Amid the debate over Ghana’s Domestic Gold Purchase Programme, a fresh data-driven analysis by economist Dr. Theo Acheampong is providing what can be described as an evidence-based answer to the key question of whether Ghana is buying gold just because prices are rising, or is it sticking to a clear policy plan?
Many believe the rising gold prices, which is currently hovering around $4500 per ounce is the major reason Ghana’s export for the commodity is surging. It is therefore believed that these high gold prices are a major fuel for the illegal mining menace since the gold business is now more profitable than ever.
Goldbod has also been pointed at with accusing fingers for purchasing gold from illegal miners. Although this is believed to have increased Ghana’s gold exports and earnings, the company is accused of being complicit in the destruction of the environment.
To answer the question of whether gold prices are the driving force of the government’s agenda, using official Bank of Ghana data covering nearly three years, Dr. Acheampong’s findings suggest something important and reassuring.
He concludes that Ghana is not chasing gold prices. It is following a programme.
When Prices Rise, Reserves Rise — But Not for the Reason Many Think
Dr. Theo Acheampong’s econometric analysis reveals that at first glance, the numbers seem to support the idea that Ghana buys more gold when prices go up. Over time, gold prices and Ghana’s gold reserves have both increased, showing a strong connection.
He reveals that this can be misleading. Both prices and reserves have simply been trending upward over time. This does not mean price increases are driving sudden buying decisions. It just means Ghana has been steadily building reserves while global prices have also risen.
“There is a strong correlation (0.92) of gold prices and gold reserve holdings. Over the sample, higher gold prices coincide with higher total holdings. But this is largely because both series trend upward over time. In statistical/econometric terms, the strong positive “relationship” in levels is likely dominated by the shared time trend,” he noted.
Month to Month, Ghana Is Not Chasing Price Spikes
When the analysis zooms in on month-to-month movements, the story changes sharply. In months when gold prices jump, Ghana does not rush to buy more gold.
In fact, reserve accumulation often slows slightly during price spikes. This shows the country is not reacting impulsively to market excitement or short-term gains. Put simply, he observes that Ghana is not buying gold because the price looks attractive that month.
“The correlation becomes negative (-0.38) when monthly changes are accounted for. In simple terms, in the short run, months with rising prices tend to be associated with smaller increases in holdings and vice-versa. The explanatory power is modest, but the sign is consistently negative,” he observed.
Remove the Trend, and the Message Becomes Clearer
The economist goes a step further by stripping out long-term trends to focus only on unusual movements. He notes that the outcome paints a clearer picture. The rising prices and reserve accumulation in this case tend to move in the opposite direction.
This, he notes, shoots down the allegation that the government, through Goldbod, is being opportunistic with the high gold prices.
“𝗔𝗳𝘁𝗲𝗿 𝗿𝗲𝗺𝗼𝘃𝗶𝗻𝗴 𝗹𝗶𝗻𝗲𝗮𝗿 𝘁𝗶𝗺𝗲 𝘁𝗿𝗲𝗻𝗱𝘀 (𝗱𝗲𝘁𝗿𝗲𝗻𝗱𝗶𝗻𝗴): the correlation of detrended residuals drops sharply to -0.64. What this means is that relative to their own trends, price spikes do not coincide with “extra” accumulation of holdings; if anything, deviations move in opposite directions,” he explained.
Policy, Not Prices, Drives Ghana’s Gold Strategy
From his analysis, it could be deduced that short-term gold price changes do not meaningfully explain how much gold Ghana adds to its reserves.
For him, the country’s accumulation of reserves is controlled by policy decisions and not market developments, in this case, the high prices.
Over the long run, higher gold prices naturally increase the value of reserves. That is normal and unavoidable. But the actual act of buying gold follows a steady programme, not price-driven reactions.
The Bottomline
Dr. Theo Acheampong concludes that the available BoG data does not support what he describes as a pro-cyclical or price-driven accumulation narrative. The various analyses, he says, show a negative relationship, suggesting that reserve holdings growth is more driven by programmes and policies.
“In my view, it is a good thing that gold reserve accumulation is programme-driven and smooth, rather than reacting mechanically/opportunistically to monthly price swings. This has been the case since 2023. Thus, for a Domestic Gold Purchase Programme (DGPP) whose primary objective is to support the cedi, such a smooth programme-driven accumulation path is generally desirable. It is consistent with the Bank of Ghana’s stated intent to use domestic gold purchases to augment FX reserves, diversify the reserves portfolio, and foster confidence in the Ghanaian economy,” he insisted.
