Analyst Says Gold-Backed Currency Can Threaten US Dollar

With the BRICS economic alliance working to develop its own native currency, one analyst has stated that a gold-backed asset would work well in threatening the US dollar. Amid the bloc’s de-dollarization plans, there are questions surrounding the alliance ability to have a currency able to replace the greenback.

Therefore, it all depends on how the currency is backed. Gold has experienced a resurgence so far this year. JPMorgan recently predicted the metal to average a $2,500 price in Q4 2024. With BRICS massively accumulating it this year, it could be a viable alternative if constructed well.

Also Read: BRICS Says De-Dollarization Process is Underway and Can’t be Stopped

BRICS Gold-Backed Currency is Clear US Dollar Challenger

For much of the last year, the BRICS group has targeted Western influence on economics. The key focus of that has been on the dollar. Specifically, the collective has continued to seek ways to lessen the international reliance on the currency. Although the project is still developing, one expert has discussed how it could be an impressive challenger.

Professor of Finance at Cumberland University, Richard Grant, recently noted that a BRICS gold-backed currency could threaten the US dollar. In a recent story, he discussed the bloc’s native currency project. Moreover, he noted why gold could be its best chance.

“Each currency serves as a domestic unit of account, medium of exchange, policy instrument, and potential source of government revenue,” Grant stated. “A well-managed currency can also be a marker of national independence and price.” This is what seems to drive BRICS.

Also Read: BRICS: New Nations Confirm Plans to Join Alliance

Although he notes that BRICS nations have benefitted from the dollar’s dominance at one point, that has passed. He noted that the issue with the currency is a lack of faith in “the prudential management of associated financial institutions and impartial access to payment systems.”

“In a world of fiat money and extensive financial regulations, this implies trust in government.” That is clearly where the BRICS issues begin. However, that is also where BRICS currency questions arise. Grant notes that this is why “none of the BRICS-plus currencies are now favored to displace the dollar.”

However, that changes when considering gold. “Gold is the definitive reserve currency,” Grant remarked. Moreover, he said that if dethroning the dollar is the focus,” gold should play a greater role in the creation of the BRICS unit of account.” It may provide them with the greatest chance to de-dollarize global finance.