Yet another country wants gold.
On Monday (Sept. 25), the Bank of Tanzania (BoT) announced it is buying gold from domestic sources to establish its own reserves.
Tanzania Minister for Finance Dr. Mwigulu Nchemba announced plans to establish a national gold reserve during the 2023–24 budget presentation.
“The bank is therefore purchasing gold from domestic miners and traders, in Tanzanian shillings,” according to a statement released by the Bank of Tanzania (BoT).
Last week, BoT Governor Emmanuel Tutuba said the central bank plans to buy 6 tons of gold from small, mid-scale, and large miners in the country. To date, the central bank has purchased 418kg of gold.
Tutuba said gold purchases would help diversify the country’s foreign exchange reserve and reduce reliance on a single currency.
That single currency is the US dollar.
According to Zawya.com, “Tanzania just like other economies, has been adversely affected by a decision by America’s Federal Reserve to embark on aggressive rate hikes as a measure to fight domestic inflation in the US economy.”
The Tanzania shilling recently hit an all-time low against the dollar.
Tutuba said diversification would help safeguard Tanzania’s wealth against currency devaluation or economic stability caused by global shocks.
“Now for the first time, we have both a gold and dollar reserve. Previously, we only had the US dollar as a foreign exchange reserve,” he said.
According to GlobalData, Tanzania ranked as the world’s 22nd-largest producer of gold in 2022. The country accounts for about 1% of total global gold production. In 2022, the country produced about 60 tons of gold.
The Bank of Tanzania is one of many central banks that are turning to gold to diversify their reserves and minimize dependence on the dollar.
Even with Turkey’s initiating large gold sales earlier this year, net central bank gold purchases totaled 387 tons through the first half of 2023. That was the highest first-half total since the World Gold Council started compiling quarterly data in 2000. This continued the trend of increasing gold reserves we saw last year.
Total central bank gold buying in 2022 came in at 1,136 tons. It was the highest level of net purchases on record dating back to 1950, including since the suspension of dollar convertibility into gold in 1971. It was the 13th straight year of net central bank gold purchases.
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