Gold Mining and Trading To Generate More Revenue For Nigeria Than Crude Oil, As Gold Heads For $2000

Gold In Nigeria

Nigeria’s economic development may receive a significant boost from gold mining and trading as gold prices hit $2000 and it's expected to increase the country's yearly revenue in taxes, royalties, foreign exchange reserves, and create more jobs.

As part of the economic diversification and reforms in the solid minerals sector, Nigeria has started refining its own reserve gold bar and has paid N268 million for a 12.5 kg bar to start a central bank stock.

According to Mr. Lukman Otunuga, the Senior Research Analyst, FXTM, the increase in the prices of both gold and oil is a timely and positive indication that Nigeria’s investment is moving in the right direction amidst the COVID-19 pandemic as gold remains a market-moving and safe-haven asset

The precious metal appreciated almost 30 percent for the year-to-date as it heads to some $2,000.

“There are several factors over-and-above the COVID-19 disease that are supporting gold prices. Safe-haven buying triggered by fears over tense United States-China relations has boosted the metal’s spot and futures prices. In recent events, the US closed one of its six consulates in China and a Chinese consulate in Houston was closed, raising questions about whether the second phase of trade talks can make any constructive progress,” Otunuga said.

He added that investors now prefer to trade gold over a dollar because of low yields on treasury bonds and exposure to negative COVID-19 sentiment.

According to him, if well harnessed, gold mining and trading have the ability to potentially generate more revenue than crude oil for Nigeria

“It is also encouraging development in the diversification of the national economy which the government hopes could lead to a stronger job market. If well harnessed, gold mining and trading have the ability to potentially generate more revenue than crude oil for Nigeria,” Otunug said.

This burgeoning news platform recalls that Trading Economics had placed Nigeria as the six largest countries with gold deposits in Africa, with estimated gold reserves of over 200 million ounces, most of which have not been exploited

Otunuga noted that Nigeria's gold mining sector is expected to create 250,000 new jobs, provide the government with an additional estimated yearly revenue in taxes, royalties, and foreign exchange reserves.