“[T[he BRICS nations, which consist of Brazil, Russia, India, China, South Africa…will be meeting…to discuss alternatives to using the US dollar as a reserve currency.”– Precious Metals Advisor Todd Graf
The dog days of summer are in full swing as economic news slows, especially compared to the hectic first quarter of the year. Ironically, these relatively calm times make investors more susceptible to mistakes. If you peer behind the curtain of what the mainstream media covers, you’ll find plenty of pressing topics.
Watch this week’s The Gold Spot to hear Scottsdale Bullion & Coin Sr. Advisor Damian White & Precious Metals Advisor Todd Graf explain the BRICS nations’ plan to dethrone the dollar, the big moves towards a central bank digital currency, and how investors can thrive in a new age of currencies.
Domestic Problems Linger
As the status quo of currency hangs in the balance, our financial czars are failing miserably in their sole role of keeping the US afloat financially. Inflation might be down slightly from recent highs, but the Federal Reserve’s recent 0.25% interest rate hike indicates our economic woes are far from over.
The seemingly slight jump is a hangover from the Fed’s aggressive policy against soaring inflation following reckless pandemic-era spending. In reality, this move nudges interest rates to their highest levels in 22 years at 5.5%. It’s a harsh reminder that the economy is in a bad place and any calm experienced by investors is most likely a false sense of security.
The Rise of a BRICS Currency?
Brazil, Russia, India, China, and South Africa – collectively known as the BRICS nations – have been actively pursuing a process of de-dollarization to limit their dependence on the greenback and increase regional influence. The economic block’s most recent and boldest step in this effort is the creation of a BRICS currency.
Next month, these emerging world powers are gathering to discuss alternatives to the US dollar as a reserve currency. Even though Russia confirmed a BRICS gold-backed currency, some member states have denied that the BRICS currency is a topic of conversation. Regardless, the development of a rival currency to the greenback is only a matter of time.
Many investors worry the development of a BRICS currency would have devastating consequences. If the dollar would lose global hegemony, the American people would see higher prices, reduced buying power, and devalued savings. Unlike the dollar and other fiat currencies, the proposed commodity-based BRICS dollar might be backed by gold.
The silver lining for investors is that this return to the gold standard would result in a surge in gold demand. Central banks are shoring up their economies with this tried-and-true store of value and would double down if the BRICS currency would prevail.
“[A] lot of people are looking at gold and silver as a way to protect their money no matter what happens, especially if these countries are looking at a gold-backed currency themselves to use for trade.”– Precious Metals Advisor Todd Graf
The Threat of a CBDC
The potential of a powerful dollar rival isn’t the only currency problem looming over investors. The rise of digital currencies could threaten safety, security, and privacy. In 2022, President Joe Biden ushered in the creation of a central bank digital currency (CBDC) with executive order 14067.
Just last week, the government released the FedNow payment program which allows (read: encourages) people to complete payments digitally. Many people see this most recent move as a sneaky beta program for a nationwide CBDC that would be used for all transactions.
Stay Updated to Stay Protected
The US dollar has been the foundation of the economic global order. Up until recently, it’s remained the stable and unchallenged world reserve currency. The dawn of a BRICS currency and the future of digital currencies threaten to completely upend the status quo which means more volatility, less security, and more uncertainty for investors. People are starting to understand the full weight of a dollar collapse, and they’re eagerly pouring into gold and silver coins and bars to preserve their wealth.
If you’re interested in learning more about the development of a CBDC and what it means for your financial security, download our free Digital Currency Report.