Bloomberg Audio Studios, podcasts, radio news. Gold continues its upward climb, heading close to three thousand dollars per ounce, with many analysts thinking the only way is.
Up tarif escalation by gold, their fizz by gold, cheer politics by gold.
We also like having gold as a position in the alternative space.
With Africa responsible for around twenty five percent of the world's total gold, will the continent start to see the benefits of the staring price.
What we've got to do in the morning industry is catch up with the price of gold.
We're a long term player.
We invest heavily in growth, organic growth. We are pointing to a thirty percent increase in production.
On today's podcast, we'll look at the impact the price of gold is having on the continent and why Zimbabwe's gold linked currency is just not able to keep up. I'm Jennifer Zabasanja and this is the Next Africa Podcast, bringing you one story each week from the continent, driving the future of global growth with the context only Bloomberg can provide. Later on, we'll hear from Mark Bristow. He's the CEO of Barrett Gold, Africa's biggest gold producer, but
first to talk all things ZIG and Zimbabwe. I'm joined by Bloomberg's Ray and Lovu, who is in Bulawio and joining us back on the show. Ray, always great to get you on the show. Thanks so much for joining us. Can you first explain how Zimbabwe's currency, the ZIG, which we've talked about on the show before, is supposed to be linked to gold. This was meant to stop currency inflation, right. Has it actually panned out that way?
It's really been a mixed bag in terms of its performance, particularly the fact that that was the key selling point that it's gold bagged. The idea of being gold bagged really is, as the central Bank has put it, gold is the main primary resource that's used to support and anchor the currency, including other precious minerals like diamonds and also cash foreign currency that's held by the central bank. So that's really the essence of it being gold backed
in that sense. But I think in terms of the expectation that it would and the crisis that has been a common feature in Zimbabwe for the last few years, which we've seen with previous currencies, that really hasn't taken off as expected. So I think, you know, on the ground, a lot of people are beginning to question that actual claim. You know, that it's gold backed, but yet the currency has lost value and the currency has been unable to
arrest inflation. In fact, they've been in the last quarter of the year, you know, sharp rise in inflation and pressures almost you know, inflation effect going back to double djil. So that already has really spilt a lot of doubt in the minds of ordinary citizens and also you know, among the business community about the claims of the currency being gold backed.
Yeah, and ry happening at the same time, we've been watching over the past few days just gold continue to hit new records. If you take a look at you know, a chart on the terminal, it's close to topping three thousand. So you're saying the ZIG has not been able to get to those records in this similar way that we're seeing gold performing right now.
Yeah, I mean, like you're pointing out. I looked as well at the charts for perspective, when the ZIG was launched on April five, up to date, it's lost about ninety five percent of its value against the US dollar. In the same period of time from April five up to date, you know, gold has risen some twenty four percent, so there's been no correlation between the movement of the gold price and the rally that we're seeing in the
markets and essentially the performance of the currency. In fact, in September last year, we saw the Zig being devalued by forty three percent by authorities in an attempt to try and stabilize it because you know, it was really losing value. So I think that disconnected has been clear that there are other factors that move this marveling currency,
and essentially it's not gold. And what we've seen is that the irony has been that gold back currency, which is the Zig, you know, is missing out on this gold rarely. So there are other factors which really are affecting the exchange rate and affecting the currency beyond just the gold price.
What are those other factors ray.
So one of the things that we've in our conversations with investors and market managers in the country has been money supply. They point out to a very tight liquid discrease in the economy right now, the economy since the devaluation of the currency last septem the central bank it's benchmark interest rate to thirty five percent from twenty percent to deal with excessive liquidity in the market, and that really creamed money supply in the economy, so there's generally
a very very thin volumes of zek liquidity. We've seen really the business environment becoming very very difficult because companies are struggling bying large to conduct commerce in light of very stringent liquidity circumstances. So the consensus really then has been that money supply is what drives the exchange rate in Zimbabwe.
Is there anything that the officials that you speak to ray the central Bank, the finance minister, is there anything that they can do at this point then to reassure investors because this should be a correlation, right, you know what what can they do now?
I think the position from both central bank and treasury officials that we speak to is that they are keen to maintain this type monetary policy stance and the tight fiscal policy position at the moment. There's no indication at all of easing of conditions. I think the fear definitely that they have is there will be a run on the exchange rate, the currency will depreciate, that will fan inflation.
So it's almost you know, a situation where they are just keeping everything on hold, and you know, even if it's at the expense of the economy and commercial activity and so forth. You know, the end game and in their view, the greater good is that the is stability that's been experienced in the markets. There's no volatility, there's no shop spike in inflation, the things which many wings
for years they've grappled with. So companies now really need to begin to relook and rethink, you know, in terms of their workforce, in terms of pay issues, because you know, this tight position is going to remain.
And they're still sticking by the ZIG as far as you know.
Yeah, the ZIG definitely has not been abandoned by authorities. It remains in circulation and remains supported by authorities. What obviously remains in doubt is at least its existing side by side with the US dollar because naturally the preference has always been to use dollars by and large. The message and communications, that's acceptance on none. You know, the ZIG is here to stay.
