With economies globally being confronted with uncertainties related to the coronavirus pandemic and central banks introducing stimulus packages and cutting interest rates, gold-backed exchange traded funds (ETF) have seen seven consecutive months of positive flows as of June.
Instructively, this presents the government of Ghana the best window of opportunity to launch the Agyapa Royalty, since the global net inflows into Gold-Backed ETFs was US$39.5 billion in the first half of this year, according to the World Gold Council.
In view of this, Finance Minister, Ken Ofori-Atta in an update of the Agaypa Royalty transaction said, “It is time to reimagine our future. We all by now must be tired of being cheated by foreign companies and we constraining ourselves from the using the same vehicles that they use.”
“We have to maximize value by income that is due the republic from the mineral wealth that we have for the benefit of our citizen, which is the primary objective of the MIIF,” he added.
The net inflows for half year 2020 already exceed the record set for highest annual inflows set in 2016 of US$23 billion. In terms of tonnage, in just six months it beat the previous full year record of 646 tonnes in 2009 by almost 100 tonnes.
The demand has been so extraordinary such that inflows in the first half of 2020 significantly exceeded multi-decade record levels of net gold purchased by central banks in 2018 and 2019.
Available data indicates that the big three gold royalty companies —Wheaton Precious Metals, Franco-Nevada and Royal Gold— in the first quarter of 2020, collectively generated a remarkable US$402 million in positive free cash flow.
Rising investor appetite for gold is also being reflected in the fact that assets under management (AUM) in global gold-backed ETFs reached a new record high in April, according to World Gold Council (WGC) data.
“We need to acknowledged that those with access to capital are not limited to our public institutions. In most cases, the vast majority of those entities that are willing to pay premium for access to our resources exist beyond our borders and therefore we need to create structures that would allow us to access to those funds,” Mr. Ofori-Atta emphasized.
“If we don’t do that, we allow ourselves to be captives of the international companies that take our resources and simply market them to the same people we choose to ignore,” the minister further maintained.