A development economist has entered Ghana’s heated gold reserves debate, arguing that massive stockpiles offer false security while productive investments drive genuine prosperity.
Dr. Hene Aku Kwapong, a Fellow at the Ghana Center for Democratic Development (CDD-Ghana) and former Wall Street executive, challenged conventional thinking on reserve management. His intervention comes as the Bank of Ghana faces scrutiny over selling approximately half its gold holdings, reducing reserves from 37.1 tonnes in September 2025 to 18.6 tonnes by December 2025.
The controversy has sparked passionate responses from economists, policymakers and citizens debating whether gold provides essential financial insurance or represents wasted economic potential. Dr. Kwapong firmly supports the latter view.
His core argument rejects gold as a wealth building tool. The precious metal generates zero income, pays no interest and yields no dividends, he explained. Unlike factories, businesses or farmland, gold sits idle without expanding or creating jobs.
Countries investing in equities, human capital and infrastructure accumulate substantially more wealth over time than nations hoarding gold, according to the economist. He emphasized that productive assets reinvest earnings and generate employment, while gold merely occupies vault space.
Dr. Kwapong described gold reserves as expensive insurance policies. The metal holds value during global crises but contributes little to economic momentum during stable periods. For developing economies like Ghana requiring massive resources for growth, tying up scarce savings in non yielding assets creates significant opportunity costs.
Every cedi locked in gold vaults means fewer resources available for roads, schools, factories and innovation, he noted. Excessive gold holdings represent opportunity cost rather than strength, in his assessment.
The analyst also disputed claims that gold reserves automatically strengthen currencies. He argued that currency values depend on productivity, fiscal discipline, credible institutions and efficient markets, not metal secured underground.
Gold fails to raise output, improve governance or deepen capital markets, Dr. Kwapong stated. Therefore it plays minimal roles in determining exchange rate stability over extended periods.
He explained that currency strength derives from credibility, productivity and institutional quality. Holding more gold does not boost productivity, enhance capital markets or improve governance. Gold reserves remain inactive while real economies operate elsewhere, which matters greatly for developing nations.
Critics pointing to United States, German and French gold holdings miss crucial context, according to Dr. Kwapong. Those stockpiles represent historical remnants from the Bretton Woods monetary system rather than modern portfolio decisions.
If advanced economies were building reserve portfolios today from scratch, gold would occupy far smaller shares, he insisted. Most developed nations currently hold relatively modest gold percentages in their total reserves.
The United States, Germany, France and Italy are frequently cited as counter examples, but those holdings are historical artifacts rather than results of contemporary policy choices, Dr. Kwapong emphasized. Modern portfolio theory would not produce such compositions if countries started fresh.
His position aligns with broader policy shifts at the Bank of Ghana. Governor Dr. Johnson Asiama recently confirmed the central bank deliberately reduced gold concentration after it exceeded 40 percent of total reserves. The institution sold portions and reinvested proceeds into income earning foreign assets.
Despite lower gold holdings, Ghana’s gross international reserves climbed to 13.8 billion dollars by December 2025, providing 5.7 months of import cover. This represents substantial improvement from 9.1 billion dollars a year earlier.
University of Ghana economists recently presented research showing the Ghana Gold Board (GoldBod) helped formalize 39.4 tonnes of previously smuggled gold in 2025 alone, generating approximately 3.8 billion dollars in additional foreign exchange. The benefit to cost ratio reached roughly 18 to 1, according to their analysis.
The International Monetary Fund (IMF) acknowledged Ghana’s progress while noting 214 million dollars in losses from gold trading operations during 2025. However, IMF officials emphasized those figures reflect accounting costs rather than direct cash losses to the state.
Dr. Kwapong frames the debate as fundamentally about development priorities rather than reserve management technicalities. He views the question as whether Ghana should prioritize comfort through gold accumulation or growth through productive deployment.
Gold may provide psychological comfort during uncertainty, but it cannot replace investment, productivity and institutional strength, he argued. For sustainable long term growth, Ghana’s scarce resources should flow toward assets actively supporting economic expansion rather than sitting dormant in storage.
The economist believes the real issue is not whether gold has value but whether it should dominate reserve strategy. His position challenges deep seated assumptions about gold’s role in national financial security.
Development economist Dr. Frank Bannor has called for greater transparency regarding the sharp decline in gold holdings. He warned that failure to clearly explain such significant transactions could undermine public confidence in reserve management and monetary governance.
The debate reflects broader tensions between traditional views of gold as ultimate financial security and modern portfolio theories emphasizing productive asset allocation. As Ghana navigates economic recovery while managing International Monetary Fund (IMF) programme requirements, these competing perspectives will likely shape reserve management policies for years ahead.
