by Ray Ndlovu and Okech Francis
BNN Bloomberg
(Bloomberg) — African nations are rushing to build their gold reserves to hedge against geopolitical tensions that have battered their currencies and fanned inflation.
Nations from South Sudan, Zimbabwe and Nigeria have either taken steps to shore up their holdings or are considering doing so. The move follows that of central banks in places such as China and India that have accumulated gold to diversify reserves and reduce dependency on the US dollar. About 20 central banks are expected to stock up in the coming year, according to a World Gold Council survey.
“As a diversification strategy, that makes some sense,” said Charlie Robertson, head of macro strategy at FIM Partners. “While gold does not pay interest, unlike reserves held in US treasuries, this hasn’t mattered because the gold price has risen so much. It’s been a profitable trade.” The price of bullion has rallied 16% this year to $2,396.59 an ounce on Monday.