I’m sure you’ve heard about BRICS.

For the first time in long history, the U.S. dollar has a world reserve currency competitor. And it’s from the BRICS nations.

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In recent years, there has been much talk about the rise of the BRICS nations as economic powerhouses challenging the dominance of the US Dollar as the world’s reserve currency. 

While the focus has primarily been on their growing economic influence, there is another intriguing story developing in the background – the increasing gold purchases by these nations. 

Could this be a sign of their intent to bring back the gold standard? 

In this blog, we delve into the motives behind the BRICS’ gold-buying spree and explore its implications for traders and investors.

The Rise of BRICS and Gold Stockpiling

The BRICS nations, comprising Brazil, Russia, India, China, and South Africa, have emerged as key players in the global economy over the past couple years.

They have a combined population of over 3 billion people and a combined GDP of around $18 trillion.

As these nations continue to gain economic strength, they have also been quietly accumulating vast quantities of gold. China, with its massive economy and dominance in the banking sector, has been leading the charge, followed closely by Russia and India. 

China – The second-largest economy on Earth and the nation which owns the 4 largest banks on the planet has been stockpiling on gold. 

Their rate of gold buying has reached astronomical levels.

Next, let’s look at Russia – with the second-strongest military on Earth. It’s also buying gold at alarming rates. In fact, the nation holds the highest gold reserves among BRICS nations at around 2,326 tonnes. 

And then look at India, on pace to become the next largest economy in the world…steadily buying more and more gold. It has gold reserves of over 780 tonnes.

The question arises: WHY are these nations stockpiling gold at such unprecedented levels?!

Let’s take a closer look…

Reviving the Gold Standard

The abandonment of the gold standard by the United States in 1973 marked a significant shift in the global financial system.

Since then, fiat currencies have become the norm, with their value not directly linked to gold or any physical commodity.

However, the BRICS’ gold-buying spree would spark speculation about the potential revival of the gold standard. By backing their currencies with gold, these nations could introduce a new dynamic into the global monetary system.

And this development could raise intriguing questions about the stability and future of fiat currencies.

Implications for Currency Markets

The BRICS’ interest in gold has not gone unnoticed in the currency markets. 

The increased demand for gold has implications for the value of currencies, especially the U.S. Dollar. 

As central banks continue to buy gold, the balance of power in the currency markets could gradually shift. 

However, note that the dollar’s popularity will not be soon lost.

The dollar currently remains the greatest of all time thanks to the U.S. economy’s growth, its wide acceptance and use across the world, and most importantly its relevance in the crude oil markets where every transaction is backed by dollars. 

Furthermore, the U.S. dollar is involved in over 60% of global foreign exchange reserves and over 40% of international transactions. It is also held by central banks and commercial banks around the world, with around 61% of foreign bank reserves held in US dollars.

All in all, the dollar plays an important role in the financial system and maybe that’s the reason why market experts are paying heed to BRICS and the gold buying developments. 

Investors and traders are closely monitoring these developments, as they present potential opportunities and risks. 

And an interesting way you can participate in this market movement is through learning to trade gold against the U.S. Dollar directly in the Forex market. 

Here’s how…

Seize Opportunities with Gold Trading

As the BRICS nations and other central banks ramp up their gold holdings, the gold market becomes an attractive avenue for traders.

Whether it’s capitalizing on a weakening U.S. Dollar or gauging the impact of gold-backed currencies, trading gold can potentially be a strategic move for forex traders looking to diversify their portfolios.

Remember, there are a few exotic pairs in the currency markets that let you trade commodities.

Click this webinar link to learn more.

As Forex traders, we can use this to our advantage. Because we can trade gold in the Forex market.

We at Market Traders Institute (MTI) have begun taking advantage of gold’s momentum.

See for yourself*

12.37% upside from May 18, 2023 to June 14, 2023. That’s 6,079 pips in the past month.

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