The decision by the Bank of Ghana (BoG) to purchase artisanal and small-scale mining (ASM) gold at spot prices through its aggregator, the Ghana Gold Board, has been described as a deliberate policy choice aimed at safeguarding foreign exchange accumulation and curbing gold smuggling.
According to GoldBod, purchasing ASM gold at prevailing spot prices serves as a critical disincentive to smuggling and ensures that sufficient volumes of locally produced gold are channelled through official and transparent trading routes.
The approach, officials say, is central to the success of the ASM component of the Gold-for-Reserves (G4R) programme.
Spot-price purchases have formed the backbone of the ASM G4R programme since its inception in 2022.
While this pricing model may result in operational costs for the Bank of Ghana, the programme was never designed to generate profit for the Central Bank.
Rather, its core objective has been the accumulation of gold reserves and the delivery of broader macroeconomic benefits to the country.
GoldBod officials explain that any attempt to purchase ASM gold at discounted prices in pursuit of profit would fundamentally undermine the programme’s objectives.
The artisanal gold market, they note, is highly sensitive to pricing signals, and even modest deviations from competitive market rates can drive gold trading into informal channels.
Historical data provides a clear illustration of this risk. In 2021, the introduction of a 3 percent withholding tax on unprocessed ASM gold led to a dramatic collapse in official exports.
Small-scale gold exports fell sharply from 39.3 tonnes valued at approximately US$2 billion in 2020 to just 3.4 tonnes worth about US$184 million the following year.
This decline was widely attributed to increased smuggling and a shift away from formal trading channels in response to non-competitive pricing conditions.
The experience, GoldBod maintains, underscores the direct relationship between competitive pricing and effective gold aggregation.
By maintaining spot-price purchases, the BoG and GoldBod have been able to attract higher volumes of ASM gold into the formal system, improve traceability, and maximise foreign exchange inflows for the national economy.
Officials emphasize that the success of the G4R programme depends on prioritising volume capture and reserve accumulation over short-term profit considerations.
In this context, spot pricing is viewed not as a cost inefficiency, but as a strategic tool to stabilise the gold market, deter illicit trade, and support Ghana’s broader macroeconomic objectives.
As Ghana continues to strengthen its gold reserve position, GoldBod says the pricing approach under the ASM G4R programme remains a deliberate and evidence-based policy choice, one informed by past experience and aligned with the country’s long-term economic interests.
