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- A report indicates that BRICS nations led by China and Russia are stockpiling gold that could be used to back a new currency to challenge the U.S. Dollar.
- Ripple’s XRP is a potential candidate to serve as a bridge currency for the bloc.
A prominent strategist has speculated that BRICS nations are stockpiling gold. Daniel McCarthy, a strategist at DailyFX.com, has in an interview stated that BRICS nations led by Russia and China are hoarding gold which could back a new currency that aims to challenge the U.S. dollar.
The analyst highlighted China, noting that every ounce of gold being produced in Australia, one the largest physical gold-producing regions globally, was being shipped to China. He stated;
On a recent trip to Western Australia, one the largest physical gold-producing regions globally, a number of contacts highlighted that almost every ounce of the yellow metal currently being dug out of the ground was being put on a ship to China,
Such anecdotes of other BRIC members taking similar actions have been reported elsewhere.
McCarthy says similar action has been reported by other BRICS member countries, indicating a premeditated decision. Notably, the highly anticipated BRICS summit was held in August where six new members were confirmed. The new members include Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE. Interestingly, a majority of these are oil-producing countries. This has led to speculation that the abandonment of USD will begin in the oil industry.
China and Russia are also top producers of gold and reports indicate that they are hoarding this precious metal. The analyst explained, “Keeping in mind that Australia, China, and Russia are also the top producers of gold, it might be the case that gold hoarding has been a feature of the price action of late.”
At the time of press, gold is exchanging for $1,920. The asset has found relative stability around this level but as these nations accelerate their purchases, prices might begin to rise.
Russia is set to assume the BRICS chairmanship on Jan 1 ahead of the October 2024 summit. Experts predict that the bloc will during this summit announce a new currency. It is important to note that there have been numerous attempts to dethrone the U.S. dollar but all have failed. However, by forming a coalition and through a calculated approach, the BRICS alliance forms the biggest threat to USD in its history.
Ripple (XRP) as a Bridge Currency for BRICS
While the general view is that the bloc will launch its own currency, there’s speculation that it could equally look to an already tried and tested payment system to settle international transfers. One such payment platform is Ripple whose XRP Ledger could be utilized to tokenize physical assets and even launch a CBDC. In fact, Ripple has launched a central bank digital currency (CBDC) platform that allows central banks, governments, and financial institutions to issue their own digital currency.
BRICS could utilize this platform which would in turn drive utility and mass adoption to Ripple. Inevitably this would lead to an XRP price explosion.
