Mining Consultant, Seth Worlashime Klaye, has expressed skepticism regarding the reported financial losses associated with Ghana’s Domestic Gold Purchase Programme (DGPP), describing the fiscal deficit as inconsistent with global market trends.
As an industry expert, Klaye argues that since gold is a universally traded commodity with inherent value that appreciates over time, the state should not be incurring such significant operational costs.
The headline reflects a growing concern among extractive professionals that the administrative framework of the Gold for Reserves (G4R) scheme may be fundamentally flawed if it fails to translate rising global prices into national profit.
“Gold is a commodity that is traded worldwide, and I don’t see the reason why we should be incurring this cost. If you have gold in reserve, you should be revaluing those reserves to reflect current prices. Today, we are talking about 2,600 U.S. dollars per ounce, so whatever stock we had, we should be making some money.”
Seth Worlashime Klaye
The paradox of the programme lies in the massive appreciation of gold, which has surged by approximately 155% since 2022, moving from an average of $1,801 to over $2,600 per ounce.
Despite this bullish performance, the Bank of Ghana recently confirmed audited losses totaling over GH¢7 billion between 2022 and 2024, citing trading shortfalls and supply chain costs.
Seth Klaye contends that in any standard business model, the final price is built to cover costs, and the failure to revalue existing reserves to reflect current market heights suggests a disconnect in how the nation’s mineral wealth is being managed.
He further questioned why the Ministry of Finance is being invited to absorb these costs when the assets themselves are gaining value.
Revaluation Realities and Macroeconomic Disconnects
The crux of the expert’s concern lies in the principles of mark-to-market accounting and the “price build-up” inherent in commodity trading.
While the central bank argues that these losses are “policy costs” intended to disincentivize smuggling by offering competitive domestic prices, the lack of a transparent revaluation framework obscures the true net worth of the reserves.
If the state continues to treat the G4R programme as a high-cost trading entity rather than a strategic asset holder, it risks turning a gold-rich advantage into a perpetual accounting liability. Profitability should naturally stem from the “revaluation surplus,” which reflects the difference between the purchase price in previous years and the record-breaking spot prices seen in early 2026.
To bridge this gap, Ghana must align its reserve management with international best practices.
The “strange” nature of these losses is amplified by the fact that the Bank of Ghana has successfully scaled ASM-sector supply from just one tonne in 2022 to over 100 tonnes in 2025.
This massive volume of physical gold should theoretically serve as a robust financial buffer.
Instead, the current reporting focuses on “accounting translation effects,” where gold is purchased at retail exchange rates to attract miners but booked at lower interbank rates, creating a “paper loss” that Klaye warned could lead to unnecessary fiscal pressure on the national budget.
Strategies for Unlocking Strategic Reserve Profitability
If approached with a more sophisticated hedging and valuation strategy, Ghana could derive immense benefits from its status as a leading gold producer.
Recent research from the University of Ghana indicates that the macroeconomic gains from the programme such as reducing gold smuggling and generating non-debt foreign exchange far outweigh the reported costs.
In 2025 alone, the formalization of gold previously lost to illicit channels brought an estimated $3.8 billion into the formal economy.
By utilizing gold as a “non-debt source of foreign exchange,” the state avoids annual interest costs on external borrowing that would have ranged between $756 million and $1.08 billion.
To derive these benefits fully, the government must transition from an “agency-based” model to a permanent, institutionalized framework under the 2026 reforms.
By adopting a “dynamic hedging program” using derivative contracts, the Bank of Ghana can lock in minimum floor prices to protect its stockpile from future volatility while capturing the upside of price rallies.
Furthermore, treating the programme’s expenses as a “quasi-fiscal stabilization cost” rather than a trading loss would provide better clarity.
This approach ensures that gold serves its true purpose: a sovereign wealth foundation that powers currency stability and reduces the nation’s debt burden through tangible, appreciated assets.
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