The Nigerian government should establish data on gold consumption in households and invest in gold in a targeted manner. The World Gold Council and Nigeria Bureau of Statistics should also establish data on the consumption of gold by households in Nigeria. These data will enable investors to determine the right strategies to adopt. Developing a gold market strategy in Nigeria is a worthwhile endeavour. It will ensure maximum returns on investments and a sustainable financial future for the country.
Developing a value chain for gold would not only provide employment, but would also stimulate the economy, increase government coffers, and create a thriving gold industry. In addition, it would make Nigeria an economic powerhouse regardless of whether or not the country actually mines gold. Developing this gold value chain will require a complete change of attitude toward gold from a traditional view of a scarce commodity to one of a scientific, financial, and economic warfare weapon.
The Nigerian government is trying to correct the wrongs in the past, but many stakeholders have been critical of government policy. President of the Miners Association of Nigeria (MAN), Kabiru Kankara, who is a prominent mining professional, has accused government officials of neglect. He also claimed that MAN members were not included in the gold market planning process, but lauded the government for its intervention. Meanwhile, Yahya Kulo, the state chapter chairman of the MAN, has stressed the importance of collaboration and transparency in government actions.
Gold is a good hedge against inflation. When inflation occurs, prices of gold go up. Its price is based on the base currency, and as such, is directly proportional to the strength of the economy. In addition, the price of gold is also a good store of value compared to the local currency. It has historically been a good investment vehicle, offering high liquidity and excellent profit-making opportunities. The Nigerian government has implemented policies that encourage investors to purchase gold.
The Nigerien gold market rose to $X per kg in 2021, increasing by X% over the previous year. Its production fell to $X in 2016 and declined to less than half of that amount in 2021. This shows that the price of gold in Nigeria will remain high for a while, but it will likely drop back down to $X in 2021. So, a prudent strategy for the Nigerian government is to invest in gold stocks that are undervalued.
As gold is denominated in the US dollar, it has a strong impact on its value. When the USD strengthens, gold prices fall. Conversely, when the USD weakens, gold prices fall. The best strategy is to open a position in gold and target the previous high as your sell price. In this way, you can take advantage of a trending gold price and make some money without having to worry about devaluation.
