Zimbabwe To Trade Diamonds For Gold As It Prepares To Launch Gold-Backed Currency

Tyler Durden's picture

A week ago we presented the idea floated by once hyperinflationary Zimbabwe, oddly jeered by most, that the country is seeking to move to a gold-backed currency, adding, somewhat surrealistically, that the "days of the US dollar as the world's reserve currency are numbered." And if anyone should know a hyperinflationary basket case, it's Zimbabwe. Well, today this bizarre story just went fuller retard, after the country announced that it may exchange diamonds for gold "so that it can have a gold-backed currency, according to a recent proposal from the governor of Zimbabwe’s central bank." Indeed we speculated previously why: "Zimbabwe, a country rich in natural resources, took so long to figure out that it was nothing but a puppet in the hands of western monetary interests." Well, others are now getting this idea - Commodity Online reports that "The country is a resource hub: It sits on gold reserves worth trillions. It has the world’s second largest reserves of platinum, has got alluvial diamonds that can fetch the nation $2 billion annually and even boasts of chrome and coal deposits." And since Zimbabwe is now fully on board this whole "pioneering" thing perhaps it should just go ahead and create the first diamond-platinum backed currency. Just don't give China and Russia ideas about floating a new reserve currency that actually has real commodity backing. What's that, you say? They are launching one soon? Oh well.

From Commodity Online:

The Zimbabwean dollar is no longer in active use after it was officially suspended by the government due to hyperinflation. The United States dollar, South African rand, Botswanan pula, Pound sterling, and Euro are now used instead. The US dollar has been adopted as the official currency for all government transactions with the new power-sharing regime, says Wikipedia.

But the central bank of Zimbabwe—Reserve Bank of Zimbabwe (RBZ)—believes that the US dollar is no longer stable.

According to Dr Gideon Gono, RBZ Chief, the inflationary effects of United States’ deficit financing of its budget may impact foreign countries and would lead to a resistance of the green back as a base currency; cited newzimbabwe.com.

Writing in a blog in New Zimbabwe, Gilbert Muponda, an entrepreneur based out of Zimbabwe has welcomed the proposal of a gold-backed Zimbabwean currency. He has applauded the proposal of the central bank governor to sell diamonds for gold.

On the other hand, for the country to move to some semblance of a gold standard, it may wish to consider shifting form a despotic dictatorship controlled by Robert Mugabe to something a little less "centrally planned."

The government’s protectionist measures have kept the mining companies at bay. The government wants the foreign miners to sell controlling stake in ventures to local blacks, which is obviously frowned up on by all. The companies, given the uncertain situation, have refrained from investing further in expansion activities in Zimbabwe.

The country cannot access foreign credit as the ZIDERA Act passed by the United States in 2001 blocks US entities from trading with certain Zimbabwean institutions and individuals This has forced the US representatives in lending agencies like World Bank, IMF, IFC, and ADB to take a favorable stance when it comes to Zimbabwean credit requests.

That said, where there's a will there's a way. And since this story refuses to go away, it probably means that Zimbabwe will definitely give it the old college try. Once again, the question is not what happens in Zimbabwe, but elsewhere, should the experiment prove to be even remotely successful.

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brian0918's picture

Gold and silver breaking north!

FEDbuster's picture

What will my 10 trillion dollar Zimbabwe bank notes convert to in troy oz?  I would take $10,000,000,000,000 to one oz of gold all day long.

TheTmfreak's picture

Holy shit! Hold onto ya butts.

Michael Victory's picture


The fascination with Gold.

Touch it, smell it, kiss it, save it.




DocLogo's picture

So either "Al Queda" is discovered operating out of Zimbabwe or another "organic" people-power, Twitter revolution begins there.

FEDbuster's picture

Gold backed currencies have already been classified as "weapons of mass destruction" by the FED.  Look for military action by NATO, IMF, World Bank, JP Morgan Foreclosure squads and anyone else the FED can get to attack the hostile rouge central bank.

dropdeadfed's picture

Exactly.  If not by force then some other kind of bullshit media fiction followed by sanctions and tariff package.

Aquiloaster's picture

Nah uh uh, you didn't say the magic word.

Nah uh uh, you didn't say the magic word.

Nah uh uh, you didn't say the magic word.

Nah uh uh, you didn't say the magic word.

Jalaluddin's picture

Zimbrazoo breaking south!

NOTW777's picture

is this why gold is popping

Arius's picture

some crazy goldbugs at Goldman getting ready for the rapture...


btw, never count out Gideon Gono...zimbabwe is turning out to be the rehersal case...

