The BRICS grouping of nations (Brazil, Russia, India, China, and South Africa) recently concluded its annual summit and signalled that when Russia takes on the mantal of chairmanship next year, a key task will be to continue to move away from Western payment mechanisms (primarily the dollar) and trade in alternatives.
The big question being asked as many of those nations continue to be major central bank buyers is, will that reserve currency be gold?
Daniel McCarthy, a foreign exchange strategist says that seems like it could be the case, and with the addition of new nations to BRICS, price action could be impacted.
He explained, “The currents of demand have been tilted as the BRIC (Brazil, Russia, India and China) nations seek an alternative to the US Dollar as a reserve currency. Much has recently been made of the potential for a gold-backed currency to allow these countries to bypass the US Dollar in international trade.”
McCarthy notes that on a trip to Australia, almost every ounce of gold being mined was destined to be shipped to China, with other BRIC member nations known to also be acquiring vast amounts of gold.
“Keeping in mind that Australia, China and Russia are also the top producers of gold, it might be the case that gold hoarding has been a feature of the price action of late,” he added.
With the next BRIC conference not taking place until a meeting in Russia in October 2024, the path is clear for gold to continue in high demand.
