International Gold Reserves

Gold reserves of the United States and the BRICS nations (Brazil, Russia, India, China, and South Africa) have made news this week as we move froward through the 3rd quarter of the year. The growing interest among BRICS nations in creating a new international currency to challenge the dominance of the US dollar as the global reserve standard is being watched carefully on the global financial stage. This initiative is seen as a response to the weaponization of the US dollar through sanctions and trade wars. The leaders of BRICS are set on taking this idea to the finish line.

Over the last 78 yrs, the US dollar has performed as the world's principal reserve currency. After World War II, the US dollar was chosen as the primary global reserve currency, initially pegged to gold at $35 an ounce. However as many of our community members are aware, in 1971 the US decoupled the dollar from gold, making it fiat money. Subsequently, a petrodollar system was established, wherein OPEC countries agreed to denominate oil sales in US dollars, creating a synthetic demand for the currency.

Recent developments continue to suggest a potential shift away from the US dollar's dominance. For instance, Saudi Arabia signed a military cooperation agreement with Russia, reducing its reliance on the US for protection. Moreover, Saudi Arabia's Finance Minister indicated openness to trading in currencies other than the US dollar. These signals indicate de-dollarization.

The BRICS nations are working for the creation of an "international reserve currency," possibly backed by gold, which could bring stability to the new currency. Central banks in these countries have been accumulating gold reserves, further indicating their preparation for this new currency.

But how capable are they? Is it possible they hold enough reserve to stabilize this idea? Take a look at the current numbers held by these nations below.

BRICS Nations gold reserve by country:

 Russia: 2,330 tons - China: 2,113 tons - India: 797 tons - Saudi Arabia: 323 tons - Iran: 320 tons - Ethiopia: 200 tons - Brazil: 130 tons - Egypt: 126 tons - South Africa: 125 tons - UAE: 74.5 tons - Argentina: 61.7 tons. Altogether the nations hold a combined 6,600 tons of reserve gold. But this amount still stands to pale in comparison to the US reserve, currently at 8,133 tons and counting.

It’s no secret the BRICS nations collectively represent a significant portion of the world's population and GDP, surpassing the G7 countries. This could potentially lead to increased self-sufficiency among BRICS nations, reducing their reliance on the United States. China's Belt and Road Initiative (BRI), a massive infrastructure project connecting various regions, which excludes the United States from significant involvement also shines a light on the potential for future development in international trade strengthening outside of the US.

As reliance on the US dollar diminishes, central banks may begin divesting their dollar reserves. This could lead to hyperinflation, higher interest rates, falling asset prices, and a decline in the United States' global influence. The historical pattern of reserve currencies and empires rising and falling throughout time suggests that the BRICS nations may be on the cusp of reshaping the world. But more than anything, the importance of having direct ownership of real gold couldn’t be overemphasized. It’s now more important than possibly ever before to keep an eye on the real, tangible asset, as gold continues to shape the global economy and our national financial stage.