The Sunday Mail
Business Reporter
SOUTH Africa-based African Medallion Group (AMG), which has had three issues of its cryptocurrency this year, has purchased gold reserves worth R250 million (or US$19,8 million) so far as it seeks to buttress its unit.
The current holdings represent a 2 400 percent growth from the R10 million worth of gold that had been bought by April this year.
Cryptocurrencies are digital assets designed to work as a medium of exchange, and their issuance and value are secured through encryption (cryptography). Currently, there are virtual medallions that can be bought online and redeemed in countries such as Malawi, South Africa, Tanzania, UK, the United States of America, Zambia and Zimbabwe.
AMG said in a recent statement it expects to leverage on investors’ flight to gold. It now expects its reserves to rise to R1 billion by the third quarter of 2018.
”As one of the oldest forms of currency (gold), its simplicity and transparency as a commodity have clear longevity. Gold is a sensible option as part of a diversified portfolio, that’s why we are confident that we will reach the one-tonne mark,” said the company.
AMG says it has managed to create its own unique gold marketplace, where gold is bought and sold between its investors. This, it says, allows AMG to keep costs down for its massive user base, which reportedly owns significant amounts of gold.
Geopolitical tensions, particularly in the Middle East, policy uncertainty in the US, including questions surrounding Britain’s planned exit from the European Union bloc, are forcing most investors to buy gold. Gold is often referred to as the “safe haven” for investors due to its retention of value, rarity, and immunity to interest rate policies, which can frequently be influenced by political and economic movements.
In September this year, AMG announced that it plans to shore up its gold reserves to one tonne in the coming months. Fiat or paper money is increasingly becoming unpopular, and investors are beginning to switch to digital currencies such as Bitcoin, Ethereum and medallions.
Initially, AMG, which has since been listed on the London Metal Exchange, issued 100 African Medallions (AM) with a face value of US$5 on May 25, 2017.
By June 18, 2017, their bid price had risen by 2 000 percent to more than US$100. Subsequently, 10 one-quarter ounce medallions, which were sold out before their launch date, were released on April 2, 2017, followed by the gold-backed AM$1 that was released on June 16, 2017.
At the 46th World Money Fair that was held in Berlin, Germany in February this year, the Krugerrand coins, which were first produced in 1967 by Mint SA, a unit of South African Reserve Bank (SARB), were launched.
This year, the Krugerrand, which is considered to be the world’s most collectable gold coin, will mark 50 years after it rolled off the printing press. More than 50 million once-ounce gold Krugerrands have been sold worldwide over the past 50 years. Though principally touted as a store of value, the medallions are expected to become tradable with time.
