In recent months, it has become increasingly evident that the Ghana Gold Board’s doré trading strategy on behalf of the Bank of Ghana has achieved its primary macroeconomic objective. Foreign exchange inflows from gold exports have strengthened reserves, stabilised the cedi, and delivered tangible short-term benefits to the broader economy. On that score, the policy intent has largely succeeded.
Where the debate now shifts, however, is not whether the strategy worked, but how it was executed.
The efficiency of the Goldbod’s trading operations has come under intense scrutiny following disclosures and industry-level observations suggesting that significant losses were incurred in the process. Explanations have ranged from FX-related accounting differences and policy-induced costs to alleged trade inefficiencies. Yet regardless of the framing, the underlying issue is difficult to escape: doré was procured at prices too high to permit breakeven trading, let alone profitability, once logistics, assaying, financing costs were factored in.
This outcome did not occur by accident.
In its determination to outcompete and crowd out smugglers, the Goldbod effectively priced itself into a corner. By offering cost prices that exceeded what could reasonably be recovered on the international market, losses became structurally inevitable. The fact that this happened while the Goldbod simultaneously held statutory authority to determine local gold prices only sharpens the concern.
In response, Goldbod officials and government representatives have repeatedly argued that the institution was never designed to be profit-oriented. That assertion, while legally convenient, collapses under basic commercial reasoning. Trading is, by definition, a commercial activity. Whether the trader is a private firm or a state agency, the laws of arithmetic apply equally. If an entity buys high and sells low, losses will occur—regardless of how noble the policy objective may be.
The critical question therefore should not be a matter of rhetoric, but be pragmatic: did the Goldbod make a profit, incur a loss, or break even on its gold trades? Emphasis on ‘on its gold trade’, because though the Goldbod’s published financials show it made a surplus, it is undeniable that it conducted gold trade (albeit through its primary aggregator) on behalf of the central bank and therefore is ultimately responsible for whatever trade losses were incurred as a result. If trade losses were indeed incurred, were they unavoidable policy costs, or the result of flawed execution?
The difficulty in downplaying these losses lies in the Goldbod’s unique position. Unlike private traders, it determines the local purchase price of doré. Global gold prices are publicly known, published twice daily by the London Bullion Market Association (LBMA). Exchange rates are also published daily by the Bank of Ghana. With these variables fixed and transparent, avoiding losses should have been straightforward: ensure that the total cost of procurement, valuation, logistics and export does not exceed the realised international selling price.
Anything short of that was always going to produce negative outcomes.
A review of the Goldbod’s published local pricing over time reveals two persistent characteristics: narrow pricing considerations and excessive opacity. The narrowness is evident in frequent, unexplained adjustments to the pricing framework, while the opacity manifests in the presentation of information that appears complex without providing elucidation.
The basic inputs required to price doré are well known to the industry. Gold is weighed locally in pounds—129.03 pounds to a kilogram. The world market price is quoted per troy ounce —32.15 troy ounces to a kilogram. Exchange rates are readily available on the BoG website. A transparent pricing authority could simply publish a single figure: Ghana cedis per pound of doré, with or without accompanying methodology.
Instead, the Goldbod publishes a local price per pound, references a global price per troy ounce that often deviates from the LBMA benchmark by tens of dollars, includes the Bank of Ghana exchange rate, and states that “no discount” has been applied. Yet when lay person attempts to reverse-engineer the price using standard conversion metrics, the result consistently shows a local price approximately 4.3% below the global market price.
This discrepancy has understandably raised eyebrows.
The missing link—rarely stated explicitly—is that the local price is pegged to 23-carat doré, while the global benchmark reflects 24-carat gold. The purity difference between the two is approximately 4.17%, which largely explains the observed pricing gap. In principle, this approach may be defensible. In practice, the lack of clarity creates confusion that serves neither public interest nor public trust.
