$1.7bn for Monetary Stabilization Is a Far Better Trade‑Off Than Losing Over $2bn Annually to Gold Smuggling

Introduction
Day in day out is the cacophony on the reported 1.7 Billion US Dollars as quasi-fiscal expenditure in the Balance Sheet of Bank of Ghana (BOG) for the year 2025 due to gold trading within the Small Scale Mining Sector with the usage of old framework of the Gold for Oil (G4O) leg of the Domestic Gold Purchase Program (DGPP) as designed by the previous regime, especially by His Excellency by Dr Bawumia.

As a Student of Risk Management, Retired Major Mohamed Bogobiri sees the noise as the Battle for the Billion or the Soul of the Economy and the Dr Bawumia’s team through the very smart and hardworking leader of the Minority as Transparency and Accountability avengers, since Mr Sammy Gyamfi posture when he was the National Communications Director of the NDC helped to destabilize the campaign of the NPP. This is a requirement of the Constitution with Probity, Transparency and Accountability principles for good governance, since it bring matters to the focus of the citizens.

Firstly, it need to emphasized that the Gold for Reserve (G4R) leg introduced in 2021 for 20% of the refined gold and not raw gold from the Ghana Chamber of Mines as exported to LBMA Refineries especially Rand Refinery in South Africa was to be bought or paid by BOG at a discount of not less than 0.4%.

So with payment made in Cedis, with the dollar equivalent based on the BOG rate or the mid interbank rate, the G4R leg was expected to be a very profitable one to BOG. Infact Ghana through the BOG made huge gains when the BOG had to sell part of the30.7 tonnes of gold held as at 31 December 2024.

As a Student of Risk Management, Retired Major Mohamed Bogobiri sees the sale is good thing by the BOG, a measure to convert National Gold Reserve to National Dollars or Forex Reserve by exploiting the rise in the price of gold from the 2,400 US Dollars in 2024 to over 4,400 US Dollars in 2025 since gold price is volatile and depends on the unpredictable couth of President Donald Trump.

So, depending on the type of eye lens put on by a speaker/debater, the1.7 Billion US Dollars on the balance sheet of the BOG may be regarded as a cost or loss which term or way it is regarded, the value is the same for Public Good. So it is very unfortunate that no further and better explanation why it was a necessary evil to Ghana, so as to bring the matter to a logical conclusion.

Otherwise, some of the statements by some speakers/debaters as State Officials could anger Cocoa farmers who have sustained the Guggisburg economy, hence the operations of the Central Bank (BOG) since 1922 or the era of Brigadier General Fredrick Gordon Guggisburg. Since they helped in the generating of Forex with the securing of the ritual syndicated loans yearly for the Country’s earlier voodoo economy system of robbing Peter to Paul since 1993 and their beloved Country was not ready or able to reward them with reasonable price for the same year 2025, that is as a reward for their good job despite the low World market of Cocoa in 2025.

So, the Better Ghana Agenda, which retired Major Mohammed Bogobiri, is attempting since 2017 to build and which could help to change the narrative in the laudable Reset Ghana Agenda, among others is also about Mindset Revolution to the change the narrative. So always come on Board the Ship Modern Ghana, the most reputable website in Modern Ghana for facts and wisdom to help ensure national cohesion towards a Better Ghana.

Smuggling of gold
With the gold rush phenomena, due to the rise in the price of gold as a store of value, as a result of the fall of the US dollars which interestingly replaced the gold standard in the 1970s, made the smuggling of gold out of Ghana to become a very good or lucrative business. Local buying agents and informal traders purchased the gold at significant discount price, far below the International spot price for the day. Most of the local traders or foreign agents in Ghana applied heavy deductions to account for assaying/servicing costs, local taxes, refining and profit margins etc.

Thus made the payments to the Small Scale Miners well below the London Bullion Market Association (LBMA) Spot Price (International or Bloomberg spot price for the day), despite the fact that the price kept on increasing daily. Thus besides the motivation of massive small scale mining (both legal and illegal), it motivated massive smuggling incentives to both informal local and international buyers offering cash closer to real-time market value and sell at the next day which saw an increased in the price.

