BON to buy 600 kg of gold from local mines

The Bank of Namibia (BON) plans to acquire 600 kilograms of gold from local mines by the end of the last quarter of 2026 as part of a strategy to strengthen the country's foreign exchange reserves and improve its ability to respond to economic shocks.Speaking during an engagement with the parliamentary standing committee on economy, industry, public administration and planning on Tuesday, BON deputy governor Nicholas Mukasa said: "The first thing I want to state is that, regarding the acquisition of gold, our strategy from the outset was to acquire gold from the country's mines. We are currently in discussions with all the mines, and I am pleased to report that those discussions have been very positive”."We have agreed to determine how much gold will be produced, and we are currently purchasing around 2 000 ounces per month. In kilograms that is about 60 kilograms of gold per month."Mukasa described the initiative as the first phase of the central bank's gold acquisition programme."During this phase, our target is that by the end of the last quarter of 2026, we will have acquired 600 kilograms of gold."He said the planned holdings would account for about 3% of Namibia's foreign exchange reserves.Balancing exposure Mukasa said the central bank deliberately opted against holding a larger share of reserves in gold."You may ask why it is 3% and not higher. Firstly, we have looked at what other central banks have done regarding gold holdings. Secondly, we have conducted optimisation studies to determine the appropriate amount of gold to hold so that it makes sense for our economy and enables us to respond effectively during times of crisis."Mukasa said the bank's research found that an allocation of between 3% and 5% is optimal."The reason for this is that gold is actually quite a volatile asset. Before the previous crisis, gold had risen to around US$2 000, and then it fell back significantly. Therefore, when adding gold to your reserve assets, which are intended to help you respond during a crisis, you must take this volatility into account."He said the programme has the added advantage of supporting the domestic economy because the gold is being purchased locally.He also confirmed that Namibia's foreign reserves currently stand at N$58.8 billion and are expected to improve further by year-end.“After financing most of the obligations we anticipate between now and the end of the year, we expect to end the year in a much more comfortable position."Happy investorsMukasa also defended the importance of maintaining strong foreign exchange reserves."One of the first questions they ask is, 'What level of reserves does the country have?' The benchmark of around three months of import cover is an important indicator for them."It contributes to investor confidence, encouraging businesses to invest locally, which in turn can help create jobs, particularly for young Namibians."Moreover, he said adequate reserves are not optional. "If you look at the legislation governing the central bank, maintaining adequate reserves is a legal requirement."Mukasa said the central bank is yet to decide where the gold will be stored, with authorities still weighing the costs and benefits of storing the gold locally or abroad.“I believe that within the next few months we will be in a position to finalise all of these options and decide where the gold will ultimately be stored."nikanor@nmh-hub.com.na

BON to buy 600 kg of gold from local mines

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Namibian Sun 2026-06-04

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BON to buy 600 kg of gold from local mines

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Namibian Sun 2026-06-04

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