A Senior Finance Lecturer at the University of Ghana Business School (UGBS), Prof. Elikplimi Agbloyor, has raised doubts over the appropriateness of the timing of the Ghana Gold Coin (GGC).
Prof. Agbloyor believes that the current investor psychology in matters of buying gold as an investment is not suitable in the country and can affect the acceptance of the Ghana Gold Coin.
This deteriorated investor psychology, the Finance Professor maintain emanates from the bad experiences that people have had with Nana Appiah Mensah – NAM 1’s Menzgold.
According to the UGBS Finance Lecturer, many investors have not recovered from the losses, shocks, and trauma they experienced when they purchased gold from Menzgold as a form of investment.
While he admits such investments were ill-informed at the time, he posited that the Ghana Gold Coin introduced by the Bank of Ghana (BoG) may suffer the repercussions of the impact of the fallout of Menzgold.
“I’m not sure it is the best time given what we call investor psychology. A lot of investors bought “gold” from NAM 1’s company and most of them lost their money. Those were ill-advised investments anyway but people may not understand the difference between what they invested in terms of buying “gold” from NAM1 and this introduced by the Bank of Ghana.”
“So, I’m not sure this is the best time to introduce gold because investor psychology may not be receptive at this time,” Prof. Agbloyor remarked, in an interview monitored by The High Street Journal.
The UGBS Professor further suggested that an exchange-traded fund (ETF) would have been a better option than the one introduced by the BoG.
ETF is an investment vehicle that allows investors to indirectly invest in gold without holding physical gold. Instead, the ETF tracks the price of gold, as its value fluctuates with gold’s market price. Industry players assert that the ETF is a convenient and cost-effective way for investors to gain exposure to gold as a financial asset while avoiding the storage and security issues associated with physical gold ownership.
With this advantage of the ETF, Prof. Agbloyor believed the central bank could have saved the investors from the burden of storing gold and its associated possible loss and theft.
“I would have probably done an ETF rather than physical gold. ETF is a security that is based on gold that provides many advantages like liquidity that this coin will provide. One of the disadvantages of owning this coin is that even though you can still store it or keep it with the bank, there is a risk of loss,” he maintained.
The BoG has introduced the Ghana Gold Coin, a new investment option aimed at diversifying the country’s financial instruments and absorbing excess market liquidity.
The gold coins were made available from Monday, November 26, 2024. The coins come in three denominations—1.00 ounce (oz), 0.50 oz, and 0.25 oz, priced at GH₵45,020.48, GH₵22,409.74, and GH₵11,188.12, respectively.
The gold coins are expected to also reduce the pressure on the demand for the dollar and stem the depreciation of the cedi.
Moreover, it is anticipated the coin will mop up excess capital in the economy in an attempt to beat inflationary pressures.
