BRICS nations China and Russia may be stockpiling some of their massive gold production to support a new currency to rival the US dollar. This is according to Daniel McCarthy, a strategist at DailyFX.com.
The new BRICS currency that has been a hot topic for months is supposed to be backed by Gold. McCarthy believes that the two top BRICS nations may be using this to their advantage, and picking up the resource in rapid and large amounts.
“The gold price continues to oscillate around US$ 1,940 going into Tuesday’s trading session as market headwinds might be offset by geopolitical factors that have seen volatility in the precious metal slide lower,” McCarthy said earlier this week.
Also Read: BRICS Discussing ‘Unified Settlements’ as Alternate to the US Dollar
He adds that even though other challenges to U.S. dollar dominance have been unsuccessful in the past, China’s role in the international gold market, and the recent behavior of other BRICS members, could bring success this time. Many experts have been split on the future of the US dollar with the emergence of this new currency.
BRICS Gold-Backed Currency the Beginning of the End for the US Dollar?
There are some believe that a gold-backed BRICS currency could mark the beginning of the end for the US Dollar. However, most experts agree that the demise of USD will take a lot more effort. One of the leading missions of BRICS is de-dollarization, hence the new currency talks at this past summit. McCarthy also says that BRICS has been snooping around the top Gold-supplying countries lately. He adds that they have been stockpiling as much as they can.
Also Read: China: BRICS Trade Reaches $330 Million, Outperforms US Trade
“On a recent trip to Western Australia, one the largest physical gold-producing regions globally, a number of contacts highlighted that almost every ounce of the yellow metal currently being dug out of the ground was being put on a ship to China…Such anecdotes of other BRIC members taking similar actions have been reported elsewhere.”
Daniel McCarthy
China and Russia are also already big producers of the precious metal. Therefore, it will be interesting to see the supply of Gold in those two countries. As well as the remaining top BRICS countries and newly added nations.