• Gold has crossed $5,000/oz due to a perfect storm of geopolitical tensions, aggressive U.S. trade policies, de-dollarisation driving silver above $100/oz as well
• Zim stands to gain a significant fiscal windfall as prices above $5k/oz trigger the 10% royalty rate likely much earlier than anticipated
• The 10% royalty is a double-edged sword especially for LSM who  unlike ASSM, face additional heavy obligations after paying the royalty, including  corporate income tax, mandatory surrender of 30% of export proceeds in local currency, NSSA contributions…

               Source: Trading Economics

 Harare- The gold market has entered uncharted territory as prices breached the $5,000 per ounce milestone in January 2026, with spot prices reaching as high as $5,085 per ounce on January 26 amid continued upward momentum.

This dramatic rally, building throughout 2025 and accelerating into the new year, represents a "perfect storm" of factors pushing investors toward the yellow metal as the ultimate safe-haven asset.

Geopolitical instability and sanctions have been key drivers, with heightened tensions between the U.S. and NATO, particularly over Greenland, where President Donald Trump has pushed for control through threats and negotiations combined with ongoing wars in Ukraine and Gaza.

The aggressive use of U.S. sanctions, which has locked some nations out of the dollar-based financial system, has spurred a rush toward physical gold as a hedge against exclusionary risks.

Central bank buying, often termed "de-dollarisation," has provided structural support, as institutions worldwide accumulate significant gold reserves to reduce reliance on the U.S. dollar. This shift reflects a desire for assets with high liquidity and no default risk, with emerging market central banks leading the charge amid eroded confidence in dollar dominance.

U.S. trade policies have further weakened the dollar, including threats of 100% tariffs on Canada over potential trade deals with China and broader disputes with Europe, fuelling fears of a global trade slowdown and currency depreciation. Persistent inflation and mounting government debt concerns have amplified the "debasement trade," positioning gold as a protector of wealth against currency erosion and loss of purchasing power.

Lower interest rates from the U.S. Federal Reserve, with expectations of further cuts amid economic uncertainties, have diminished the appeal of yield-bearing assets like bonds, making non-yielding gold more attractive. Strong physical demand in major markets such as China and India, boosted by festive seasons and consistent retail buying, has added sustained pressure, while, record inflows into global gold ETFs reflect portfolio diversification amid volatile stock markets, with investors seeking stability.

The combination of these elements has propelled gold past previous records, while silver has also surged beyond $100 per ounce, reflecting broad precious metals strength in this environment.

For Zimbabwe, a nation where gold is the top export earner and mining contributes over 60% of foreign exchange, this price breakthrough translates into a potential windfall for government revenues through its revised royalty structure.

Due to ballooning gold prices, Zimbabwe’s gold sector has also surpassed the long-dreamt goal of a 4 billion gold industry in just 11 months at 4.1 billion, with earnings set to fall between 4.4 billion and 4.6 billion for the whole of 2025. This will drive total exports closer to 10 billion.

Following industry backlash against an initial proposal to hike royalties to 10% for prices above $2,500 per ounce, the 2026 budget bill adjusted the threshold upward, implementing a tiered system: 3% for gold sold below $1,200 per ounce, 5% between $1,201 and $5,000, and 10% for prices exceeding $5,000.

With prices now firmly above this trigger, the government stands to capture significantly more value from both large-scale producers and artisanal and small-scale miners (ASM).

In a rally projected to push prices beyond $5,000 sustainably, potentially toward $6,000 as forecasted by some analysts, Zimbabwe's royalties could generate hundreds of millions in additional revenue, aiding its ambition to achieve upper-middle-income status by 2030, though effective governance and anti-leakage measures will be crucial to ensure these gains benefit the broader economy.

Large-scale miners (LSM) in Zimbabwe, however, face a double-edged sword with this royalty escalation, as the 10% levy compounds an already burdensome fiscal and operational load.

