The evolving financial systems of BRICS nations, led by China, are challenging G7 dominance by promoting gold and digital currencies, thereby reshaping global trade and enhancing geopolitical significance amid rising tensions.
BRICS Economic Strategy
BRICS has developed nBRIDGE, a decentralized digital currency exchange system using gold as a stable store of value for settling trade imbalances and enabling direct energy transactions between member nations.
The alliance is incentivizing countries like Brazil to participate while maintaining neutrality, allowing them to balance support for BRICS without declaring allegiance to either side of the global economic divide.
BRICS aims to isolate themselves from the debt problems associated with the US dollar-based system, which has reached an endgame due to escalating interest expenses and annual US budget deficits.
Global Financial Dynamics
BRICS’ diplomatic and economic cooperation has been strengthened by dissatisfaction with IMF and UN system’s representation of emerging economies, particularly Brazil, Russia, India, and China, which have been marginalized for over half a century.
The alliance is growing bilateral settlements in local currencies, setting FX rates, and increasing multilateral settlements, with the transition to a true multilateral system dependent on the monetization path of gold.
BRICS is reducing the power of US sanctions by enabling countries to conduct business without violating them, while these sanctions act as capital controls on the West, creating a financial Iron Curtain.
Commodity Outlook
Gold is likely to appreciate multi-decadeally as a store of value, while silver will increase in value compared to currencies but not necessarily to gold, with atomic elements potentially being the next asset class to be monetized.
BRICS’ use of gold for settling trade imbalances, particularly in energy transactions, could lead to a more stable energy pricing structure, benefiting all parties by maintaining stability in global energy prices.