THE GLOBAL MOVE against the US dollar’s unfair advantage is having multiple effects:
- Gold prices have leapt 40 per cent in 12 months and will rise further, brokers say.
- The BRICS countries have decided not to launch a new united currency but will instead increase use of local units of value in cross-border transactions.
- And plans are afoot among BRICS members to replace the weaponized US dollar with a notional multipolar unit with a price set by the value of gold alongside a basket of currencies.
STOCKING UP ON GOLD
Many of Asia’s central banks, including China and India, have been regularly increasing their stocks of gold.
But brokers note that western nations are not joining the rush, with only the central bank of Poland making big purchases of the yellow metal. This may be because China and Russia are the biggest producers of gold, and they are reluctant to divert cash to countries the US sees as competitors.
That reluctance doesn’t hold true for western investors and investment banks. Both Goldman Sachs and UBS are telling clients that gold, which has risen to as high $2,758 an ounce, a week ago, will likely rise to $3,000 next year.
GEOPOLITICAL TURMOIL
In the past, gold prices jumped during periods of geopolitical turmoil—and there’s certainly a lot of that happening, with a faltering war in Europe, an under-reported war in Africa, a shockingly brutal war in Gaza, and a US election that is guaranteed to leave 80 million people angry and disappointed.
But on top of that, there are multiple other issues.
First, there’s a rising awareness that the world as a whole will no longer allow the US dollar to be weaponized to give a single nation a massive advantage over the rest.
Second, the west’s position of moral superiority to “rule the world” has been replaced with a massive black hole over its “ironclad” support for Israel’s attacks on Gaza, the West Bank, Lebanon, Yemen, Syria, and now Iran.
Third, the western media, with its “west good, east bad” message, is still dominant over global media channels, but its western lens viewpoint is now seen with extreme scepticism.
And fourth, it’s now widely recognized that the 13% rich west will be overtaken by the unstoppable organic growth of the economies of the 87% rest of the world, whatever the US does with its favorite weapons of sanctions, military intimidation, and global political interference, or hybrid warfare. Businesses want to prepare for tomorrow, not today.
NO JOINT CURRENCY FOR BRICS
The BRICS countries have seen the struggles of the Euro, so do NOT want to shift to a joint currency. Instead, as Russian leader Vladimir Putin said at the end of the recent BRICS conference in Kazan, Russia, they will encourage the use of local currencies, while working on a bridging concept that will provide a fairer, safer alternative for cross-border transactions than the US dollar. Picture a unit that is based on 40 per cent gold and 60 per cent currencies.
“We are not refusing, not fighting the dollar, but if they don’t let us work with it, what can we do? We then have to look for other alternatives, which is happening,” Putin said.
There’s also a future-focused reason on why Asian countries are stocking up on gold. People want to trade with countries such as China, seen as competitors of the US. Trading in gold will enable them to avoid US sanctions for doing so.
The meeting of the BRICS nations ended with a declaration that did not mention any plan to de-dollarize global payments. Instead, it made a mild-sounding statement: “We welcome the use of local currencies in financial transactions between BRICS countries and their trading partners.”
And that gentle suggestion shows the subtle way that BRICS will change history.
Image at the top by Fridayeveryday.