Past regimes especially in the last 11 years, thus starting from the first regime of President Mahama and the second regime of President Nana Addo attempted to change the narrative without success. The first regime of President Mahama in 2014/2015 made private Ghanaians to register Companies and be licensed as gold buyers and exporting Companies in the Small Scale Mining Sector.

The Exporters were made by the then Government to bring 80% of their gold sales to Ghana and keep 20% outside if required to do so. Some of the Ghanaians had foreign partners with some as reportedly as financiers.

This gave birth to numerous gold buying and exporting Companies like Nana Appiah’s Menzbanc (the parent company of Menzgold) and the rise of Ms Joana Cudjoe from mobile sale agent to multimillionaire. Google ‘How my net worth reaches 700 million US Dollars a year by Ms Joana Cudjoe’. Google Involvement of Chinese in Small Scale Mining by Professor Crawford’. Google for Old videos and photos of Amenfi Central PC in galamsey operations pop up. This was during her appearance on Delay Show.

So you could easily guess or tell how much was banked outside Ghana or paid to foreign partners if you understand the tributer system in the Small Scale Mining Sector is what is practiced by the Small Scale Miners the galamsey operators and their barons or financiers same as in the cocoa industry . It is not secret that it is 80 percent to the investor or baron or financier normally foreigner and 20 percent to the Ghanaian accomplices. Google ‘Involvement of Chinese in Small Scale Mining by Professor Crawford’.

Unfortunately our leaders continue to be clueless otherwise part of they are problem. Otherwise the laws on Small Scale Mining should have been revised by now, since this good idea as recommended by an erudite miner namely Dr Tony Aubyn, when as CEO of the Ghana Chamber of Mines. This is what Major Mohammed Bogobiri has advocated for with combination of Declaration of State of Emergency.

Google for Declare State of Emergency and review the laws on Small Scale Mining to relegate Small Scale Mining as Community Mining and introduce Medium Scale Mining for Ghanaian tycoons, like Ms Joana Cudjoe, an individual who may be making more than Preastea Sankofa Gold Ltd. Google ‘How my net worth reaches 700 million US Dollars a year by Ms Joana Cudjoe.

When I was the Head of Bogoso Mine, I used to get Bogoso Mine to support Preastea Sankofa Gold in their export of their gold, at no cost with the helicopter shipment to Accra. So I can easily imagine their net returns.

Between 2016 and 2021, reports by Reuters or International media indicated that over 7Biilion Dollars of worth of gold was exported yearly from the Small Scale Mining Sector to the United Arabs Emirate yearly, whilst 5 Billion US Dollars of Gold was recorded yearly in the Books of Bank of Ghana. Google for Reuter and UK Government report on about 10 Billion US Dollars of gold sold in UAE by Ghana in 2016 but Bank of Ghana records indicated only 5 Billion US Dollars of gold from the Small Scale Mining Sector. This happened, notwithstanding the Government attempts to ensure official transactions in the gold trading in the Small Scale Mining Sector for Ghana to benefit a lot.

So this meant gold smuggled out of Ghana to only the United Arabs Emirate yearly was over 2Billion US Dollars, no report on how much worth of gold was smuggled to India and China, since their nationals were/are openly in the Small Scale Mining Sector, a mining sector legally restricted or reserved for the citizens of Ghana. Note a Plane with 50 Million US Dollars’ worth of gold was seized at the Dubai Airport in 2016 due to lack of proper documentation, hence likely as smuggled gold.

Domestic Gold Purchase Program
History tells that it was due to the very severe economic challenges or economic downturn in 2021 that saw Dr Bawumia, then as Vice President of Ghana, to think outside the box and caused the introduction of the Domestic Gold Purchase Program (DGPP) which started on 17 June 2021 with the Gold for Reserve (G4R) leg.

This was introduced, when he found that the Country’s National Gold Reserves remained stagnant at 8.77 tonnes between 1958 and 2021. So, the Gold for Reserve (G4R) was introduced to help in the economic recovery efforts or boost the economy portfolio of the Country.

