Not. 0:11:57.720 --> 0:11:58.320 At the moment. 0:11:58.600 --> 0:12:01.720 The outlook from the world called console really is gold 0:12:01.760 --> 0:12:04.640 is going to continue on its path. Obviously, there's a 0:12:04.679 --> 0:12:07.559 lot of attention on the your political tensions in the 0:12:07.600 --> 0:12:10.600 Middle East and the US election coming up in November, 0:12:11.040 --> 0:12:13.480 and also the FAID, what's going to cut rates so 0:12:13.520 --> 0:12:16.080 I think at the moment, really the bet is still 0:12:16.080 --> 0:12:20.120 on gold. I can't immediately see a shift from. 0:12:19.960 --> 0:12:22.839 That, absolutely, and it's interesting too to look at how 0:12:22.880 --> 0:12:25.720 the other commodities play out as well. There's a note 0:12:25.720 --> 0:12:28.400 from a Bank of America about silver in particular and 0:12:28.400 --> 0:12:31.280 how that compares to gold. It's all be interesting to 0:12:31.360 --> 0:12:35.560 watch those metals. Thanks so much. Ray, really appreciate your 0:12:35.600 --> 0:12:38.640 reporting and for joining us on the podcast this week. 0:12:38.920 --> 0:12:39.439 Thank you, Jen. 0:12:39.760 --> 0:12:42.560 You can read more from Ray and the team on 0:12:42.640 --> 0:12:45.440 Bloomberg right now. We will put a link in the 0:12:45.480 --> 0:12:51.240 show notes. So clearly this is African nations responding to 0:12:51.280 --> 0:12:54.000 the uncertainty in the world right now and what that 0:12:54.080 --> 0:12:57.800 might pretend for their own economies. But it might be 0:12:57.880 --> 0:13:01.400 too early to conclude that this goldrush is actually a 0:13:01.480 --> 0:13:06.160 silver bullet for countries struggling with currency volatility and their 0:13:06.160 --> 0:13:14.160 own financing setbacks. This program was produced by Adrian Bradley. 0:13:14.400 --> 0:13:17.200 Don't forget to follow and review this show wherever you 0:13:17.360 --> 0:13:21.240 usually get your podcast. I'm Jennifer's Apisaja. Thanks so much 0:13:21.320 --> 0:13:21.920 for listening.