"...it could be, first and foremost, a major challenge to the US dollar's hegemony..."
Gold is real money. Everything else is a promise to pay.
Count me a skeptic. consider the euro, a currency created for a group of pretty similar, and geographically contiguous countries, and how it has been just another currency with no real shot at dethroning the dollar, although that was one of the key themes behind its creation. Now ask yourself, how will these 60 nations (or even the 5 original BRICS) create a monetary area that is better able to be synchronous than Europe. they can't and never will. plus you have the fact that India and China hate each other. do you think they want to share a currency? and as mentioned below, exactly what do they mean by gold-backed? is that at the central bank level? and if so, will the Chinese be willing to use their gold to pay Saudi Arabia when the Saudis decide to convert their BRICS currency into gold after a few years of surpluses with everyone?
This is a fantasy that has existed for a long time and will continue to exist. As if now, and for the foreseeable future, there is no alternative to the dollar as the major reserve and transaction currency.
Whether BRICS intends direct conversion by anyone holding their currency is a big question. And if that's what they 'promise' (you can convert their currency to gold), you'll have to ask: To whom will you appeal when they don't? When they say "Sorry sir/ma'am, your social credit score does not allow you to redeem your notes for gold." --- what court will you go to? A CCP court? (please). A Russian court?
I agree with QTR on the merits of de-dollarizing. But until you understand "legal tender" you don't see the full picture. https://digitallibertiesamendment.com
And yet the price of gold didn’t move up at all. Talk is cheap. Let’s see what happens when someone actually asks for their gold exchanged for the BRIC currency.
Gold backed currency is very unlikely to happen, there are some parts of the puzzle missing. The main reason is all the trust that is needed. Who audits the gold, what about its purity etc. At best, they might do what China does with the offshore Yuan, its convertible to gold.
The dollar could have had a much longer reign had the manipulation and just outright insanity not been so over-the-top IMO. But really, why should there be a hegemonic fiat currency in the first place?! Or conversely, why wouldn't a gold-backed currency be a better option to that?
The other thing that a gold-backed currency could be is something that is a whole lot harder to manipulate the price of using manufactured spooky stories (i.e., like the entire US market has become). I'm tired of my 401K dramatically losing value (and time) because so-and-so said such-and-such.
The pushed it and pushed it and here we are. About time IMO!
This cannot happen with the current level of debt and fiscal deficits. It is wishful thinking. The world needs the inflation. It would create an economic depression. Now, this might happen in the future, but not as product of a BRICS meeting, but as a product of a financial collapse and after a hyperinflation crisis of the US Dollar. I hope not to be alive then, because will come with war, civil unrest and the end of the world as we know it.
I am both excided and skeptical of it.
Skeptical because this is China and Russia. Can we actually trust those two to maintain a gold peg? They will abandons it or modify it if doing so serves their best interests. I have little to no trust in them.
But excided because a stable currency is amazing for reserves. Once institutions realize the benefits of it they will demand that the ECB and US Federal Reserve make something similar. And we will have three gold backed currencies, the US Dollar Backed by Gold, Euro Backed by Gold, and BRICS currency backed by gold. And once again the entity with most trust will get used...which will most likely become the US Federal Reserve again.
I was your subscriber too, but your investment method is wrong.
The Bank of Korea (BOK) has a foreign exchange reserve with the majority (over 70% as of the end of last year) consisting of currencies other than the US dollar, such as the euro, Japanese yen, Chinese yuan, and others. The proportion of gold holdings in the foreign exchange reserves slightly exceeds 1%. However, the BOK believes that there is not a significant need to increase the amount of gold holdings.
The BOK's position is based on the view that gold is not an actively adjustable asset in response to market expectations, unlike other currencies. The perception that gold is considered a last resort among foreign reserves could potentially send unexpected signals to the market if it is sold. Therefore, the BOK suggests that it may be a better choice to adequately supply liquidity in US dollars rather than expanding gold holdings.
Additionally, the BOK considers the uncertain potential for future price increases in gold. They mention that gold prices are already approaching historical highs, and there is uncertainty regarding its future upward potential. Factors such as the strength of the US dollar, which can occur at any time based on global economic conditions, and the opportunity cost of holding gold in terms of real interest rates turning positive, can also act as constraints on gold price increases.
I don't understand the logic behind the quote from Thorsten Polleit, chief economist at Degussa, "For making the new currency as good as gold, a truly sound currency, it must be convertible into gold on demand." Why? A gold BACKED currency and a gold CONVERTABLE currency are not the same thing. As long as the gold backing the currency can be regularly audited (i.e. trusted) then the currency can hold its value against gold regardless of the ability to convert the currency to physical gold. The lesson of history is that if you have a convertible currency, eventually people will convert. I don't think they'll make that mistake.
Furthermore, the little I've seen published on this seems to indicate that this will be a trading currency, not a reserve currency. Basically, a way for these nations to trade without using the US dollar or having to sit on loads of US dollars the value of which is being eaten away by inflation every year.
The question I have had with going back to a gold standard is the same thing I questioned about crypto from the beginning. The world population is 8 billion people. There are less than 6 billion oz of gold in the world (per google).
How does a transaction work? I will buy that cheeseburger for .000000000001 of gold or its currency value?
Does gold end up going from $2K oz to $100,000,000,000 an oz?
This assumes that the BRICS or whoever is going to run this gold currency owns every oz of Gold in the world - which they do not.
Does this make some coin collector in Kansas an instant billionaire because he has a safe full of coins?
We screwed up 50 years ago - now I do not see a logical way to return to that system.