There has been a lot of talk and rumor around the possibility of the BRICS Nations (Brazil, Russia, India, China, and South Africa) announcing a new gold-backed currency to enable trading between them.
There has been interest from 40 other nations in joining BRICS, so the coalition is only likely to strengthen in the coming years with more countries onboarding and an ever-increasing volume of trade being conducted between these nations.
Will BRICS announce a Gold-Backed Currency this month?
There has been much speculation in the media as to whether BRICS will announce the creation of a new currency this month at the BRICS conference in South Africa, with many conflicting statements and fake news abounding on the subject.
As yet, no official from any of the countries involved has stated publicly that this is going to happen.
A more likely scenario is that a “framework” for a gold-backed currency will be discussed and possibly formalized at the meeting.
This doesn’t mean that the gold-backed currency is still a pie-in-the-sky pipedream by any means. If you look at this year’s gold buying and stockpiling by the countries involved in the BRICS coalition, and some that wish to be involved, such as Turkey, it is very obvious that they are gearing up for a substantial usage of gold, which means that the BRICS gold-backed currency is on the horizon in the not too distant future.
Why a Gold-Backed Currency?
For decades the US Dollar has held hegemony among all other currencies when it came to global trade. This not only kept the US Dollar strong because it was the medium for global trade settlement, but it also cemented the US as the most powerful and dominant country in the world.
Geopolitically, times are very much changing, and all of the BRICS countries are strongly invested in moving away from the US Dollar as a trading medium. Hence, the necessity of a “strong and agreed medium of exchange” between them to facilitate trade is essential.
Gold has long been trusted as a way of backing numerous fiat currencies so that they maintain their value. It is highly likely that in order for a new “currency” to be trusted by a diverse range of nations, such as the BRICS coalition, that currency will need to be backed by valuable physical assets, such as precious metals, the primary of which is obviously gold.
Are other Countries considering a Gold-Backed Currency?
The BRICS coalition is not alone in considering a currency backed by gold and other hard physical assets. Russia and Iran are in talks about creating a gold-backed stablecoin to facilitate trade between the two countries.
Vedomosti, the Russian news site, reported that the two countries intended to create a “commodity-backed stablecoin that will be pegged to recognized assets like gold, so the value is clear and observable for all participants.”
Another nation going back to the “Gold Standard” is Zimbabwe, which launched a digital currency “fully backed by physical gold reserves held in the bank,” Reserve Bank of Zimbabwe Governor John Mangudya stated.
China is another country heavily involved in stockpiling gold, with massive ongoing purchasing this year and some huge purchases last year, including a massive $4.6 billion purchase of Swiss Gold in July 2022. This may be an indication of the BRICS Gold-backed currency becoming an imminent reality, or it may be an indication of collaboration with Russia on a joint gold-backed currency.
With many nations’ currencies internationally being devalued by inflation, it is well within the realms of possibility that other countries may well look to return to the “Gold Standard” and revalue their sovereign currencies by pegging that value to gold as many countries had done last century with great success.
What are the implications to the US Dollar of BRICS and/or other Gold-Backed currencies?
De-dollarization has been defined as “countries reducing their reliance on the US dollar and advancing trade and economic reserves in their own currency or alternate resources, including gold and precious metals.”
This trend is only going to accelerate, and it is only a matter of time before the US Dollar loses a lot of its status as the world reserve currency. You only need to look at the history of the British Pound to see how can happen over a few decades, with the Pound now being considered a second-tier currency.
A currency’s value is a function of supply and demand. With a substantial and ongoing lessening of demand for the US Dollar over time, its value is going to drop accordingly.
For the U.S. as a nation, this is likely to mean less access to capital, higher borrowing costs, and lower stock market values, amongst other things.
How is this going to affect the individual American?
With De-dollarization becoming an increasing reality, this will only continue to drive prices up as the value of the USD decreases and reduce the value of your assets in real terms as their purchasing power will be reduced.
With inflation on the rise, rampant money printing by the Federal Reserve, a significant number of Banks failing because they cannot meet their obligations, and the escalating tensions geo-politically, it is a worrying time for the average American investor.
On top of this concerning negative news for the dollar, many informed commentators are predicting that the US will be in a recession next year.
Jake Jolly, head financial analyst of renowned financial investment firm BNY Mellon Investment Management, stated last month on CNN Business, “A recession sooner or later remains more likely than not.”
So what, then, is the solution? In times of economic turmoil at home, with ongoing high inflation, excessive money printing, and war [and warmongering] on the global stage, not to mention the supply bottlenecks caused by sanctions and the lingering effects of the pandemic, how do you protect the wealth you have accumulated over a lifetime of hard work from erosion?
How can you protect your lifetime accumulated wealth?
Highly reputable investment website Investing.com stated in a recent article about the BRICS currency.
“The mere fact that BRICS countries are considering gold as a basis for international trade should incentivize central banks – and individual investors – to accumulate precious metals. If gold’s role as a global alternative currency is to increase, then so, likely, will its price”.
The best-known and most commonly recognized “safe haven asset” is physical gold. Gold has been recognized for centuries as a store of value and is prized by many cultures. The value and credibility of gold are very much a part of our everyday language, with companies promoting their premium product lines as “gold standard products,” great opportunities being called “golden opportunities,” and “good as gold” used to describe something of high value.
The actual “Gold Standard” itself was a reference to currencies, particularly the US dollar and the British Pound, being backed by physical gold held in vaults so that each dollar or pound issued was backed by the equivalent value in gold. This ensured that the value of the currency and its purchasing power was maintained. The US abandoned the Gold Standard for the last time in 1971 under Richard Nixon, making way for the excessive money printing that is going on today, with no genuine assets backing the value of the US dollar.
To put this devaluation into perspective in terms of actual purchasing power, an item that would have cost $50 in 1970 would have cost almost $350 in 2020, around seven times as much, a monstrous loss of purchasing power! [Source Statista.com]. Were you to have purchased an ounce of physical gold in 1970, that ounce of gold would have cost you around $38. That same ounce of gold today is worth $1964.00, a phenomenal gain in value!
A long-term bull market for gold is predicted!
With gold predicted to be in a bull market for the next at least five years and The World Gold Council predicting solid gold demand from central banks and Sovereign nations for the foreseeable future, now is an ideal time to get educated about the benefits of gold, and how you can use physical gold investment as a means of hedging your retirement portfolio against risk.
The future of gold investment is looking decidedly rosy, with educated commentators such as Juerg Kiener of Geneva-based Swiss Asia Capital, a well-recognized player in the international investment field, predicting that gold could soar to $4000 per ounce in 2023 alone on CNBCs Street Signs Asia broadcast recently.
Gold-Backed IRAS and 401ks
An increasingly popular way for US seniors and retirees to get involved in physical gold investing is by means of a Gold Backed IRA or 401k, and due to increasing demand, it is now a fairly straightforward process to change some or all of your existing IRA or 401k to one backed by physical gold. Making this change is accepted by the IRS as a non-taxable event.
Many astute, financially intelligent, and wealthy Americans who have built up a substantial retirement fund, such as Hall of Famer Joe Montana and TV host Mark Levin are looking to Gold IRAS to protect their lifetime’s accumulated wealth.
There is a process involved and specific rules and regulations around the types of gold you can invest in, as well as very clear rules around storage of the gold you choose to purchase [you must store your gold in a licensed depository, home storage is not permitted under IRS rules].
A reputable precious metals company will educate you on the advantages of a Gold Backed IRA, and if you feel that it is the right option for you, tailor a package that suits your lifestyle, timeframes, and individual investment goals and assist you in navigating the paperwork and legalities involved in making the switch.
