Record High Gold Price May Boost Cedi Stability & Gov’t Revenue, But Tabs Must Be Kept on Galamsey

Gold price on the international market is hitting a record high, driven by global economic uncertainty, representing a good omen for Ghana’s cedi and its foreign exchange earnings to buoy revenue.

The price of the precious metal climbed past $3.500 per ounce on Tuesday, with both COMEX futures and spot market hitting very high levels. Analysts explain the development is partly as a result of the upcoming Federal Reserve rate cut and weakening U.S. dollar.

Investors are seeking a safe haven, hence the resort to gold, pushing the price to record highs.

Ghana, a major exporter of gold in the world, cannot sit on the fence following this development. The boost in price offers Ghana a lucrative chance to boost foreign exchange reserves and national revenues. However, it is also a two-edged sword, posing another challenge.

A Surging Gold Price Enhances Gov’t Revenue & Strengthens Cedi

The timing of the gold surge is very significant for Ghana. With the cedi experiencing relative stability, this gold price boom is expected to enhance the strength of the cedi. This will continue to mitigate the downside of import costs, allowing the country to realize higher returns in local currency terms.

The price surge also enhances revenue generation potential from formal mining exports and supports efforts to shore up Ghana’s external reserves. Already, the establishment of the Ghana Gold Board has boosted the earnings of the country from gold exports. With this price surge, the government could be happier for a major revenue boost.

Possible Galamsey Resurgence Amid Rising Gold Values

But all is not rosy with the rise in gold price, especially with the existence of the illegal mining menace. The rising value of gold could trigger a spike in galamsey and deepen the devastating impact of the menace on the environment and sustainable development.

As gold hits new peaks, it presents an opportunity for greedy and opportunistic individuals to flock to unlicensed mining lured by the quick returns, despite its environmental destruction and health hazards

The not-so-fruitful fight against illegal mining continues to degrade farmlands, poison waterways, and undermine legal producers. It could be highly expected that the rising prices of the precious mineral could increase the surge in the illegal mining activities.

What Ghana Must Do Before the Gold Rush Recedes

As economists say, “whatever rises must fall”, it must be anticipated that the record high gold price will not stay high in perpetuity. While the current price boom opens a window for revenue windfall, it’s unlikely to last indefinitely.

This means the government must position itself to transform this temporary surge into sustainable progress.

Among a number of actions, analysts say Ghana must consolidate the gains by enhancing its revenue performance. GoldBod and its task force must be strengthened to plug any loopholes in the gold value chains.

It should be anticipated that a rise in gold prices could trigger illicit trade and smuggling. GoldBod must enhance its surveillance and curb any illegal activities.

There is also the need to accelerate local value addition. While gold is highly profitable, the government can fast-track infrastructure to increase the refining of the gold to enhance its value.

What It Means for the Everyday Ghanaian

For the general economy, this gold boom could mean stronger state revenues. It is expected that the high revenues will translate into better public services if managed wisely. But unchecked galamsey threatens vital resources: rivers, farmland, and livelihoods are at stake. Farmers lose ground to mining operations; families lose access to clean water and fertile land

If properly handled, today’s gold boom could become tomorrow’s sustainable prosperity. But only if Ghana acts decisively, beyond celebrating record prices.

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