Joe Elkjer
Precious Metals Advisor
Joe Elkjer, a Precious Metals Advisor at Scottsdale Bullion & Coin since 2019, specializes in helping clients protect their assets through tangible investments. With a strong background in business and finance, he emphasizes stellar customer service and stays dedicated to informing clients about market impacts through frequent appearances on The Gold Spot.
Todd Graf
Precious Metals Advisor
Todd Graf is a seasoned Precious Metals Advisor at Scottsdale Bullion & Coin. He has a decade-long career in finance, previously at Morgan Stanley and Vanguard. He is Series 7 licensed and has extensive experience in traditional and defensive assets, providing clients with solid investment strategies.
The ever-changing landscape of global economics is currently undergoing one of its most seismic shifts in recent memory. The annual BRICS Summit is at the forefront of this momentum as the world’s leading emerging economies meet to discuss the future of their relationship with the Western-dominated world market.
In this week’s The Gold Spot, Precious Metals Advisors Todd Graf and Joe Elkjer cover the implications of this historic summit, what it means for US investors, and how it could impact the dollar.
Why Does the BRICS Summit Matter?
Brazil, Russia, India, China, and South Africa, collectively known as the BRICS nations, have been meeting every year for the past 15 years, so what makes this particular summit so momentous?
This year’s summit hosted in South Africa comes at a decisive time in the world economy as countries consistently shift away from USD. With over 40% of the global population, the world’s largest GDP, and over 40 countries eager to join the ranks, the BRICS block has never wielded more influence.
Early BRICS Summit 2023 Outcomes
August 22 marked the start of the 15th BRICS Summit in Johannesburg, South Africa. In line with expectations, BRICS leaders are rushing to build a new world order free of any dollar influence. Several possibilities have been raised that would further sideline the greenback’s role on the world stage.
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Get Report – It’s Free!A Potential SWIFT Alternative
Perhaps the biggest takeaway from the first day of meetings is the potential of an alternative to the Society for Worldwide Interbank Financial Telecommunications (SWIFT). The SWIFT system is the dominant banking system that facilitates cross-border transfers and payments between different countries.
A competing system would have far-reaching implications by rerouting global financial flows, decreasing the security of international wires, and limiting the world’s ability to sanction rogue states.
BRICS Expansion
Ever since the BRICS founding, the five core countries have fielded eager requests for membership from countries around the world raising the question about the block’s long-term goals and direction. This summit provided a clear-throated answer with the admittance of six new nations: Saudia Arabia, Argentina, the United Arab Emirates, Ethiopia, Egypt, and Iran.
The inclusion of leading oil producers increases the BRICS’ economic might while demonstrating the group isn’t afraid to cozy up with once-staunch US allies. Simultaneously, the open embrace of Iran signals the group’s desire to alienate the West and directly challenge its hegemony.
The Looming Threat of a BRICS Currency
Perhaps the most eagerly anticipated topic of the summit is the creation of a BRICS currency. As of now, the currency remains an aspiration of individual member nations. The move has yet to be officially adopted by the BRICS bloc.
According to South African President Cyril Ramaphosa, “There’s also no clear BRICS consensus on a trade currency…further discussions need to take place, particularly amongst our finance ministers.”
However, the mere discussion of a potential cross-border currency to rival the dollar reflects a staggering shift in global sentiment. The world no longer views the dollar as a strong and stable currency worth building their economies around. The BRICS nations are simply stepping in to fill the void left by waning US influence while giving the dollar a final nudge out the door.
Impact on the US Dollar
Nearly all topics at the 15th annual BRICS Summit fall under the umbrella of de-dollarization. All member countries have evident ambitions to limit America’s influence on the world stage to boost domestic economic might and limit the West’s sanction powers.
As the world reserve currency, the dollar inevitably has the largest target on its back. The BRICS’s ability to create their own economic center of gravity and sphere of influence would have deleterious effects on the US dollar.
Ironically, American investors would most likely be the last people to realize it given the cushion the US economy enjoys against world economics. At the same time, they will be the ones hit the hardest. The cataclysmic fallout of a toppled dollar would lead to decreased purchasing power, higher inflation, more expensive borrowing, and a weaker domestic economy.
A Boon to Gold
The spotlight of the BRICS Summit might be on the downfall of the dollar, but these same events create a tailwind for gold prices. Generally, what’s bad for the greenback is good for gold as precious metals tend to increase in value as economic conditions worsen. With central banks scooping up record amounts of gold, it’s clear that uncertainty and instability are reaching new heights.
Stay Informed to Stay Protected
This BRICS Summit marks a tremendous shift in the world economy. We’re seeing the wholesale embrace of de-dollarization as an official economic policy, not just a hidden byproduct of leaders’ decisions with the best interests of their countries in mind. The dollar isn’t just the victim of this global economic transformation; it’s the target.
Since investors have the vast majority of their wealth wrapped up in the dollar, it’s prudent to consider alternatives such as physical gold and silver to hedge against the declining role and value of USD. You can take the first step in safeguarding your financial future by requesting a FREE COPY of our insightful Precious Metals Investment Guide today.