‘Gold coins may be a safe haven for investors’

EARLIER this month, the Reserve Bank of Zimbabwe (RBZ), announced plans to introduce gold coins — Mosi-oa-Tunya coins — as a new investment instrument that will also serve as a store of value for investors.

According to the central bank, the 22 carats coins, with a weight of one troy ounce, will be available for the market this week.

The coin will have liquid asset status, that is, it will be capable of being easily converted to cash, and will be tradable locally and internationally. The coin may also be used for transactional purposes in addition to having prescribed asset status and institutional investors can use it to meet regulatory requirements for prescribed asset investments.

Analysts opine the Mosi-oaTunya coins have high potential as an inflation hedge especially since they can be purchased in local currency and will allow institutional and private investors to make a direct investment in gold bullion and hedge their portfolios against currency turbulence.

However, IH Securities maintain the coins are not within reach for the average retail investor given the current gold price is circa US$1,800.

Although gold has long been considered a durable store of value and a hedge against inflation, this will leave the average retail investor with the stock market as a preferred investment option.

“Over the long run, however, stocks have outperformed the price increase in gold, on average,” said the brokerage firm.

“The stock market is liquid and provides exposure to diverse economic sectors that the listed companies operate in. It also provides above-average asset returns in the medium to long term,” said IH Securities.

The stock broking firm maintains the stock market has outperformed gold during times of relative economic stability.

But last week, the equities faltered. Four of the benchmark indices closed in the negative.

The primary indicator — ZSE All Share Index fell 1,8 percent to close the week to Thursday at 15,809 points from 16,109 points.

The ZSE Top 10 Index went down 1,3 percent to 9,708 points while the ZSE Top 15 Index was 1,8 percent lower than prior week to close at 10,673 points.

At 31,712 points, the Medium Cap was 3,5 percent slower than the previous week. The Small Cap was, however, in the positive with a 4 percent increase.

The market was weighed by losses in Cafca which was the biggest laggard with a 15 percent decline to $221.

Afdis followed with a 14 percent decline to $332,95 as the spirits and wines maker reported volumes and earnings growth for the first quarter to June 30, 2022 on improved demand. Total volume growth of 18 percent was recorded while revenue went up 57 percent on increased product supply and outdoor activities as Covid-19 restrictions were relaxed.

The trio of FMP, Lafarge and OK Zimbabwe went down 12 percent each to $6,50, $125 and $25,36 respectively.

The market’s biggest counter by value — Delta eased 6 percent to $263,03 while Innscor was 8 percent slower to close the week at $297,42.

Further losses were offset by gains in Willdale and Natfoods which rose 27 percent to $2,23 and 11 percent to $1 800 respectively.

Clothing retailer- Edgars rose 19 percent to $7,10. The FtrMioLotifcAkerdt, 1D1paierricbeonrtdeaanchd to $20, $28 and $19,55 in that order.

On Thursday alone, three of the Exchange Traded Funds (ETFs) traded in the positive territory as only one declined.

MIZ led the risers amongst the ETFs on a 2,4 percent lift to $1,25, trailed by Datvest MCS that put on 0,24 percent to $1,69. The Old Mutual ETF ticked up a marginal 0,09 percent to $9. Cass Saddle snapped its five-day rising streak to record a 4,8 percent loss that took it to $1,40.

Elsewhere, on the VFEX market, Padenga notched up 0,17 percent to close at US30 cents while Seed Co International traded 679 shares at a stable price of US28,1 cents. A total of 1,958 shares worth US$576 exchanged hands in the two counters.