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Gold as an investment asset: Gold Board panacea to socio-economic dilemmas
By Constance GBEDZO
Gold has long served as a reliable store of value and a hedge against economic uncertainty. Gold has been utilized to create ornate jewelry and decorative items, thus representing wealth and status across various cultures.
Also, ancient civilizations crafted intricate gold artifacts for religious, ceremonial, and aesthetic purposes. Gold has also been used in dentistry for fillings, crowns, and bridges due to its durability.
This intrinsic value of Gold as treasurable mineral has made the extraction of gold from the bowels of the earth an imperative economic venture. Gold has maintained its allure and has played a crucial role in shaping economies and societies.
As one of the world’s leading gold producers, Ghana is uniquely positioned to harness this national asset to support financial market development, promote wealth creation, and enhance economic resilience.
To fully realize these benefits, Ghana has undertaken significant reforms in its gold sector.Central to these efforts is the establishment of the Ghana Gold Board (GoldBod), a state entity tasked with transforming the exploitation, trade, and regulation of the nation’s most valuable natural resource.In a landmark move, GoldBod has secured agreements with nine large-scale mining companies to purchase 20% of their gold output, aiming to bolster the country’s gold reserves and stabilize the Ghanaian cedi.
These initiatives have already yielded tangible results.In April 2025, Ghana recorded a historic milestone with gold exports reaching nearly $900 million, the highest monthly value in over two years.Additionally, the Bank of Ghana’s Domestic Gold Purchase Program has accumulated over $5 billion worth of gold reserves to enhance the nation’s foreign exchange holdings.
To further capitalize on its mineral wealth, Ghana is also focusing on value addition. The commissioning of the Royal Gold Ghana Ltd refinery, a joint venture between the Precious Minerals Marketing Company and Rosy Royal Ltd, marks a significant step towards refining gold locally, thereby retaining more value within the country and creating employment opportunities.
These strategic reforms underscore Ghana’s commitment to maximizing the benefits of its gold resources through various investment avenues.
The development of a robust regulatory framework being spearheaded by the GoldBod, is pivotal in ensuring the sustainability and growth of the country’s gold investment market. The Gold Board has the potential to enhance gold output, foreign exchange inflows, stabilise the cedi and correct the balance of payments and fiscal deficit.
Thus far, the rhetorics around the GoldBod has been encouraging. Particularly intriguing is the fact that the processes leading to its creation are being led by a versatile young Chief Executive Officer, Mr. Sammy Gyamfi (ESQ) who has deployed his expertise in law and youthful exuberance to ensure successful GoldBod programme.
Gold is an important reserve asset with significant strategic role in economic development. Gold has transformed itself from just a precious metal and ornament to a store of value, a symbol of wealth and medium of exchange. Globally, individuals and households continue to invest in gold as the mineral is regarded as appreciating investment that creates and preserves wealth.
Nonetheless, in recent years, gold-traded investments have gained traction globally as investors seek diversification, liquidity, and security. Gold’s inherent value and rarity makes it a safeguard against inflation and possible devaluation of the cedi. The future performance of gold as an investment, therefore, is highly anticipated, in view of the geopolitical uncertainties and with growing demand from emerging markets.
Ghana can take advantage of the several financial instruments embedded in Gold to attain macro-economic stability. For example, the Bank of Ghana initiated this measure when they introduced an alternate gold-based investment schemes, dubbed, ‘the Ghana Gold Coin’, under the Domestic Gold Purchase Program (DGPP) in 2021. Unfortunately, this product together with other Gold based investment assets including investments into equities and mutual funds were not aggressively promoted as asset classes that have the potential to provide better returns than the traditional investments like bank deposits, treasury bills and bonds.
Adding Gold Exchange Traded Funds (gold ETFs) or gold-based mutual funds or Sovereign Gold bonds or physical gold to the known investment portfolios can help mitigate risks and offer economic stability in the long run.
Gold Exchange Traded Fund (Gold ETF) aims to capture the investor interest across as a viable alternative to investments in physical gold. It is dependent on company performance, dividend potential, global gold price trends, and exposure to Ghana’s production dynamics.
Sovereign Gold bonds are issued at values denominated in grams of gold based. The tenure of the bond may be 8 years, and the bonds may be listed in the stock exchanges. The investor is possibly provided with an option to exit the scheme on completion of 4 years of holding period. The bonds may also offer interest at a percentage rate per annum payable semi-annually.
Commodity derivatives in gold: Commodity derivatives in gold comprise of derivative products like futures and options that are priced based on the underlying product gold. They are used by the industry to hedge and others to speculate.
Equity/Debt Products can be private equity/joint ventures which involves direct investment in mining projects, offering potentially higher yields but also higher risks; necessitates thorough local due diligence or Gold-Backed Instruments: Structured products that use gold as collateral; risk and return profile is influenced by both gold value and financial structuring.
Considering the various uses of gold, it is evident that its value transcends time, making it a versatile and enduring investment choice. Ghana can take advantage of gold as financial instruments to attain macro-economic stability.
Financial institutions in Ghana should also take advantage of the opportunity under the GoldBoD arrangement to design gold base investment instruments.
Indeed, the Security and Exchange Commission (SEC), in collaboration with the Central Bank of Ghana and the Private Sector Financial Institutions must take the advantage of the opportunities being created by the Ghana Gold Board to design financial assets for private sector individuals and institutional investors.
The writer is a Corporate Governance & Enterprise Development
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