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The History of the Lake Victoria Goldfield

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The following content is sponsored by Tembo Gold

The History of the Lake Victoria Goldfield

One of the most important mining sites in Africa, Tanzania’s Lake Victoria Goldfield holds several multi-million-ounce gold deposits and has ongoing operations by some of the largest gold companies in the world.

In this infographic from our sponsor Tembo Gold, we dive into the history of the site, examining its significance and gold production to date.

The Significance of the Lake Victoria Goldfield

Despite Southern and Western African countries mining gold for centuries, the gold reserves in East African countries, specifically those of Lake Victoria, have been relatively untapped in nature until recently.

According to Tanzania’s Ministry of Energy and Minerals, Tanzania has proven reserves of over 44 million ounces of gold, with many discoveries around the Lake Victoria Goldfield turning into multi-million-ounce deposits.

Bolstered by gold-rich greenstone belts, a rich history and growing infrastructure, the Lake Victoria Goldfield is a strategic and significant location for mining.

Over 100 Years of Gold Exploration

Before Resolute Mining’s Golden Pride mine opened in 1999, Lake Victoria Goldfield had a few relatively dormant decades. Gold exploration in the area, however, has been underway for more than 100 years.

The first ever commercial mine in East Africa started production in 1909, following Germany’s establishment of the German East Africa colony in 1891. By 1937, three gold mines dominated gold production in Lake Victoria. Within four years, the region’s annual production of gold reached more than 150,000 ounces.

However, things changed for Lake Victoria’s mining industry when Tanzania gained independence from Germany in 1961. Under the new government, agriculture was seen as the preferred approach for economic growth, and slowly but surely, all commercial gold mining in the country came to a halt.

The Tanzanian government did not revisit policies that favored mining and foreign investment again until 1998. Within one year of the new Mining Act, Golden Pride started mining in the Lake Victoria Goldfield, and several more followed. From approximately 10,000 ounces of gold in 1997, gold production flew to 1.68 million ounces by 2005.

Now, in 2023, Lake Victoria has significant infrastructure with a 25-year history of post-colonial mine development predated by over 100 years of gold exploration.

Lake Victoria Goldfield’s Legacy

As physical gold continues to play an integral part in asset management and investor interests rise in the face of inflation, gold exploration and production is as important and valuable as ever.

With a growing establishment of mines from world-class gold companies and exceptional preliminary drilling results in many projects– including in Tembo Gold’s 32 km2 project area–Lake Victoria Goldfield’s legacy is only beginning.

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Real Assets

Visualized: Real Interest Rates by Country

Currently, over half of the major economies have negative real interest rates.

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Visualized: Real Interest Rates of Major World Economies

Interest rates play a crucial role in the economy because they affect consumers, businesses, and investors alike.

They can have significant implications for people’s ability to access credit, manage debts, and buy more expensive goods such as cars and houses.

This graphic uses data from Infinity Asset Management to visualize the real interest rates (ex ante) of 40 major world economies, by subtracting projected inflation over the next 12 months from current nominal rates.

ℹ️ Ex ante is Latin for “before the event”, and in this case refers to the fact that this data uses projected inflation rates to calculate real interest rates.

Nominal Interest Rates vs. Real Interest Rates

Nominal interest rates refer to the rate at which money can be borrowed or lent at face value, without considering any other factors like inflation.

Meanwhile, the real interest rate is the nominal interest rate after taking into account inflation, reflecting the true cost of borrowing or lending. Real interest rates can fluctuate over time and are influenced by various factors such as inflation, central bank policies, and economic growth. They can also influence economic growth by affecting investment and consumption decisions.

According to the International Monetary Fund (IMF), since the mid-1980s, real interest rates across several advanced economies have declined steadily.

historical declining rates

As of March 2023, Brazil has the highest real interest rate among the 40 major economies shown in this dataset.

Below we look at Brazil’s situation, along with the data of the four other major economies with the highest real rates in the dataset:

Nominal Interest RateReal Interest Rate
🇧🇷 Brazil13.75%6.94%
🇲🇽 Mexico 11.00%6.05%
🇨🇱 Chile 11.25%
4.92%
🇵🇭 Philippines6.00%2.62%
🇮🇩 Indonesia 5.75%2.45%

In general, countries with high interest rates offer investors higher yields on their investments but also come with higher risks due to volatile economies and political instability.

Below are the five countries in the dataset with the lowest real rates:

Nominal Interest Rate Real Interest Rate
🇦🇷 Argentina78.00%-19.61%
🇳🇱 Netherlands3.50%-7.42%
🇨🇿 Czech Republic7.00%-7.17%
🇵🇱 Poland 6.75%-6.68%
🇧🇪 Belgium3.50%-6.42%

Hyperinflation, as seen in Argentina, can lead to anomalies in both real and nominal rates, causing problems for the country’s broader economy and financial system.

As you can see above, with a 78% nominal interest rate, Argentina’s real interest rates remain the lowest on the planet due to a staggering annual inflation rate of over 100%.

Interest Rate Outlook

Increasing inflation and tighter monetary policy have resulted in rapid increases in nominal interest rates recently in many countries.

However, IMF analysis suggests that recent increases could be temporary.

