17 July 2023
Amidst the backdrop of the United States and its allies confiscating Russian assets, a growing recognition has emerged regarding the dangers of relying on another nation’s currency. As a result, there have been notable shifts away from the U.S. dollar and a push to establish alternative money-transfer systems free from U.S. government control. Among the most significant developments is the BRICS nations’ proposal to create their own currency for international trade, backed by gold.
This idea has sparked speculation about the resurgence of gold as a de facto remonetized asset and the potential revival of an international gold standard. After decades of Western suppression of gold prices, proponents of the precious metal are excited by this prospect, as documented by GATA over the years.
Any retreat from the dollar is expected to drive demand for monetary gold. Gold remains the only viable alternative reserve currency, offering a politically neutral and secure form of money. The likelihood of the BRICS group devising and maintaining a currency backed by anything other than gold is slim, given the inherent challenges and differences within the group.
However, concerns persist regarding the governments within the BRICS group, some of which exhibit totalitarian and lawless tendencies. Trusting these nations to uphold the rule of law and property rights presents a considerable challenge, especially considering the actions of the United States and its allies.
The exact definition of a currency “backed by gold” remains unclear. Will it be officially convertible to metal at a fixed rate, and who will have the ability to convert it—individuals or only governments? Even the U.S. dollar can be considered “backed by gold” to an extent, as the United States can utilize its remaining gold reserves for interventions in currency markets.
The BRICS, driven by resentment toward the dollar and its associated imperial power, may overlook the potential limitations and constraints imposed by gold. Gold as money empowers individuals and markets while curbing government power by limiting its ability to create money and inflate currencies.
However, governments worldwide generally oppose the notion of a free market in money, preferring to maintain control. Thus, it raises the question of whether countries seeking to liberate themselves from the dollar truly desire to be subservient to gold instead.
Moreover, even resource-rich nations with substantial gold reserves, such as South Africa, Venezuela, Zimbabwe, and Russia, have managed to impoverish themselves through poor politics, flawed economic systems, and rampant corruption. Gold alone cannot rectify these issues.
Gold’s remonetization does not rely on the BRICS alone. It has served as money for thousands of years and is likely to continue as such in the future. Rather than relying on the BRICS group, gold requires a free market, one free from government intervention through futures contracts, derivatives, swaps, and leases. These interventions create a false impression of abundant supply, obscuring gold’s intrinsic value—relative scarcity, akin to the value of any sound currency.
GATA has been dedicated to exposing the manipulation and subversion of free markets in the monetary metals. The success of the BRICS group hinges on understanding and dismantling this subversion, reinstating genuine metal transactions and allowing gold to reclaim its rightful place.