The power dynamics of global currency are perpetually in a state of flux, but one constant has been the steadfast position of the U.S. dollar as the world’s reserve currency.
Yet, even this might be under threat. A shadow has crept over the American financial landscape, and it’s shining with the luster of gold. The BRICS countries (Brazil, Russia, India, China, South Africa) are hatching a plan that could potentially redefine the global currency paradigm.
Accumulating gold: A strategic game-changer
The BRICS nations have been quietly stockpiling gold, and not in insignificant quantities. According to the World Gold Council, China secured a whopping 102 tonnes of gold in 2023, followed by Russia with 31.1 tonnes, and India adding 2.8 tonnes to its reserves.
These numbers may appear modest on a global scale, but they signal a potential tipping point that could challenge the U.S. dollar.
These four BRICS countries, excluding India, are also among the world’s largest gold producers. China leads with 380 tonnes per year, Russia follows with 300 tonnes, South Africa mines 90 tonnes, and Brazil contributes 80 tonnes.
With control over a significant part of the world’s gold production, the BRICS have the capacity to manipulate gold prices, effectively weaponizing this precious metal.
The financial writer Robert Kiyosaki, who has a flair for predicting economic twists, opined that the BRICS could employ gold to commence their de-dollarization plans, a move that could squeeze the life out of the U.S. dollar.
Yet, his words must be taken with a grain of caution. Kiyosaki’s predictions are intriguing but speculative at best.
A shift towards local currencies: De-dollarization in full swing
But gold isn’t the only tool in the BRICS’ arsenal. The bloc has been diligently working to persuade other countries to abandon the U.S. dollar in favor of local currencies.
BRICS New Development Bank chair, Dilma Roussef, has been vocal in promoting this shift, declaring that there are “no obstacles” for developing nations to transition to trade in their national currencies.
Roussef’s meeting with Russian President Vladimir Putin was not a mere casual conversation but a focused strategy session. Both leaders agree that this shift is not only feasible but beneficial for strengthening trade and local economies.
Putin, emphasizing the growth in settlements, believes that the bank will play a pivotal role in furthering these efforts. The upcoming summit in Johannesburg is expected to reinforce this campaign, pushing forward the expansion criteria for the bloc.
The BRICS nations are not merely tinkering with economics; they are crafting a whole new narrative that could shake the very foundation of the global financial order.
By accumulating gold and advocating for trade in local currencies, they are subtly undermining the dominance of the U.S. dollar. However, as with all grand schemes, only time will reveal whether these strategies will bear fruit or crumble under the weight of ambition.
The U.S. dollar can breathe for now, as the creation of a new BRICS currency won’t be on the agenda at the next summit. But the tide is shifting, and the undertow is powerful.
With gold and de-dollarization at the forefront of the BRICS’ strategy, the world may soon witness an economic landscape transformed by the gleam of gold and the power of local currency.
