Uganda Presents Purchase Plan to Return to the Gold Standard
Tue July 16 2024
Uganda is aiming to return to the gold standard at some extent with a purchase proposal that seeks to amass more gold to back its fiat currency, the Ugandan shilling. The Central Bank of Uganda will purchase gold from artisanal miners to support their activities and reduce raw gold imports.
Uganda Eyes Gold Standard Backing for Its Currency
Uganda is moving to back up its currency with gold. Last week, the government announced a plan to amass gold to rebuild its precious metal reserves and lower its reserve investment risk. The Central Bank of Uganda, which currently holds no gold in its reserves, will purchase this gold from artisanal miners, seeking to achieve two objectives: to support the Ugandans that carry this activity in the country and reduce the raw imports of bullion.
In a recent report titled “State of the Economy,” the Ugandan Central Bank declares it expects this program to have “positive spill-over effects on other sectors of the economy in line with the Bank’s mission to support socio-economic transformation.”
The country has been hit by a capital flight prompted by the enactment of specific regulations targeting LGBTQ rights that caused the World Bank to stop aiding the country last August. Uganda has refineries but doesn’t have a relevant mining industry, even when it claimed to have found 31 million metric tons of gold in 2022.
Uganda is the last of a series of African countries that want to turn to gold to back the value of their fiat currencies, or to create new backed currencies. This is the case of Zimbabwe, which launched a gold-backed “structured currency” called Zimbabwe Gold (ZIG) in April. Ghana has also acted in this regard, asking big gold miners to sell 20% of their production directly to the central bank.
Gold has been in high demand from central banks and retail investors lately, and several predictions vaticinate that its price might reach record levels in the future, going from $27,000 to even 40,000 per ounce.
Source: https://news.bitcoin.com/