Watch this week’s The Gold Spot to hear Scottsdale Bullion & Coin Founder Eric Sepanek and Precious Metals Advisor John Karow discuss the BRICS nations’ complicated relationship with the dollar, growing domestic concerns over digital currency, and the future use of gold as an alternative currency.

BRICS Currency or Bust?

There’s a ton of confusion surrounding the potential creation of a BRICS currency. The economic block comprising Brazil, Russia, India, China, and South Africa has made no official affirmation or denial of the currency. However, that hasn’t kept individual officials from touting their support for an intra-country currency.

The lack of transparency shouldn’t be construed as a strategic effort to maintain secrecy. Instead, the confusion is a natural byproduct of the group’s ambivalence toward the US dollar. The BRICS nations present a united front against the greenback and American influence, but their atomized economies depend on the dollar’s stability, security, and liquidity to operate.

These contradictions lead to a catch-22 dilemma that the BRICS nations are trying to escape. It’s impossible to predict what’s going to happen from the outside since those on the inside are blind to the next steps. Considering the seismic shift that would follow the release of a BRICS currency, investors are concerned about the security, stability, and predictability of the global economy.

China’s Power Grab

On paper, all BRICS members are on equal footing with similar sway within the group. In practice, China’s comparatively powerful economy makes it the defacto ringleader. That doesn’t bode well for the rest of the block since the CCP has a well-earned reputation for manipulating other countries to pursue its economic interests.

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“[China is] really looking…for a cow to be milked. They’re not trying to create a global system. They want to be dominant.”
– Precious Metals Advisor John Karow

Gold is Essential

Despite leading the world in collective GDP, the BRICS nations don’t have much influence in the global economy. A collective currency alone wouldn’t be enough to convince the world to abandon the US dollar en masse. The only way the BRICS currency would have a chance of creating a new reserve currency would be with gold backing.

This possible development is dominating headlines, but details remain elusive. The BRICS nations will meet on August 22, 2023, in South Africa, and investors are hoping for more clarity following the annual summit. Regardless, it’s clear the world prefers a return to gold rather than remaining dependent on the fledgling dollar.

“Backing with gold is the only way that the world will take the [BRICS nations] seriously.”
– Scottsdale Bullion & Coin Founder Eric Sepanek

Digital Currency vs Personal Privacy

As BRICS nations flirt with the development of a gold-backed currency, the US government is inching closer to the future of digital currency. Ever since Biden kicked off the development of a Central Bank Digital Currency (CBDC) with Executive Order 14067, it’s been full speed ahead for the digitization of the dollar.

On July 20, 2023, the Federal Reserve released the FedNow program which some view as a potential springboard for more CBDC influence. The initiative is advertised as a simple internal clearing system providing more efficient payments. With an embarrassingly archaic banking system, the US definitely needed a push into the modern day.

Still, the progressive and consistent moves toward a fully digitized future concern investors. China recently released a pilot version of the digital yuan which placed an expiration date on individual digital notes which further fuels skepticism at home.

“The real concern here is overreach.”
– Founder Eric Sepanek

A Potential Banking Oligarchy

The next phase of the banking crisis is underway as collapsing regional banks are getting eaten up by big players. This exponential consolidation translates to fewer options for investors. The combination of a centralized banking system and the rise of digital currency has investors panicking about government overreach.

It would feel great to cast these concerns aside as conspiracies, but we’ve already seen several examples of how private companies and banking institutions can control people.

  • During the trucker protests in Canada, over 200 bank accounts were frozen some of which had only donated small sums to the organizers.
  • PayPal, Bank of America, and other major lending institutions have withheld funding to companies with even the loosest associations with guns.
“Privacy is slowly being eroded, and that’s what people are worried about.”
– Precious Metals Advisor John Karow

Gold: The Not-So-Alternative Currency

Whether the BRICS nations develop a gold-backed currency or not, it’s painfully clear that an economy based on fiat currency is unsustainable. As the famous J.P. Morgan saying goes

“Gold is money. Everything else is credit.”

Smart money isn’t waiting for the BRICS to make the next move. They’re already hedging against the growing uncertainty, instability, and insecurity within the market by scooping up more gold.

Stay Informed to Protect Your Wealth

Currency is a crucial pillar of any economic system. When the currency undergoes radical changes, you can expect the entire structure to buckle. Savvy investors are tracking the developments of the burgeoning digital currency to protect their wealth.

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