Gold has smashed through US $4 200 per ounce, its highest price in history. But while the world glitters, Zimbabwe’s so-called gold-backed currency, the ZiG, continues to slide.

Since its launch in April 2024, the ZiG has weakened from ZiG 13.56 to about ZiG 26.7 per US dollar — even as global bullion has surged more than 75 percent.
If gold is soaring, shouldn’t the ZiG rise with it?

Backed, Not Bound

Economist Dr Admire Dube, a CFA charterholder with a PhD in Finance, calls that belief “a seductive but mistaken notion.”

“The firming of gold prices does not directly increase the value of ZiG,” he says. “Because the ZiG was never pegged to the dollar or to gold in a one-to-one manner.”

If the ZiG were truly pegged, its value would have mirrored gold’s 75 percent surge — strengthening to around ZiG 7.7 per dollar. Instead, it trades twice weaker than at launch.

“Zimbabwe’s gold and mineral reserves back the ZiG, but they don’t peg it,” Dube explains. “There’s a fundamental difference between a currency being backed by gold and being on a gold standard.”

Economist Prosper Chitambara observes:

“When it’s a gold standard, the value of the currency is tied directly to gold. In Zimbabwe’s case, it’s different. The RBZ only uses part of its gold and forex reserves to defend the ZiG in times of pressure.”

He stresses that the system is better seen as a confidence mechanism than a metallic anchor:

“The backing is designed to stabilize expectations, not fix the exchange rate. It’s a psychological and strategic tool to deter speculative attacks, not a guarantee of appreciation.”

When Gold Rises, So Do the Books

But rising bullion prices inflate the value of the Reserve Bank’s gold holdings and royalties, boosting its defensive reserves.

“Zimbabwe’s royalties on gold production are split — half paid in USD, half in physical gold,” Dube notes. “So, as gold prices rise, the same amount of gold is worth more, strengthening the RBZ’s reserves without any additional mining.”

Two tonnes of reserve gold once worth US $146 million now fetch US $256 million — a US $110 million gain purely from appreciation. And with exports around 35 tonnes, annual receipts could jump from US $2.6 billion to US $4.5 billion if prices hold above US $4 000.

The Mosi-oa-Tunya Benchmark

The contrast between the ZiG and Zimbabwe’s Mosi-oa-Tunya gold coin highlights what “direct” linkage to bullion really looks like.

Each Mosi coin — one troy ounce of 22-carat gold — moves exactly with the global spot price. When gold rises, the coin’s value automatically climbs. It is gold in hand, not on paper.

The ZiG, by contrast, is only partially collateralised by gold. It cannot be redeemed for physical metal.
Where the Mosi behaves like a micro-level gold standard, the ZiG remains a confidence-anchored hybrid — an IOU backed by reserves that cannot be touched.

The Mosi is a model closer to Russia’s evolving gold-linked rouble system, where each digital unit is notionally tied to the state’s verified bullion holdings, but convertibility remains limited.
Russia holds more than 2 300 tonnes of gold, enough to maintain a credible floor for the rouble. Zimbabwe’s reserve cover — roughly a third of money supply — offers only a cushion.

Why a Stronger ZiG Isn’t the Goal

Ironically, Dube warns that a rising ZiG could hurt more than it helps.

“A stronger ZiG would make Zimbabwe’s non-mineral exports — agriculture, horticulture, art, manufacturing — far more expensive internationally,” he says.

With reserves covering barely two months of imports, he argues, Zimbabwe needs to prioritise export competitiveness over prestige.

The Bigger Picture

Globally, gold’s rally reflects nervous markets — U.S. rate-cut bets, geopolitical friction, and a weakening dollar. Analysts now eye the US $5 000 mark, while American economist Steve Hanke predicts US $6 000 by 2026.

For Zimbabwe, that glitter means something subtler:
higher gold prices pad the RBZ’s vaults — and lift the Mosi coin — but value of the ZiG is also determined by other  factors.