Once this adjustment is understood, the Goldbod’s claim of buying at world market price begins to make sense—until bonuses are introduced. The moment bonuses are added on top of the 23-carat peg, the Goldbod is effectively purchasing above the global market price. Under such conditions, losses are no longer a possibility; they are a certainty.
Goldbod leadership has defended this approach by reiterating that profitability is not the institution’s priority. The objective, they argue, is to shore up foreign reserves for national benefit. While the objective is legitimate, the execution raises concerns. Zero-profit trading is only feasible if operating costs are also zero. Where costs exist—as they inevitably do—basic prudence demands at least minimal margins to absorb them.
Offering bonuses while aiming to break even is not prudence; it is contradiction. It is acceptance of loss from the onset. The IMF is now proposing the finance ministry absorbs this loss which now sits on the books of the central bank using tax-payers money. Hopefully, Mr. Ato Forson lives up to his reputation and sends them his legendary response; this expense was not covered in the budget, where are we going to get the money? The Bank of Ghana should be allowed to make up for the loss since it seems to have considered it an acceptable policy cost from the onset.
The loss, having come from a monetary policy decision, ie., the decision to continue selected projects under the Domestic Gold Purchase Program, should remain monetary policy cost, not a fiscal policy one. Never mind that fiscal benefits accrued as well in the end. Yes indeed, the government instituted the Goldbod, and indeed they have claimed the glory for the monetary benefits its activities have accrued. But, it was the central bank that funded the trade activities of the Goldbod in the last couple of months, not the state. The losses therefore should be covered by the BoG, not the Finance Ministry.
The overall justification for this loss often returns to smuggling. Without competitive prices, the argument goes, smugglers will outbid the state. This reasoning misunderstands the nature of the smuggling ecosystem. There are at least two dominant categories of illicit buyers. The first comprises money launderers, for whom gold is merely a vehicle to clean illicit funds. Profit is irrelevant; losses are acceptable. The second consists of long-horizon foreign investors with deep capital reserves who can afford to hold gold for years, benefitting from long-term price appreciation.
Attempting to outbid either group is futile. No rational state actor should engage in a bidding war with entities that do not operate under commercial constraints.
The more effective strategy lies elsewhere. Miners must be persuaded to sell to the state for reasons beyond price—predictability, trust, speed of payment, regulatory fairness, and operational support. When miners experience enforcement pressure on one hand and solicitation on the other, allegiance becomes difficult to secure. ESG compliance is essential, but enforcement strategies must be calibrated to avoid undermining parallel economic objectives.
Finally, the Goldbod does not require a state-sponsored revolving trading fund to function effectively as is the current plan. A modest administrative budget at inception is reasonable. Given that the Goldbod is already recording surpluses, even an administrative budget at this point is unnecessary. Trading itself, however, should be financed through buyers’ credit—the same mechanism imposed on licensed self-financing aggregators. Doing so would force efficiency, transparency, and discipline into the system.
At present, inefficiencies remain glaring. International payments can reach the Bank of Ghana within hours, yet cedi disbursements to aggregators can take several days. In a market where prices move twice daily, such delays are untenable. With proper coordination, gold could be paid for, assayed and dispatched within 48 to 72 hours—standards already achieved elsewhere.
Transparency remains the Goldbod’s greatest vulnerability. Gold is a high-value commodity; inefficiencies cannot be concealed indefinitely. A transparent operational model, diversified off-taker base, and clear reporting of volumes and counterparties would not weaken the institution. It would strengthen it. The scrutiny would force efficiency.
Ultimately, scrutiny is not hostility. It is insurance. And for an institution entrusted with one of Ghana’s most valuable resources, accountability is not optional—it is foundational. The principal reason the Goldbod traded at a loss using BoG funds is that the BoG was comfortable with such a model. The Goldbod can engage in profitable gold trade if it is motivated to do so. In our collective interest, sustainable efficiency within the Goldbod can be ensured by a combination of forced self-sufficiency and radical transparency. The Goldbod really does not require state funds to thrive. It has already demonstrated that.