Thanks so much. Ray, that's our Bloomberg reporter Ray in Lovo, who is in Bulawayo in Zimbabwe, and stick with us when we come back. Well, hear from one company that's bullish about the benefit for Africa of a high gold price. Part of my interview with Barrett Gold CEO Mark Bristow is after the break, we'll be right back. Welcome back. Today. We're talking all things gold as global trade wars seem to be helping push the commodity up closer and closer
towards the three thousand dollars mark. South Africa's annual mining conference, Mining in Daba, was held along the backdrop of this gold rally. I spoke with Mark Bristow, the CEO of Barrett Gold, the largest gold producer in Africa, and I asked him about the state of the gold mining industry in Africa. But first I wanted to know how high he thought gold could go.
Everyone's trying very hard to push the gold pros up. What we're seeing as a continuation of d dollarisation fueled by the actions coming out of Washington.
And on top of.
That, you know, we've got challenges in the UK. Europe is not in good place, with the French and the Germans, you know, the leaders of the Free World all in the crossis and of course Middle East and conflicts in every continent so gold price has got a lot of upside. Still, I always say the risk is the upside, and it's very much intact that trend.
How much further do you think it has to go? Because some people believe potentially we've peaked.
You know, everyone has been saying that you've seen in the equities have been softer than the actual bullion press over twenty twenty four. But I don't think so. And certainly, I mean there's a lot of reason why the gold parcus shouldn't go down if you try and look at what it's going to take for us to get back to normality in the global economy today.
It's not an easy task.
And I think we've seen damage to the US dollar as a reputational currency and gold has taken that place normalized.
What does that mean for Barrack's assets then, and especially on the African cors.
All the assets are very valuable, whatever assets you've got, particularly if you're in gold and copper today.
To exit any of the operation definitely not okay.
No, we constantly look at our call as sets because I'm very focused on high quality tier one assets and so there's there's a tie and there's a market for those non core assets. But we're you know we've been. We're a long term player. We invest heavily in growth, organic growth. We we are pointing to a thirty percent increase in production by the end of this decade, organic.
Growth at all of your operations.
Across the group and that and that's going to happen without any issuing of shares.
In fact, we're buying back shares.
So when are you going to start buying back shares?
We have already started.
Do you plan to continue doing that?
That abolutely certainly where the chap Rus is sitting at the moment, one of the best investments we can make is buy back our own share.
What do you think where do you think the share price then has to go?
I think the shap well it's.
Going to go up, okay, yes, But then what is your calls then for that?
You know that's the market will judge that. And at the end of the day, what we've got and we're about to bring out our twenty twenty four results. We have one of the strongest balance sheets in the industry.
We were able to buy back our shares and re investing all the time in new opportunities and more importantly, we're about to build out two really big mining projects, the expansion in Zambia, doubling production and then the big gold and copper asset in Pakistan, which is one of the biggest gold and copper minds that haven't been developed yet in the world.
And Mark, I also want to talk to you about another one of your operations that's in Mali. There's been a lot of focus on what's happening the discussions between the Mali and government and also Barrick where what is the next shoot to drop? Where are we at right now in negotiations.
You know, Jennifer, it's been a very sad time for me.
You know, I've been in Mali since it was really re established as a democracy, and we said, I've worked with any many all the governments since nineteen ninety two, and I think we've Mini's got itself in a position where, you know, it's really try to shake out some short term cash out of the industry, and this industry is the very foundation of its economy, and I think we need to and so communication, to your point, is really important.
We are in communication.
We are working every and were making progress, not as fast as I would expected but I'm sure everyone's a little cautious, because that's what happens when you get on the wrong side of everyone.
We haven't agreed to a number to paying back.
Any of what, we haven't reached an agreement on anything yet, but we are making progress and I think that's the that's the positive.
And that was Barrett Gold CEO Mark Bristow speaking with us at mining in Daba. And thanks so much to Mark, and also Bloomberg's Rate and Lovu for joining us on today's podcast. And don't forget you can read all of our coverage on gold and all commodities, including rays reporting across Bloomberg platforms. Now here's some of the other stories
we've been following across the region this week. Namibia's central bank chief has warned that escalating tensions between the US and South Africa could destabilize its economy, citing the close ties it has with the two nations and the vulnerability of the Namibian dollar, which is pegged to the rand.
President Donald Trump, in a February seventh executive order, froze all usaid to South Africa over what he falsely claimed were rights violations stemming from a new land expropriation law and for South Africa's case in the International Court of Justice alleging Israel's assault in the Gaza Strip was an
act of genocide. And Ghana's Special Prosecutor has declared former Finance Minister ken Oforiata a wanted person after he failed to meet with authorities to answer questions over alleged wrongdoing. Ofori Ata, who held the position for seven years from twenty seventeen, was replaced as minister last February by former President Nana Akufu Adu. And you can follow these stories across Bloomberg, including the Next African Newsletter. We'll put a link to that in the show notes. This program was
produced by Adrian Bradley. Don't forget to follow and review this show wherever you usually get your podcasts. I'm Jennifer Zabasoja. Thanks as always for listening. We'll see you next time.