Biti Says RBZ Bought Gold Coins For US$18m, Sold Them At US$10m
Former Finance Minister Tendai Biti has said the Reserve Bank of Zimbabwe (RBZ)’s Mosi-oa-Tunya Gold Coins are a new form of arbitrage and looting from the public to enrich cartels.
He claims that the central bank bought gold coins for about US$18 million and sold them for about US$10 million using a discount rate of about 300% which is below the market rate creating an arbitrage.
Arbitrage is the simultaneous purchase and sale of an asset in different markets to exploit tiny differences in their prices. We present Biti’s Twitter thread below:
The auction system continues to be vehicle of arbitrage&rent behaviour. Rigged rate of 1:621 still lags behind market rate of 1:750. There is no answer except corruption as to why there is no free float of ZW$ Significantly allocations are decreasing to US$11m from highs of $50 m
The obvious deceleration of activity on the auction is explained by the increased energy in gold coins production. Gold coins are new form of arbitrage & looting. A bank heist serving to transfer resources from public coffers to cartels. As of 22 Sept 9516 coins sold for ZWL$9 b
Gold coins are being sold in local currency at a discounted rate that is 300% below market thus creating arbitrage This explains why 95 % of purchases are in ZWL$. The @ReserveBankZIM has spend roughly US$ 18m in buying 9516 coins which it has sold at around US$10m. This is THEFT.
For a country without any reserves to back its currency¤t account gold coins are zany The suggestion that they are containing inflation is also fiction. Official inflation figures remain above 280%. We restate that this economy needs genuine structural reforms not mascara
We restate that the solutions are simple, dollarize, float the ZW$, remove export surrender requirements, pay workers US$, restore pensions, deal with corruption, pursue fiscal consolidation. Fund social services. Above all attend to POLITICAL REFORMS & allow a free&fair election.
The gold coins were introduced on the 25 of July 2022 with multi-dimensional objectives, including clearing excess liquidity which was considered a factor behind the freefall of the local currency.
