While the price of gold on world stock exchanges reaches historical highs, up to 4.400 dollars per ounce, Bosnia and Herzegovina (BiH), unlike most countries, cannot make use of even a part of the potential benefits that such global upheavals offer.
“Our monetary policy is so restricted that we cannot change the value of the currency, even though inflation is at least twice as high as it was when we defined that relationship,” warns economic analyst Zoran Pavlovic. “We have become a non-competitive market.”
Gold rises, but BiH remains on the sidelines
Gold prices in recent months reflect all the uncertainty of the modern world – wars, inflation, and fear of the loss of money’s value. While central banks around the world, led by China, India, and Russia, are increasing their gold reserves and fleeing from the dollar, BiH has almost no room for maneuver to respond to these changes.
The reason is simple: the fixed exchange rate of the BAM against the euro. This system, established through a currency board, prevents the Central Bank of BiH (CBBiH) from independently creating monetary policy. The BAM must be fully backed by foreign exchange reserves in euros, so the value of the domestic currency cannot be adjusted to market conditions, neither in inflationary crises nor in periods of recession.
“Our system does not allow us to use monetary tools such as changes in interest rates or currency devaluation in order to stimulate exports and mitigate inflation,” says Pavlovic.
Modest gold reserves – a missed opportunity from the past
BiH today owns around 3.5 tons of gold, which is a relatively small amount compared to the countries of the region. Pavlovic reminds that the country already lost a significant part of its potential after the inherited Yugoslav gold was sold at 250 dollars per ounce – at a time when, just six months later, it was worth almost twice as much.
“We were left without a precious reserve that today would have a multiple higher value,” he says.
Nevertheless, the CBBiH today retains part of its reserves in gold, recognizing its role as a symbol of stability and security.
Gold for citizens – a luxury, not an investment
For citizens of BiH, investing in gold makes almost no sense. Unlike in the European Union (EU), in BiH, value-added tax and customs duties are applied to monetary gold, which makes investing unprofitable.
“That is why investors from BiH who want to invest in gold do so abroad, most often in EU countries where there are no additional costs,” explains Pavlovic.
Gold as a mirror, not salvation
While the world reacts to the rise in gold prices as a signal of uncertainty, BiH faces a much deeper problem – the inability to independently shape its own monetary destiny.
“The bigger problem for BiH is not that we do not have enough gold, but that we cannot model our own monetary policy,” concludes Pavlovic.
“The exchange rate against the euro limits us and makes exports less competitive. In a world where gold dictates confidence, we are merely observers.”
Gold, once a symbol of wealth and power, is today more a mirror of global uncertainty. And in that reflection, BiH sees all its economic weaknesses, dependence, helplessness, and missed opportunities, Forbes writes.
