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What prevents them exchanging gold for $ like all other gold producers are doing? This is probably what they themselves were doing beforehands?
by luciusdomitius 4y ago
What prevents them exchanging gold for $ like all other gold producers are doing? This is probably what they themselves were doing beforehands?
- notahacker 4y agoThis sibling comment has the answer to that: it helps disguise the margin the government makes on gold it compulsory purchases from local miners in local currency https://news.ycombinator.com/item?id=33742853 https://news.ycombinator.com/item?id=33742853 Also helps to look like you're doing something about a debt crisis even if the net effect is minimal or negative...
- analog31 4y agoIt shouldn't be hard for the miners to guess that margin, given that the market price of gold can be looked up. Gold is, for all intents and purposes, usable as money, at least between sophisticated parties such as governments. It lacks some of the features of USD, but if Ghana is out of USD, then those features don't matter to them.
- notahacker 4y agoOh, the mining company management will know what the spot price in dollars is and if the spot price offered in cedis doesn't seem fair. But "we've found a cunning new way to exploit our gold reserves" is a better PR line to the general public than "we're fudging the figures a bit in our favoir* Look at HN's somewhat sophisticated audience heralding it as a power move against the dollar rather than a country scrabbling around for ways to dig itself out of a financial hole caused in part because the dollar holds value much better than their own currency.
- analog31 4y agoIt strikes me as a tax on gold mining. I can't think of any principled reason why they shouldn't do that, to raise money for their government. Indeed, having a better engineered money system is one of the things that make rich countries richer.