Over the last year, the gold market has seen immense interest from the global market as countries have sought to stockpile the asset. For many, this has been perceived as a hedge against the prominent currency within international trade and attempts to diversify holdings. Yet, amid BRICS de-dollarization, financial expert Peter Schiff says Central Banks are preparing for a US dollar collapse.
In a post to X (formerly Twitter,) Schiff explained the increase in foreign central banks’ gold acquisition strategies. Moreover, those efforts have been driven by China, which has remained the dominating party in the physical gold market. The continued purchase of the metal, and local currency promotion, could seal the US Dollars fate.
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Peter Schiff Says Central Banks Gold Acquisition is Preparing for the Worst
Throughout the last year, the BRICS economic alliance has not been shy regarding its de-dollarization push. Leaders from the bloc have spoken about the necessity for greater diversification within internationally prevalent currencies. However, they have opted to integrate initiatives that promote local currencies, and even develop their own.
One way that these countries have begun to diversify their asset holdings is through gold. Although that diversification is undoubtedly a part of it, it is not the sole reason. Amid these BRICS activities, Peter Schiff has warned that central banks are preparing for the US Dollar collapse with gold.
“Foreign Central Banks aren’t just buying [gold] to hedge against political risk,” Schiff said in a post. “They’re trying to get out in front of a major decline in the dollar’s value and a potential sovereign debt crisis. It’s US investors who don’t understand the rise, which is why they’re not buying.”
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The US debt has surpassed $34 trillion and continues to be an overlooked issue within the United States economy. Subsequently, the exposure of differing assets with value is the only real move to make for countries that are at risk of being too dollar-dependent. There are few countries as committed to this idea as the BRICS nations.
Speaking to Kitco News, Midas Touch Consulting managing director Florian Grummes, noted China’s impact on gold. Specifically, he noted the country “dominates the physical gold market through strong demand from the Central Bank and buying frenzy at the beginning of the Year of the Dragon.”
Considering sanctions placed against Russia, BRICS countries are by proxy at risk of similar actions. Therefore, steps to acquire gold, transition to local currencies, and develop its native currency become necessary. Although the dollar’s status is unquestioned, it unfortunately cannot keep its current pace forever.