June 24, (THEWILL) – Council Predicts Brighter Future For Gold • Developed Countries’ Central Banks to Stock Gold Amid Macroeconomic Uncertainty
President Bola Tinubu administration’s mining sector reform through the National Gold Purchase Programme has hit a goldmine as it met the London Bullion Market Association Delivery Standard, LBMADS, and added $5million to the foreign reserves following the first commercial sale of the mineral over the weekend.
The programme which has also enabled the local refinement of over 70 Kilograms of gold for the London Bullion Market Gold Delivery Standard and the future sale of refined gold to the Central Bank of Nigeria, CBN to bolster the apex bank’s foreign reserve and boost the value of the Naira, was a major cause for celebration at the presidential villa, Abuja, yesterday, when Minister of Solid Minerals Development, Dr. Dele Alake broke the news to President Tinubu and presented him with some gold bars and the LBMDS certificate.
THEWILL recalls that until the coming of government’s sector reform, mineral mining in the country, particularly gold, has been an all-comers affair as shown by the arrests of illegal miners of Chinese origin by the Economic and Financial Crimes Commission, EFCC, and the National Security and Civil Defence Corps, NSDC, between July 2023 through February, April and May 2024 in Kwara, Zamfara, Oyo, Niger, Akwa Ibom and Nasarawa States. Dr Alake had to back the reform with the deployment of Special Marshals to monitor and prevent activities of illegal miners in major mining sites in the country.
For a sector that contributed less than one percent to the country’s GDP due to illegal mining, the reform appears to be yielding the desired result for a turn- around of the economy.
According to THEWILL checks, this development is a major achievement coming on the heels of plans by more central banks of developed countries to add to their gold reserves within a year, due to ongoing macroeconomic and political uncertainty despite high prices for the precious metal, the World Gold Council (WGC) said in its annual survey published on June 18, 2024.
According to the survey, demand for gold from central banks in developed economies has been elevated in the last two years as some countries diversify their foreign currency reserves. Their demand contributed to the gold price rally in March-May with the spot price hitting a record high of $2,449.89 per ounce on May 20, 2024.
“Despite record demand from the official sector in the last two years, coupled with climbing gold prices, many reserve managers still maintain their enthusiasm for gold,” Shaokai Fan, WGC head of central banks sector, said in a statement.
The survey, which was conducted in February-April and included a total of 69 responses, showed that 29% of central banks expected their own gold reserves to increase in the next 12 months.
This is the highest level since the WGC, an industry body whose members are global gold miners, began the survey in 2018 and compares with 24% in 2023.
The WGC said 81% of respondents expected global central bank gold reserves to increase over the next 12 months compared with 71% a year ago.
Commending President Bola Ahmed Tinubu for supporting reforms in the solid minerals sector and assuring that the National Gold Purchase programme will increase the country’s reserve and boost the naira’s value, Dr Alake said the latest gold bar was sourced from artisanal and small gold miners and refined by an agency of the Ministry, the Solid Minerals Development Fund, to meet the London Bullion Market Association Good Delivery Standard over the weekend,
Alake said the refined gold would be sold to the Central Bank of Nigeria to bolster foreign reserves.
Explaining to President Tinubu the significance of the event, Alake said it marked the first commercial transaction under the National Gold Purchase Programme (NGPP), the centralised offtake scheme supported by a decentralised aggregation and production network of artisanal and small-scale miners and cooperatives.
He said: “The successful completion of the first commercial transaction clearly demonstrates the National Gold Purchase Programme’s effectiveness. It has increased the nation’s foreign reserves assets and shown that using the Nigerian Naira to purchase a liquid asset traded in United States Dollars, such as gold, is a viable strategy. This transaction has also underscored the potential of the National Gold Purchase Program to enhance fiscal and monetary stability.”
Alake said the first commercial transaction has delivered +US$5 million increase in Nigeria’s foreign reserves assets, 70+ kilograms of gold refined to the London Bullion Market Good Delivery Standard and successful aggregation of locally mined gold thereby injecting about NGN6 billion into the rural economy.
Receiving and displaying a symbolic bar, President Tinubu commended the Ministry for achieving a major milestone in the administration’s drive to diversify the economy.
“This is another concrete step towards the diversification process under the Renewed Hope Agenda” the President said.
In her presentation, the Executive Secretary of the Solid Minerals Development Fund, Fatimah Shinkafi said the London Bullion Market Good Delivery Standard is the globally recognised stringent and trusted standard that enables the global trade in gold and silver bars.
“Only gold and silver bars that meet our Good Delivery standards are acceptable in the settlement of a Loco London contract – where the bullion traded is physically held in London” she said.
Shinkafi said, through the efforts of the National Gold Purchase Program under the Ministry of Solid Minerals Development, Nigeria has joined a select group of countries bolstering their gold reserves by purchasing gold in local currency to foster economic confidence, enhance currency stability, and create a more attractive environment for foreign investment.
