FX.co ★ BRICS may not create a new gold standard

Two weeks ago, a rumor emerged that BRICS will unveil a new trade currency backed by gold, but South African ambassador Anil Sooklal denied this, stating that they do not have such plans yet. Although no new currency will be seen, the upcoming summit in August will certainly have serious implications for gold.

Many economists regarded the implementation of a new gold standard as a challenging task since it could create significant economic instability due to deflation. However, gold will continue to play an important role as a monetary metal.

Over 40 countries expressed interest in joining BRICS, which poses a much more serious threat to the status of dollar as the global reserve currency. Of course, not all will be admitted to the alliance, but their number will be significant enough to trade with each other, bypassing USD.

If dollar really declines, countries around the world will need to hold more gold in their reserves to ensure the value and stability of their currencies. Many countries already pursue this, proven by the fact that they consistently increase their gold reserves.

It seems that even though the world economy moved away from the gold standard, the need for reliability that nations can trust always exists. Since gold remains untied to any government or organization, it became the top reliable safe-haven asset in the eyes of many.