Buying high, selling low-Bright Simons warns GoldBod’s model is structurally risky!
Bright Simons, the Honorary Vice President of IMANI Africa, said that GoldBod helped keep the Cedi stable in 2025, but it wasn’t the main reason. He said that no one thing controls exchange rates. “Gold makes up a huge part of Ghana’s exports, and exports are a big reason why exchange rates change. We should remember that gold prices went up over 70% in 2025 alone,” he said in a post on his X page about the 214 million Bank of Ghana gold losses. Bright Simons said that GoldBod really did lose $214 million on $5 billion worth of gold. It is a lot higher than the loss rate that has been hurting Cocobod. 2. But those losses don’t tell the whole story. The Bank of Ghana also has to pay sterilization and opportunity costs. He said that the losses are structural because GoldBod has to buy high and sell low more often than it should. Read the piece for real-life examples. 4. GoldBod would go bankrupt in about 11 months if it didn’t get money from the central bank. He said, “Its US$279 million budget for 2025 that hasn’t been spent yet would last less than a year.” I thought my last article about the GoldBod losses was clear and easy to understand. But even my friends who know a lot about money told me I needed to think more about three things: how did the losses happen, how bad are they, and whether they are worth it for the benefits of Cedi stability. So, here’s a shorter version: https://brightsimons.com/2025/12/is-talk-of-losses-by-goldbod-just-abstract-drivel/ Here are some important points: 1. GoldBod really did lose $214 million on $5 billion worth of gold. It is much higher than the loss rate that has been hurting Cocobod. 2. But those losses don’t tell the whole story. The Bank of Ghana (BoG) also has to pay sterilization and opportunity costs. 3. The losses are structural: GoldBod has to buy high and sell low more often than it should. Read the piece for real-life examples. 4. GoldBod would go bankrupt in about 11 months if it didn’t get money from the central bank. It has a budget of $279 million for 2025 that hasn’t been spent yet, but it won’t last more than a year. 5. GoldBod did help keep the Cedi stable in 2025, but it wasn’t the main reason. There is no one thing that controls exchange rates. Over 15 variables can be prioritized by economists. 6. Gold makes up a large part of Ghana’s exports, and exports are a big part of how exchange rates change. We should remember that gold prices went up more than 70% in 2025 alone. 7. In the past, though, these long gold rallies only account for about 8% of the strength of the FX market. 8. The Cedi, on the other hand, went up about 24% from the end of 2024 to the end of 2025. 9. The last improvement is due to IMF discipline, debt restructuring, and policy intervention that changed its natural course. 10. GoldBod’s maximum plausible contribution is limited and not very important. Three percent would be a fair guess. 11. More losses would not be a small problem. They will hurt BoG’s net reserve growth. And it costs more because BoG “makes” the money that is used to buy gold and has to clean it up to keep prices from going up. 12. The tools that BoG has for this whole operation cost a lot of money. So, losses make it harder for BoG to keep the Cedi stable. If the price of gold goes down, all of these risks will get a lot worse. In a risky way that goes along with the cycle. 14. Stability shouldn’t be based on hidden subsidies. That’s why some of us have been warning people to be careful and honest about these state-run gold programs since 2022. 15. But if we have to keep doing GoldBod and the other gold jobs, we really hope that gold prices stay high. Because, in the end, the books always match up.
