BRICS Challenges the USD with a Soaring Asset: Gold

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Business Today

The BRICS (Brazil, Russia, India, China, and South Africa) group, known for its expanding influence, has been making waves in the global economy. Starting from January 1, 2024, they welcomed five new members: Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates. With this expansion, the BRICS aims to reduce the international trade’s reliance on the US dollar and establish a new reserve currency.

Gold has emerged as a central player in the BRICS’ currency strategy. The precious metal, which is gaining value worldwide, holds a prominent position in their ambitious plan. On April 10, the global spot gold price hovered around $2,346.3 per ounce, while gold futures for June 2024 on the New York Comex exchange reached $2,366.9 per ounce.

In Vietnam, gold prices experienced a rapid rise in recent days. However, on the morning of April 10, the price of 9999 SJC gold dropped by 300,000 dong per tael in both buying and selling, reaching 84.5 million dong per tael (selling price).

According to Cointribune, the increasing demand for gold highlights its pivotal role as a battleground between the traditional dominance of the US dollar and the growing power of the BRICS, led by Russia and China. In 2023, the BRICS became the largest gold buyers, with China alone purchasing 225 tons of gold, followed by Russia, India, Brazil, and South Africa.

The Western-imposed sanctions prompted Russia to seek alternative financial mechanisms, leading them to increase their use of gold to support their currency. On April 4, Russia announced plans to double its gold and foreign currency reserves, with the buying period set from April 5 to May 7, 2024. Anton Siluanov, Russia’s Finance Minister, revealed that they would spend 235.3 billion roubles (approximately $2.6 billion) or 11.2 billion roubles per day to purchase foreign currency and gold.

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This move will help Russia overcome US sanctions and ensure uninterrupted economic development. Additionally, reducing their holdings of the US dollar and replacing it with gold and other currencies will safeguard Russia against financial risks. With the US having a debt of 34.4 trillion USD, any economic slump in the US would have a detrimental effect on other countries and their economies.

Furthermore, Cointribune reports that Russia’s intention to establish a gold-backed financial system encourages other nations, particularly in Africa, to reassess their reliance on the US dollar. Countries like Zimbabwe are closely monitoring the BRICS’ de-dollarization efforts and exploring the potential for gold-backed currencies. African nations view gold-backed currencies as a crucial step towards achieving their economic growth targets, catching up with the economic development in the Western and Northern regions.

In a world seeking financial alternatives to the US dollar, the BRICS’ focus on gold as a vehicle for change poses a significant challenge to the USD’s global dominance. As the BRICS group expands its influence and embraces gold as a strategic asset, the global financial landscape is poised for a transformation that could reshape the global economy.

With the BRICS propelling the movement and gold soaring in value, all eyes are on the future of global currencies and the potential impact on economies worldwide.