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BRICS Bloc’s Bullion Buy Up Buoys Trend Toward Dedollarization

A worker polishes gold bullion bars at the ABC Refinery in Sydney. File photo.

2023 proved to be the dollar’s worst-performing year since the global downturn associated with the Covid-inspired economic crisis in 2020, with US efforts to cajole countries into submission through sanctions, combined with unsustainably high debt levels, prompting investors to reorient their investments.BRICS+ bloc countries are continuing to actively stock up on gold, driving up the precious metal’s price and sparking active discussions about whether the financial move is part of a calculated push away from the US dollar and its battered status as the world’s de facto reserve currency.“Amid growing uncertainty surrounding the US dollar’s status as the global reserve currency, both Russia and China have emerged as leaders in promoting de-dollarization efforts within the BRICS alliance. This shift towards gold as a store of value has seen the central banks of these nations actively acquiring the precious metal, signaling a broader move away from traditional reliance on the greenback,” Africa24 contributor Cristiano Volpi wrote in an analysis published Thursday.The China and Russia-led effort, undertaken against the backdrop of rising global tensions, spats with the West, and a desire to “reduce exposure to Western currencies,” has prompted other BRICS economies’ central banks to follow suit in the bullion buy up, Volpi added.These moves have had a dramatic impact on gold prices, with a recent analysis by US investment banking giant Citigroup predicting that gold may top $3,000 per ounce in the coming 6-18 months – from it’s roughly $2,350 per ounce or so showing this week.AnalysisStealing Russian Assets Spells End of US as ‘Bastion for Rule of Law’24 April, 19:03 GMTGold, a store of value going back millennia, has been on a rollercoaster ride upward since the early 2000s, climbing from about $400 an ounce in 2005 to over $1,000 an ounce in 2008, $1,800 an ounce in 2012, and $2,000 an ounce from 2020 on, surging to highs of as much as $2,400 an ounce so far in 2024.Last week, Russian representative to the International Monetary Fund Alexei Mozhin urged BRICS members to prepare for the collapse of the dollar, and suggested that the bloc could create an alternative “built on a basket of currencies” of the five major members – the Brazilian real, the Russian ruble, the Indian rupee, the Chinese renminbi (yuan) and the South African rand.“Such a proposal is being discussed. In the event of the collapse of the dollar and the international monetary system, it will be necessary to turn the said BRICS accounting unit into a real currency, backed by exchange goods,” Mozhin told Sputnik last Friday.Mozhin did not elaborate on the new currency, or mention the role gold could play in the new unit of value. However, gold’s possible use to back an alternative to the dollar and other ‘fiat’ currencies has been discussed at length among the various options for the potential post-dollar global financial architecture built by BRICS.EconomyGold Reaches New Peaks as Investors Flee Rising Inflation Woes4 April, 18:08 GMTThe BRICS bloc surpassed the G7 wealthy industrialized nations in GDP terms in 2022 (and in purchasing power parity terms in 2018), and is expected to account for more than 50 percent of the world’s nominal GDP by 2030. The bloc moved to more than double its membership last year, becoming the BRICS+ after including Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates on January 1, 2024. Argentina was set to join as well, but backed out at the last minute after President Javier Milei’s election victory in late 2023.In his analysis Thursday, Volpi emphasized that the BRICS’ buy up of gold is spiking bullion’s global value, with “the transition towards gold and other alternative assets by BRICS nations” having “significant implications for the global economy.”“As these countries lead the way in diversifying their value holdings, questions arise about the long-term impact on the US dollar’s status as the dominant reserve currency. This shift reflects a broader trend toward multipolarity in the global economic landscape,” the observer wrote.AnalysisUAE Investment Congress Marks Russia’s Eastward Shift Amid BRICS Surge9 May, 14:11 GMT

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