After paying the royalty on gross sales now doubled from the previous 5% cap, LSM must contend with a corporate income tax rate of 24.72%, value-added tax of 15%, and withholding taxes on dividends and management fees. Employment-related obligations further strain margins, including Pay As You Earn (PAYE) deductions, AIDS levy at 2% of taxable income, contributions to the National Social Security Authority (NSSA) for pensions and worker compensation, and direct employee costs such as wages, training, and health benefits in a high-inflation environment.

Responsible mining mandates add layers, requiring environmental rehabilitation funds, compliance with safety standards, and community social responsibility (CSR) initiatives like local infrastructure development and education programs.

Downstream beneficiation efforts, encouraged by government policies demand additional capital for refineries and value-addition, potentially offsetting export incentives.

ASSM are excluded from all these responsibilities after paying the 10% tax despite land degradation, land pollution, no other taxes, employment costs, 100% USD payments among other things mentioned above.

While soaring prices could enhance profitability, potentially yielding net gains if costs are managed, the cumulative tax burden, estimated at over 50% of revenues in high-price scenarios including the 30% export surrender to RBZ squeezes smaller LSM operations, hence despite booming prices, output remains below 1.1 tonnes every month over the past 5 years.

LSM output has drastically decreased from a higher of above 50% in 2002 to just 47% in 2017 and 24% in 2025, while other unconfirmed reports alleges that they channel part of their gold through the ASSM for 100% USD payments.

This calls for some incentives or reduced rates on reinvested profits to sustain exploration and output amid global competition.

Zimbabwe is not isolated in its bid to extract more from the gold boom; across Africa, resource-rich nations are recalibrating fiscal regimes to capitalize on elevated prices, with Ghana exemplifying this trend through aggressive reforms.

 As Africa's largest gold producer and the world's sixth-biggest, Ghana plans to double royalties from the current 3-5% sliding scale to a new tier starting at 9% and escalating to 12% for prices above $4,500 per ounce, a threshold already surpassed in 2026. The government will also scrap long-standing stability and development agreements that locked in favourable tax and royalty terms for 5-15 years in exchange for investment, phasing them out by 2027 to ensure miners share windfalls more equitably.

This overhaul, set for parliamentary review by March 2026, includes stricter local content requirements and aims to boost revenues for infrastructure and diversification away from raw exports, mirroring Zimbabwe's push for beneficiation.

However, Ghana's miners, like those in Zimbabwe, warn that such hikes could stifle investment, potentially reducing output and jobs in a sector employing over a million people. Both countries' strategies reflect a continent-wide shift toward resource nationalism amid the rally, but Ghana's more stable economic environment may better absorb investor pushback compared to Zimbabwe's history of abrupt policy changes.

Comparing mining environments in Zimbabwe and Ghana reveals stark contrasts in regulatory stability, environmental enforcement, and investment appeal, influencing how each navigates the gold surge. Ghana boasts a more investor-friendly climate, ranking higher in the World Bank's Doing Business index with streamlined permitting, transparent contracts, and a dedicated Minerals Commission that fosters partnerships, attracting majors like Newmont and AngloGold Ashanti.

Environmental regulations are robust, with mandatory impact assessments and community consultations, though challenges persist with illegal artisanal mining (galamsey) causing deforestation and water pollution in regions like Ashanti. In contrast, Zimbabwe's environment is marred by volatility, ranking near the bottom in ease of doing business, with frequent policy shifts, currency instability, and allegations of corruption deterring foreign direct investment.

Environmental degradation from informal mining is rampant, leading to soil erosion, mercury pollution, and deforestation in areas like Matabeleland, with weaker enforcement due to resource constraints and overlapping ASM-LSM conflicts.

While both nations grapple with similar issues, balancing economic gains against sustainability, Ghana's formalized ASM sector and stronger governance provide a more predictable landscape, potentially allowing it to better leverage the $5,000+ prices for long-term benefits, whereas Zimbabwe must prioritize reforms to compete effectively.

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