BRICS announced their plan to launch their own currency to move away from dependence on the dollar. While waiting for this project to come to fruition, the alliance is avoiding the dollar through various strategies. One of the latest, the massive use of gold by the BRICS as a means of supporting their local currencies.
Gold is at the heart of BRICS monetary strategy
Since last year, BRICS has continued to expand its reach and influence. The alliance plans to expand its membership in 2024. But it is moving forward with ambitious and bold initiatives.
As a reminder, the BRICS notably announced the development of a new currency aimed at limiting the dependence of international trade on the American dollar. A prospect which should represent a significant geopolitical change.
It turns out that gold, a raw material highly valued by the BRICS, is the central element to support this initiative. Recently the price of the precious metal reached an all-time high of $2,340, up approximately 1.24% over the past 24 hours.
The surge in demand for gold underscores its central role as a battleground between the traditional dominance of the U.S. dollar and the emerging power of the BRICS. Russia and China are the leaders of this dynamic.
The role of Russia and China in this dynamic
It must be said that Russia's recent actions in Ukraine have prompted it to seek other financial mechanisms. As a result, Russia and the BRICS are increasingly turning to gold to support their currencies.
At the same time, more and more countries, including the United States, are reconsidering gold as a global reserve. This, while the dollar is gradually declining. A dynamic that elevates the status of gold, setting the stage for a prolonged standoff between the BRICS and the dollar.
Furthermore, Russia's desire to establish a system based on gold is encouraging other countries, particularly in Africa, to reassess their dependence on the dollar. Countries like Zimbabwe are closely observing BRICS dedollarization efforts and are therefore exploring the potential of gold-backed currencies.
This comes against a backdrop where African nations aspire to match the economic growth seen in the western and northern regions. They therefore consider a currency backed by gold as a crucial step in achieving this objective. In any case, as BRICS gains ground in inspiring other nations to follow their example, the transformation of the international monetary system accelerates.
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