The G4R by the previous regime termed herein as the Old Framework involved the Large Scale Mining Companies under the Ghana Chamber of Mines. So, the old framework introduced in 2023 required the Large Mining Companies under the Ghana Chamber of Mines (hereafter simply as Ghana Chamber of Mines) to sell 20 percent of their refined gold production at the oversea refineries at 0.6 percent discount of the Spot price (Bloomberg Price) of the date of export to Bank of Ghana.

This implied that the sale of 20% refined gold to BOG from the Ghana Chamber of Mines by the old framework as exported straight with the 80% of the gold of an affected Large Scale Mining Company at the cost of the Ghana Chamber of Mines to the related oversea refineries accredited to LBMA, outside Ghana, say Rand Refinery in South Africa, since Ghana has none.

The 20% refined gold is kept at the Vault of the LBMA’s Refinery, then documented it and issue Paper Gold to BOG to cover the gold. So no physical gold to the BOG by the G4R leg, with the 20 percent gold from the Ghana Chamber of Mines.

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BOG, then pays the affected Large Scale Mining Company in Ghana Cedis at its equivalent to US Dollars for the 20 percent refined gold at 0.6 percent discount of the Spot price for the date of export, using BOG Reference Rate or the Daily Interbank Forex Weighted Medium Rate and not the Forex Bureau Rate. The gold is kept at the Vault of the LBMA’s Refinery. So, a loss is not expected with this G4R leg rather profit should be expected with the discount of 0.6 percent granted by Ghana Chamber of Mines.

In 2022, due to the IMF’s condition that not more than 80 Million US Dollars should be pumped into the economy by BOG, so in order to meet the demand for Dollars by the petroleum products importers, His Excellency Dr Bawumia, sold another idea of the Gold for Oil leg (G4O) of DGPP to BOG.

Why a loss is necessary evil.
Due to the issues of not complying with local and International Standards (due to diligence, traceability by responsible and legal mining) as done by the Ghana Chamber of Mines, gold from the Small Scale Mining Sector is normally sold in India and UAE, since it is rejected to be sold in European Markets. Otherwise, it must be sent to LBMA Refinery at very high discount, hence may not fetch the accepted spot price before the gold can enter European Markets.

Although, there is no universal rule stating that gold for national gold reserves must pass through LBMA accredited refineries, most Central Banks including the BOG prefer or strongly encourage gold from LBMA accredited refineries for maximum international liquidity and trading. As such the gold from the Small Scale Sector may not fit for purpose by a reputable Central Bank.

Since Gold from non-LBMA Refiners lack internationally recognized serial numbers. So besides to reduce smuggling, so need to motivate the traders to sell their gold to BOG with premium price paid to them, there was the need to sell the gold at discount percentage to Off Takers, outside Ghana to meet refinery cost. Implying the seller BOG must give room for profit. Hmm a loss is expected.

Hence a lost is obvious, since it is to be incurred if the Small Scale Miner did not give discount to the Agent of BOG as the buyer of the gold and the buyer rather had to pay premium rate to the Small Scale Miner and not using BOG or official rate. Hmm the fear of the massive destruction of the environment to make more gold for money, since man is a very greedy animal.

So, since the gold from the Small Scale Mining Sector do not go to LBMA Refineries for internationally recognized serial numbers, so the G4O leg of the DGPP model in the old framework of the DGPP for the Small Scale Mining Sector was opted for between 2023 and 2025, as in a two years agreement between the BOG and PMMC. This agreement between the BOG and PMMC was reportedly endorsed by Dr Bawumia as the VP of Ghana.

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Good Governance
This state of affairs besides payment of premium prices to the Small Scale Miners/traders for gold saw the exporting of the gold at a huge discount which will certainly or logically lead to a financial loss right from the word go. So a percentage loss of money was part of the 1.7 Billion US Dollars. But it was a cost for public good, so transparency and accountability principles are very important for good governance, so the exact state affairs must be explained to the citizens by BOG and not GoldBod, the Agent.

