- Insights hint at BRICS nations stockpiling gold, possibly paving the way for a new gold-backed currency.
- Russia, prepping for BRICS leadership, emphasizes the need for de-dollarization, signaling major changes ahead.
Gold’s New Role in Geopolitical Chess
The Golden Oscillation: Understanding Market Dynamics Gold, historically a trusted store of value, is displaying interesting market behaviors. As the price hovers around US$ 1,940, the geopolitical landscape appears to exert more influence than ever on its stability. Notably, the real yields on U.S. 10-year Treasurys surged to a staggering 14-year zenith of above 1.90%. For context, back in 2009, when these yields last touched such peaks, spot gold traded below US$ 1,000 an ounce. Fast forward to 2018, with real yields close to 1.0%, gold’s spot price was just shy of US$ 1,300 per ounce.
The changing tides in gold’s demand are becoming evident. The BRIC nations – Brazil, Russia, India, and China – are actively searching for alternatives to the US Dollar’s dominance as a reserve currency. This move to sidestep the dollar in international trade seems to be tilting towards a potential gold-backed currency. Given China’s influential position in the global gold market, coupled with recent actions by other BRICS nations, there might be a deviation from previous failed attempts to challenge the dollar’s supremacy.
In a revealing observation, Daniel McCarthy of DailyFX.com noted that a significant portion of gold mined from one of the world’s largest gold-producing regions, Western Australia, is making its way to China. Similar activities by other BRIC nations have been reported, reinforcing the possibility of strategic gold stockpiling.
Rising Russian Leadership and the Evolution of BRICS With Russia set to assume the BRICS chairmanship next year, expectations are rife about the country’s potential announcements during the BRICS summit in October 2024. The anticipation is amplified given that BRICS is expanding its member base, integrating influential oil exporters like Saudi Arabia, UAE, and Iran.
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Russian Deputy Foreign Minister Sergey Ryabkov’s recent comments further illuminate Russia’s aspirations. Emphasizing the intent to enhance BRICS’ prominence globally, Ryabkov stated that significant strides are being made towards the bloc’s de-dollarization goals. An integral part of this vision seems to be the development of independent payment instruments and a secure platform for cross-border settlements, untethered from Western influences.
In conclusion, with spot gold witnessing a slight dip, trading at $1,927.00 post the Labor Day weekend, the golden commodity’s future role in international trade and geopolitics remains more intriguing than ever.
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