Commodity Samachar- A few days back the announcement from BRICS created waves in the market and witnessed high volatility. The BRICS has been planning on creating a gold-backed currency that could potentially overthrow the US Dollar.
To those of you who’re unfamiliar with the BRICS, it’s an association of nations comprising Brazil, Russia, India, China and South Africa. The good news is that they might be on the verge of endorsing a new gold exchange standard.
Reports from a London-based research firm going by the name Crossborder Capital suggest that a united gold reserve is being made to back an international currency that’s yet to be named.
Several claims are arising stating that the gold reserves of the existing BRICS nation, combined with those of over 40 other nations who may be joining the initiative, could surpass the US reserves by the end of the year.
Could Saudi Arabia be the Ally BRICS has been waiting for?
Kitco.com had a spirited discussion recently with Andy Schectman, the President and Owner of Miles Franklin Precious Metals. An optimistic Scehctman said ” It’s coming. Whether or not it is a gold-back currency that is introduced in a few weeks or a few months, or next year, to me, the alliance that is being built represents the majority of the human population.
However, the most intriguing aspect of the interview would be the potential participation of Saudi Arabia in the upcoming BRICS summit
The BRICS is slowly becoming a powerhouse in the global economic dimension and is expected to expand its membership soon. Over 20 counties have formally asked to join the BRICS., including Saudi Arabia, Argentina, Iran, UAE and so much more.
Schectman said, ” There is a cohesion of countries joining together to break free from the Western influences.”. In many ways, he says that Saudi Arabia is the central figure surrounding the de-dollarization and the dollar dominance.
In the interview, Schectman talked about an interesting deal that was stuck between the Nixon Administration and Saudi Arabia in the 1970s, which witnessed Saudi trading oil exclusively in the dollar in exchange for a security guarantee from the US. This was the beginning of the shift within OPEC for the utilization of oil trades in the dollar currency. Due to this dynamic, the Greenback got its petrodollar stats.
A recent development has also been reported that led to speculations of a positive shift to the unnamed proposed BRICS currency. In recent news, Saudi Arabia approved the decision to join the China lead Shanghai Cooperation Organization as a dialogue partner. The SCO is a political, security and trade alliance that was created in 2001 to counter Western influence.
Schectman goes on to explain ” This is a big deal. The Shanghai Cooperation Organization is considered the largest regional military and financial organization in the world. Almost 60% of the Eurasian landmass and 40% of the global GDP is represented here”
Final Note:
The de-dollarization trend has already begun before the introduction of the BRICS currency. Different countries using other currencies than the dollar to transact has made it evident that the Western influence may fade in due time. It may not happen overnight but is an inevitable event.
All countries are anticipating the BRICS summit that is to be held between August 22-24 in Johannesburg. Will they announce the currency that will change the economic dynamics of the world?
We’ll just have to wait and see.
Until next time, Happy Trading!!
Commodity Samachar
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