BRICS is looking to create a common currency using gold that could challenge the US dollar in the international trade sector. The speculation comes after BRICS countries China, India, and Russia splurged on accumulating gold this year. The top buyers of gold in 2023 will be the Central Banks of the BRICS countries, according to the World Gold Council.
BRICS aims to make their yet-to-be-released currency take on the US dollar and topple it from its global reserve status. This puts the American economy under pressure, as the US will have little means to fund its deficit.
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BRICS Common Currency Could Be Linked To Gold
Economist Jim Rickards revealed in a recent video conference that the upcoming currency could be linked to gold. He stressed that BRICS might not be backed by gold but could be “gold-linked” when it’s launched in the global markets.
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“We’re going to have a common currency (BRICS) which will be linked to the weight of gold,” he predicted. He explained that being backed by gold would make it worthless, as the US has more gold than the BRICS. Therefore, the BRICS currency being “linked to gold” will make it stronger in the markets. Rickards stressed that being linked with gold will make BRICS stable, as the precious metal rarely experiences volatility.
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“If a BRICS currency equals gold, you get a BRICS transfer exchange rate. Here’s the key, you’re not linking BRICS (currency) to the US dollar. You’re linking the currency to the weight of gold. Which means the dollar value fluctuates, and if BRICS is linked to gold, the dollar rate fluctuates (but BRICS will not fluctuate and remains stable)“, he said.
In conclusion, Rickards predicted that a time would come when the US would have to do everything to maintain the markets. “In other words, the US will do all the dirty work. They (US) will have to maintain the markets, they got to speculate, they got to hedge, they got to put capital.”