Build a war chest – Theo Acheampong makes case for leveraging gold to boost reserves
Economist and political risk specialist Dr Theo Acheampong says Ghana must seize the moment of historically high gold prices to strengthen its international reserves and protect the economy.
Speaking on Joy News’ PM Express on Monday, the Technical Advisor at the Ministry of Finance said gold continues to trade at record levels, presenting a rare opportunity.
“Of course, gold has been at historical all-time highs,” he said, explaining the government's
Reserve accumulation policy.
He said forecasts from major institutions suggest the favourable trend may persist.
“If you look at all the different forecasts that have been produced by some of the major investment banks, some of the major multilateral banks, and even internally within the Ministry itself, everything indicates that you’re likely to still have this tail right wind that you can actually leverage on for the next two to three years.”
For him, the critical question is how Ghana responds.
“So the idea really is that okay, what do you do to actually take advantage of the potential high prices that we have seen in relative historical terms, to build a buffer, or, as we put it, to build a war chest.”
He was clear that building reserves is not an end in itself.
“Now you’re building the war chest, not the reserves. Is not a means or an end in and of itself. It’s a means to an end.”
That end, he explained, is economic stability and job creation.
“The end really being that you’re able to support your currency, support your economy, and ultimately, translate that into jobs.”
Dr Acheampong said analysis conducted using Ghana’s data shows a measurable relationship between gold and the country’s external buffers.
“If you look at the data, and then I’ve been, we’ve been doing some sort of work right around this.”
He outlined the approach.
“So you can actually take the gold data, take our gross international reserves, take inflation, take exchange rate, and then do some sort of correlation and even causality right analysis.”
He added that the statistical link is significant.
“Just to be maybe a little technical and try to explain the relationship between gold and our gross international reserves, the correlation there is actually positive.”
“The coefficient is about 0.64.”
For him, the critical question is how Ghana responds.
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