NOTW777's picture

seems like gold shorts are panicky.  it would not take much

my guess is that the side of the boat with dollar longs/short PMs is getting crowded

eur looks sick

Arius's picture

got to pay the piper at some point ...no more free rides...it couldnt happened to a nicer group of people!

ZapBranigan's picture


No, it's Laissez Faire Friday...manipulation efforts often wane whilst planning yachting events for the weekend.  Don't worry though, once they see that it has spiked, they will attempt a smack-down reigning-in Au below the psychological 1500 before the close.


buzzsaw99's picture

Gono is the scumbag who looted the country for years.

Sabibaby's picture

Hey, I don't live in Zimbabwe but the leaders of my country do the same thing!

The Navigator's picture

Gono is our president and he's only been looting the country for 2.5 years.

Troy Ounce's picture


Great idea. Even when Mugabe is in charge. Accepted with a kiss on the mouth!

GoldenDragon's picture

I expect that if Zimbabwe actually makes such a move, NATO will need to invade for "humanitarian" reasons.

speconomist's picture

How long do they have until the invasion happens?

This would be too much, after Sadam and Qaddafi.

DeadFred's picture

The trend line for invasions if sloping sharply downward. If you extrapolate from the early Afgahanistan/Iraq days through Libya on to Zimbabwe what do you get? Maybe a half dozen drunkards in a broken-down hummer armed with shotguns. I'm bearish on invasions, I think there's another plan to take down this threat. Bribery? Hotel maids?

SheepDog-One's picture

So then Zimbabwe is next to be bombed for 'humanitarian reasons'? Libya was last to be quietly moving to a gold backed currency.

Geoff-UK's picture

We are bombing Libya FOR THEIR OWN GOOD, you racist bastard.

Rodent Freikorps's picture

Zimbabwe is the former Brit colony known as Rhodesia.

Let them be the open oppressor again.

Hypocrisy needs sunshine these days.

Euros = hypocrites. Shout it to the world.

sabra1's picture

time for another no fly zone, eh oBLAHma?

falak pema's picture

China play in Africa via Zimbabwe as stalking horse of the gold backed monetary standard. There you are, it is now showing its strategic face...

Arius's picture

here is their reply to the west for ignoring their candidate for the imf job...

falak pema's picture

Have they thrown that towel in?

Vincent Vega's picture

I wonder if the US$ will be pegged to the new Zimbabwe$. <sarc of course>

LawsofPhysics's picture

This will indeed be an interesting development to follow.

akak's picture


"Clone of Osama Bin Laden recently discovered to be hiding in a compound in Harare, coincidentally adjacent to the residence of President Mugabe."

KlausK's picture

OT, just out: Lots of transitoryness for Germany - food prices up 10%. As you know: If we do inflation over here, we do it Autobahn style.

Google says:
The Germans have to adjust to rising costs for food: dairies, slaughterhouses, roasters and other food producers raised their prices in April so sharply than it has been almost three years.

They rose by an average of 7.2 percent the previous month, the Federal Statistics Office said on Friday. "A stronger increase was most recently in August 2008, whereeight percent, " it said. The prices for butter and fruit and vegetable juices shot up bymore than a third up. Coffee cost 17.8 percent more meat (except poultry) 10.6percent more.

One reason for the steep upward trend in higher prices for agricultural commodities on world markets. Arabica coffee rose in price from the beginning to the end of Aprilby nearly a quarter, while corn cost almost 15 percent more.




Id fight Gandhi's picture

The usual people have been exploiting them and other Africans for diamonds. Diamond while having value, even in industry, is a highly variable asset, hard to find buyers and subjective values. Gold much better store of wealth.

earnyermoney's picture

Off your game. No where to go but down after 250+ junks.

akak's picture

Your mentor, HarryWanger, was a better troll than you Hamy.

The trick lies in being less obviously transparent, and at least occasionally mixing in some truth with the half-truths and dissembling.

Arius's picture

you mean like mixing diamond, gold and some fiat currency...

spartan117's picture

Another Cash for Gold shop opened up here in Pasadena, CA.  Just exactly who are they buying all that metal?

SheepDog-One's picture

'How far goldbugs have fallen'...I guess $20 below all time high is a great tragedy?

HelluvaEngineer's picture

Hmmm, trade for diamonds (which are plentiful and only valuable thanks to DeBeers cornering the market?)  No thanks.

reachsb's picture

Don't forget that due to the world-wide mining boom (namely in precious metals), mining companies use diamond tipped drills to crush the ore. No other material has been useful for this purpose. And you have no idea what the replacement rates of these diamond tipped drills are because they only have a finite life. Kinda poetic if you ask me.