Fine gold explained
What is fine gold and how do we make our gold fine? This was yesterday’s biggest concern after the recent announcement by the Reserve Bank of Zimbabwe of the forex retention increase for gold submissions.
The RBZ increased forex retention from 55% to 70% a move positively received by miners. The Bank also announced that its entity Fidelity Printers and Refiners (FPR) will pay 100% USD for fine gold pegged at 45us$.
Mining Zimbabwe spoke to legendary Miner Engineer Chris Murove who shed light on the process of attaining fine gold.
“Every miner including the ASGM will still take their impure gold to Fidelity in the form they have been doing it, whether smelted or as toast. Fidelity will determine the amount of pure (or fine) gold in the miner’s bullion and they pay accordingly” Murove said.
On his thoughts on the 100% hard currency payment for fine gold introduction, Eng Murove said, “The move by Fidelity to pay the small scale miners 100% hard currency will incentivise miners to shun the parallel market in favour of the formal market which is Fidelity. However, Fidelity should not keep the price static, but when it rises on the world market, they should follow suit and when it drops, they should maintain the floor price of $45 to support their producers”.
Norton Miners Association Chairman Mr. Privelage Moyo miners will definitely go for fine gold as equipment and products used for operations require US dollars.
“It is better to get all the funds in USD as it is the preferred mode of payment and it is stable. We no longer have to worry about the depreciation of the local currency and converting our rtgs to ridiculous rates to buy USD’s. Going for 70/30 means one gets only 10-15% of the 30% in actual value when converting the rtgs to USD which is what we as miners were complaining about all along” Moyo said.
Prior to the forex retention increase Fidelity was paying 55/45 which expert say contributed to a thriving illegal gold buying market.
In January the Gold Mobilisation National Taskforce handed an explosive gold smuggling report that details well-knit gold smuggling by a coterie of gold buying barons, which is costing Zimbabwe billions of United States dollars. The precious metal is being smuggled mainly to South Africa, which is then used as a gateway to global markets.
Zimbabwe is losing an estimated 70 tonnes of gold to the parallel market every year as licensed buyers channel most of their output to the informal market. It is most probable miners will go for fine gold due to the disparity between the official USD to zwl rate and the parallel market rate.