BRICS Takes on the Dollar: The Rise of Gold-Backed Currencies
With recent bank failures and global economic uncertainty, the U.S. dollar seems really unstable and its future is more uncertain than ever.
In 2023, the U.S. dollar faces competition from multiple sources, including gold, which the new BRICS currency may soon support. Gold has experienced a steady 20% increase in value since last year and is considered a reliable hedge against inflation.
Notably, the demand for gold in 2023 is not driven by individual or institutional investors but by the central banks of BRICS countries.
As per the World Gold Council, Russia, China, and India’s central banks have been the primary buyers of gold in 2023. The dollar’s value has decreased due to accumulating debt, leading many countries to avoid falling into a debt trap.
In Q1 2023, China purchased 102 tonnes of gold, Russia acquired 31.1 tonnes, and India added 2.8 tonnes to its reserves. BRICS nations plan to support their currencies with gold instead of the dollar, signaling a decline in the latter’s dominance in global trade.
The upcoming BRICS summit in South Africa may be a game-changer. Reports suggest that gold could be used as a benchmark for the new currency, weakening the dollar’s strength in the market. This development presents a significant advantage for BRICS countries to introduce a gold-backed currency.
In conclusion, a time when countries keep gold reserves instead of the U.S. dollar is not too far away. The next BRICS summit may be crucial in determining the dollar’s future in the years to come.