Note the seller of the gold especially the Small Scale Miner must be responsible for paying for the cost of assay but when the State decides to pay for the cost of assay etc and the State as the exporter must grant discount to the Refinery as Off Taker, a loss or cost to the State or public is expected, herein as for public good. The used of the parallel Forex market was also a contributor to a loss.

So those saying that not a percentage of the controversial 1.7 Billion US Dollars in 2025 was a loss got it very wrong, since a loss for public good was built in the old framework in the 2023 G4O leg Agreement between BOG and PMMC that was what was implemented by the GoldBod in 2025. The old framework was designed by the previous regime, purposely to stabilize the economy and save the Cedis within a possible short time.

It was therefore designed to maximize gold export, so to motivate the reduction of smuggling of gold in the Small Scale Mining Sector to UAE was a necessary thing or evil, since as reported by the Reuters Smugglers caused a loss of 2 Billion US Dollars a year, this caused the paying of premium price to Small Scale Miners/gold traders Also the need to give offer discount to Off-takers, since BOG in real thinking or sense should be regarded as the Small Scale Miner who was/is selling or sold his or her gold, so BOG acting on as the Small Scale Miner or his Rep, must cater for assay cost/service cost, import tax at home country of the Off Taker and Off Taker’s profit margin. Then the issue of Foreign exchange differentials for different dates should tell a JSS student that a huge loss is expected.

Note the G4O leg of the DGPP involved physical gold handling, with Precious Minerals Market Company acting as an Agent of the BOG, as the aggregator (buyer), the assayer, for the weighing and valuing of the gold and handover of same gold to BOG for the export. Since, the State now involved in the active buying and exporting of gold from the Small Scale Mining Sector

So GoldBod was introduced in 2025, among others to replace the PMMC or to represent the State in the Domestic Gold Purchase Program by centralizing the purchase, assaying, and exporting of gold in Ghana to reduce smuggling to zero or to maximize gains from the gold produced in Ghana. .

Due to the smuggling of gold which pertains in the Small Scale Mining Sector, so, in order to disincentivize the smuggling of gold in the Small Scale Mining Sector and to keep the gold within formal economy, the GoldBod buying agents historically purchased the gold from the Small Scale Gold Mining Sector at premium rates especially Forex bureau market rate. This pricing mismatch between Small Scale Gold Mining Sector, gold purchased in 2025 and the official accounting led to the heavily discussed accounting valuation losses.

Conclusion
Considering the loss of over 2 Billion US Dollars by smuggling of gold from the Small Scale Mining Sector, the cost or loss of part of the 1.7 Billion Dollars in 2025 as quasi fiscal expenditure in the books of BOG, in the first year of operation of GoldBod is commendable. Since, GoldBod without initial seed capital and had to work very fast in the ongoing mining sector, so it had to use the existing old framework as designed by the previous regime. So, since Rome was not built in a day, the work of the GoldBod in 2025 was restricted to the G4O leg of the DGPP in the Small Scale Mining Sector as in the 2023 Agreement between BOG and PMMC, whilst working very hard in the building of systems etc for the full start of her mandate in 2026 to be guided by GANARP.

This was important not to disturb exiting system or agreements immediately So that, when the system is fully in place, besides gaining the confidence and support of the Small Scale Miners to give reasonable discount for reclamations, assay fees, tax, profit, etc for the off taker, it will act independent of BOG for funding. But continue to support BOG to build both Foreign Currency Reserves and National Gold Reserves as mandated by Act 1140.

So the debaters must demo integrity, so both the NPP and NDC through Dr Bawumia, The Economic Whiz kid or Wizard, who designed the program and the indefatigable Lawyer Mr Sammy Gyamfi who implemented the Dr Bawumia’s designed DGPP which GoldBod’s Management made slight differences to maximize official gold export and the alleged usage of Forex Bureau Rates to further reduce smuggling, need to explain well to the public in the Battle or Clash for the Billion. Thus both share the credits for the massive economic gains, hence for the fight for the soul of the economy. Which is the Battle for the Billion is about.