Central banks in advanced economies are likely to ease monetary policy and bring interest rates back to pre-pandemic levels when inflation is brought under control, according to the fund.

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Visualizing the Assets and Liabilities of U.S. Banks

Banks play a crucial role in the U.S. economy, and understanding their balance sheets can offer insight into why they sometimes fail.

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Zoomed in crop of a voronoi diagram of the assets and liabilities of U.S. banks

Understanding the Assets and Liabilities of U.S. Banks

The U.S. banking sector has more than 4,000 FDIC-insured banks that play a crucial role in the country’s economy by securely storing deposits and providing credit in the form of loans.

This infographic visualizes all of the deposits, loans, and other assets and liabilities that make up the collective balance sheet of U.S banks using data from the Federal Reserve.

With the spotlight on the banking sector after the collapses of Signature Bank, Silicon Valley Bank, and First Republic bank, understanding the assets and liabilities that make up banks’ balance sheets can give insight in how they operate and why they sometimes fail.

Assets: The Building Blocks of Banks’ Business

Assets are the foundation of a bank’s operations, serving as a base to provide loans and credit while also generating income.

A healthy asset portfolio with a mix of loans along with long-dated and short-dated securities is essential for a bank’s financial stability, especially since assets not marked to market may have a lower value than expected if liquidated early.

ℹ️ Mark-to-market means current market prices are being used to value an asset or liability on a balance sheet. If securities are not marked to market, their value could be different once liquidated.

As of Q4 2022, U.S. banks generated an average interest income of 4.54% on all assets.

Loans and Leases

Loans and leases are the primary income-generating assets for banks, making up 53% of the assets held by U.S. banks.

These include:

  • Real estate loans for residential and commercial properties (45% of all loans and leases)
  • Commercial and industrial loans for business operations (23% of all loans and leases)
  • Consumer loans for personal needs like credit cards and auto loans (15% of all loans and leases)
  • Various other kinds of credit (17% of all loans and leases)

Securities

Securities make up the next largest portion of U.S. banks’ assets (23%) at $5.2 trillion. Banks primarily invest in Treasury and agency securities, which are debt instruments issued by the U.S. government and its agencies.

These securities can be categorized into three types:

  • Held-to-maturity (HTM) securities, which are held until they mature and provide a stable income stream
  • Available-for-sale (AFS) securities, which can be sold before maturity
  • Trading securities, held for short-term trading to profit from price fluctuations

Along with Treasury and agency securities which make up the significant majority (80%) of U.S. banks’ securities, banks also invest in other securities which are non-government-issued debt instruments like corporate bonds, mortgage-backed securities, and asset-backed securities.

Cash Assets

Cash assets are a small but essential part of U.S. banks’ balance sheets, making up $3.1 trillion or 13% of all assets. Having enough cash assets ensures adequate liquidity needed to meet short-term obligations and regulatory requirements.

Cash assets include physical currency held in bank vaults, pending collections, and cash balances in accounts with other banks.

Liabilities: Banks’ Financial Obligations

Liabilities represent the obligations banks must fulfill, including customer deposits and borrowings. Careful management of liabilities is essential to maintain liquidity, manage risk, and ensure a bank’s overall solvency.

Deposits

Deposits make up the largest portion of banks’ liabilities as they represent the money that customers entrust to these institutions. It’s important to note that the FDIC insures deposit accounts up to $250,000 per depositor, per insured bank, for each type of account (like single accounts, joint accounts, and retirement accounts).

There are two primary types of deposits, large time deposits and other deposits. Large time deposits are defined by the FDIC as time deposits exceeding $100,000, while other deposits include checking accounts, savings accounts, and smaller time deposits.

U.S. banks had $17.18 trillion in overall deposits as of April 12th 2023, with other deposits accounting for 74% of the overall liabilities while large time deposits made up 9%.

Borrowings

After deposits, borrowings are the next largest liability on the balance sheet of U.S. banks, making up nearly 12% of all liabilities at $2.4 trillion.

These include short-term borrowings from other banks or financial institutions such as Federal Funds and repurchase agreements, along with long-term borrowings like subordinated debt which ranks below other loans and securities in the event of a default.

How Deposits, Rates, and Balance Sheets Affect Bank Failures

Just like any other business, banks have to balance their finances to remain solvent; however, successful banking also relies heavily on the trust of depositors.

While in other businesses an erosion of trust with customers might lead to breakdowns in future business deals and revenues, only in banking can a dissolution in customer trust swiftly turn into the immediate removal of deposits that backstop all revenue-generating opportunities.

Although recent bank collapses aren’t solely due to depositors withdrawing funds, bank runs have played a significant role. Most recently, in First Republic’s case, depositors pulled out more than $101 billion in Q1 of 2023, which would’ve been more than 50% of their total deposits, had some of America’s largest banks not injected $30 billion in deposits on March 16th.

It’s important to remember that the rapidly spreading fires of bank runs are initially sparked by poor asset management, which can sometimes be detected on banks’ balance sheets.

A combination of excessive investment in long-dated held-to-maturity securities, one of the fastest rate hiking cycles in recent history, and many depositors fearing for and moving their uninsured deposits of over $250,000 has resulted in the worst year ever for bank failures in terms of total assets.

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