Gold beats tourism to become Tanzania’s leading foreign exchange earner

[Wacha1]

Credit: Alfred Zacharia @azacharia3 azacharia@tz.nationmedia.com -1

''Dar es Salaam. Gold is now Tanzania’s leading foreign exchange earner after overtaking tourism which has been hit by the Covid-19 global pandemic. A new report by the Bank of Tanzania (BoT) says that gold exports increased by 46.8 percent - to $2.5 billion - in the year to May, while tourism earnings slowed from $2.5 billion to $2.3 billion in the same period. The increase in gold exports was attributed to increases in both production volume and price. Last May, gold was sold at $1,531.37 per troy ounce, up from $1,257.35 in May last year, the BoT report states.

“The price of gold in the world market remained high, apparently due to weakening of prices of financial assets due to the outbreak of coronavirus,” the Monthly Economic Review for June reads in part. However, gold reached above $1,800 an ounce yesterday for the first time since 2011, with the precious metal benefiting from its ‘haven’ status as the coronavirus outbreak triggered fears on the global economy. Gold hit $1,800.86 an ounce around 0830GMT on the London Bullion Market, the highest level in 8.5 years.

A weakened US dollar also made the price in that country’s currency attractive to investors, AFP reported. “It is little surprise that the original safe haven is continuing its rally,” said Carlo Alberto De Casa, chief analyst at ActivTrades. “Investors are still buying stocks; but it seems they want to be covered in case of any market correction.” Neil Wilson, chief market analyst for Markets.com, said gold was winning support also thanks to fears of high inflation caused by central bank stimulus to prop up the global economy.

“The gold bull thesis rests not only on the requirement for safe assets - given the economic uncertainty - but also longer term on fears of a surge in inflation caused by the massive increase in the money supply,” he said in a clients note. Gold’s record-high stands at $1,921.18 an ounce. Tanzania’s gold Gold accounted for 55.7 percent of Tanzania’s non-traditional exports which amounted to $4.53 billion in the year to May, the BoT report states.

In May 2020 alone, gold exports earned $245.7 million compared with $160.1 million in May 2019. The country’s total exports value of goods and services amounted to $9.96 billion in the year to May 31, 2020 compared with $8.63 billion in the corresponding period in 2019. Gold prices rose because of uncertainty caused by Covid-19 and US-China trade tensions, which gave gold the reputation of a good hedge, the BoT said in its Monthly Review. Investors prefer gold as a safe haven when there are economic crises.

Other exports Traditional exports surged to $1,023.6 million in the year ending May 2020 from $535.1 million in the corresponding period in 2019, driven by exports of cashew nuts, cotton, cloves and sisal. The increase in exports of cashew nuts and sisal manifested in both volume and prices, while those of cotton and cloves rose on account of export volumes, owing to good weather conditions. Conversely, exports of coffee, tea and tobacco declined.''

Good news for Tanzanians who are directly involves in gold business. Tanzanians lives should improve and the natural resources should benefit the people not few individuals who are siting pretty somewhere else. Hongera kwa kazi iliyotukuka ya awamu ya 5, Hapa kazi tu!

... .... at the same time the economy is a bit slower compared to 2019.

''Tanzania's economy grew by 5.7 percent during the first quarter of 2020 - even as economists differed in projections following the outbreak of Covid-19. The growth is slower than the 6.3 percent recorded in the first three months of 2019, according to figures released by the National Bureau of Statistics (NBS).

The quarterly economic highlights report shows that the country's Gross Domestic Product (GDP) at constant prices stood at Sh31.6 trillion during the period from January to March 2020, up from Sh29.9 trillion in the corresponding period in 2019.'' ..... .... ... more

Tanzania's Economy Grows By 5.7 Per Cent in 2020 First Quarter

 

[Wacha1]

Ile dhahabu ambayo inapita Uganda lazima iangaliwe kwa macho mawili. Viongozi wa usalama wa Mwanza na Bukoba vipi?

 

[Wacha1]

Hivi ile kampuni iliyotaka kuuza Mwadui imeshapeleka maelezo kwa Waziri? Walipewa hadi tarehe 10 mwezi huu saa 10 jioni?

 

[Wacha1]

Gold price hits new high
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Credit: Rosemary Mirondo/AFP @mwaikama rmirondo@tz.nationmedia.com -1

Dar es Salaam. The government has expressed optimism after gold prices hit a new high in the world market. Gold struck a record high of $1,944.71 in Asian trading on Monday as traders piled into the “safe haven” investment, a status that is a product of the characteristics that have long made the metal useful in finance. The new price is well above its previous record of $1,921.18 per ounce in 2011.

