As the public debate over the Bank of Ghana’s move to offload about 50% of its gold reserves intensifies, a former Wall Street Executive and a Fellow of CDD-Ghana, Dr. Hene Aku Kwapong, seems to be supporting the move of the Central Bank.
Dr. Hene Aku Kwapong says keeping enormous gold reserves may protect value in uncertain times, but it does not build a growing economy.
In an article to put the issues in a proper development-focused perspective, Dr. Kwapong argues that Ghana must be careful not to confuse financial safety gold offers with economic growth and development.
Gold Preserves Value, It Does Not Create Wealth
Central to the CDD-Ghana Fellow argument is that gold does not grow. Unlike businesses, factories, or farms, gold generates no income. It pays no interest, yields no dividends, and does not expand over time.
While productive assets reinvest profits and create jobs, gold largely sits idle. Over long periods, he notes, countries that invest in equities, human capital, and productive infrastructure build far more wealth than those that stockpile gold.
“Gold does not make you wealthy in the way productive assets do. Gold has no yield. It does not compound. It does not finance investment. Over long horizons, equities, human capital, and even well-managed sovereign bond portfolios dominate gold in wealth creation. Gold preserves value episodically. It does not grow it,” he explained.
An Expensive Insurance Policy
From his experience, keeping gold in large reserves is just an insurance policy, useful in times of crisis but costly to maintain if relied on too heavily. He says precious metal tends to hold value only during episodes of global stress.
Outside those moments, he adds that it contributes little to economic momentum.
For a developing country like Ghana that needs enormous resources to drive economic growth, keeping large quantities of gold comes with an opportunity cost. Tying up scarce national savings in a non-yielding asset means fewer resources for roads, schools, factories, and innovation.
In his view, excessive gold holdings represent opportunity cost, not strength.
“Countries that rely on gold as a central store of value are not choosing a growth strategy, they are choosing an insurance policy, often an expensive one,” he noted.
He added, “Tying up scarce national savings in a non-yielding metal is an opportunity cost, not a signal of strength.”
Gold Does Not Strengthen the Currency
Against the widely held assertion that gold provides a strong footing for currencies, Dr. Kwapong argues that large gold reserves do not automatically support a stronger currency. According to him, currencies gain strength from productivity, fiscal discipline, credible institutions, and efficient markets, not from metal locked in vaults.
Gold, he argues, does not raise output, improve governance, or deepen capital markets. As a result, it plays little role in determining long-term exchange rate stability.
The CDD-Ghana Fellow explained “Gold also does not meaningfully strengthen a currency. A currency’s value depends on credibility, productivity, fiscal capacity, and institutions. Holding more gold does not raise productivity, deepen capital markets, or improve governance. In practice, gold reserves are inert. They sit in vaults while the real economy operates elsewhere. For a developing economy, this matters a lot.”
Lessons from Advanced Economies
Critics of the Bank of Ghana’s decision often point to countries like the United States, Germany, and France, which hold substantial gold reserves.
Dr. Kwapong dismisses this comparison, explaining that these holdings are historical leftovers or relics from the Bretton Woods era, not the outcome of modern policy choices.
He is convinced that if those countries were building their reserve portfolios today, he insists, gold would occupy a far smaller share.
“The reality is that most advanced economies hold relatively modest shares of reserves in gold. The United States, Germany, France, and Italy are often cited as counter examples, but those stocks are historical artifacts of the Bretton Woods era, not the result of modern portfolio choice. If those countries were starting from scratch today, they would not choose that composition,” he emphasized.
The Bottomline
The former Wall Street Executive is reframing the conversation in the context of Ghana’s socio-economic development. He sees the development as a development issue rather than just improving Ghana’s image with significant gold reserves.
He is clear that the question is not whether gold has value, but whether it should dominate reserve strategy.
Dr. Kwapong is convinced that gold may provide comfort during uncertainty, but it cannot replace investment, productivity, and institutional strength. For long-term growth, he believes Ghana’s resources are better deployed in assets that actively support economic expansion rather than sitting quietly in storage.