It later pulled back somewhat. The rise of gold prices is even good news for Tanzania where the precious metal is now the leading foreign exchange earner. Gold exports overtaken that of tourism which has been hit by Covid-19. The Bank of Tanzania’s Monthly Economic Review for May 2020 indicates that gold exports increased by 46.8 percent to $2.5 billion in the year to May while tourism earnings slowed from $2.5 billion to $2.3 billion in the same period.

The increase in gold exports was attributed to increase in both production volume and price. In May, gold was sold at $1,531.37 per troy ounce, up from $1,257.35 recorded in similar month last year, the central bank report stated. Prospects are better following the increase of prices in the world market. Commenting the development, the commissioner for minerals Mr Zephania Maduhu said sine Tanzania is also part and parcel of the trend in the global prices, the price increase will boost the country’s revenues.

“We will benefit as a country in the value of gold charges that include royalties, service levies as well as the taxable income will also increase,” he said. Historical record The Egyptians were the first to mine gold somewhere around 3000 BC. The fairly balanced distribution of gold across the planet meant numerous civilisations used the metal in their societies, according to AFP reports.

If the metal was first used for its aesthetic qualities, from 700 BC it began to be used as money along with silver. Being rare, relatively easy to extract and work, as well as rustproof, gold was well suited for use as a medium of exchange. It maintained a central role in monetary systems for centuries. It was only less than 50 years ago that gold lost its role underpinning the international monetary system.

It was in 1971 that US President Richard Nixon abandoned the convertibility of the US dollar to gold which had underpinned the post-World War II international monetary system. ‘Lot of value’ If gold has lost that monetary role, that doesn’t mean it has lost a role as a means of storing value, particularly when other investments could be hit by recession or inflation. Carlo Alberto De Casa, an analyst at ActivTrades and an author of a book about the precious metal, said one advantage of gold is that “a lot of value can be stored in a small environment” due to rarity and price.

Production of gold has remained relatively stable over time compared with other raw materials. Take for example oil, where the OPEC oil cartel has used its ability to turn on and off the taps to support prices for decades. Between 2018 and 2019, gold production inched up around one percent, and only thanks to recycling did supply increase by a total of three percent. Another important feature is that “gold, in contrast to the greenback and other currencies, cannot be printed,” De Casa told AFP.

While central banks like the US Federal Reserve and the European Central Bank have not printed cash, they have done virtually the same thing by creating electronic money to buy assets such as government and corporate bonds. Over the past years, they have injected vast amounts of money into their economies in this manner to support growth. This flood of liquidity tends to lower the value of currencies, and the fact that interest to be earned on government bonds has fallen as central banks snap them up tends to sap demand from foreign investors.

But no interest Gold, in contrast to bonds, does not offer interest. And there are no dividends for investors, unlike when they place their money in stocks. So, during good times, the investment argument for gold may not glitter. But it is during times of crisis that it shines -- its value is completely disconnected from the real economy. The value of stocks may fall during recessions as the prospects for profits fall, and investors could lose everything if they hold onto shares in companies that go bankrupt. Inflation eats away at the value of bonds.

Investors thus seek gold out as a “safe haven” during times of economic crisis or volatility. While other precious metals such as silver and palladium also enjoy something of safe haven status, their use in industrial products means that during recessions their price tends to slide as demand from manufacturers slides. Analysts said fears about the future were driving the current rally in gold.

Swissquote Bank’s Ipek Ozkardeskaya said “capital continued pouring into the precious metal on the back of an uncertain appetite for risk and waning trust regarding the strength and the viability of gains in global equities.” While gold is appreciated by many investors, it does have its detractors. Prominent among them is legendary investor Warren Buffett, the “Sage of Omaha”, whose investment decisions are closely followed by many.

He most famously expounded on the metal in a 1998 speech when he said gold “gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again, and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.” Much before that economist John Maynard Keynes derided the gold standard as “a barbarous relic”. While gold may provide a safe haven of sorts, that safety is relative. Investments by speculators can increase short-term volatility and over the long term, a recovery in global growth will see investors sell off and the price fall. (Additional reporting by AFP)

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Gold is returning to its old days glory, the USD will seize to be a currency to depend.

 

[Wacha1]

1ounce is approximately 28.34grams


Gold hit $2,075.00 an ounce at stock exchanges around the world.