Is Gold accumulation trend by BRICS countries signaling incoming crisis?
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As gold trades at historical highs, a new trend is emerging where the five largest BRICS nations (Brazil, Russia, India, China, and South Africa) are accumulating the precious metal at an accelerated rate, raising questions about the true implications. To put this accumulation in perspective, while these countries have seen a surge in gold reserves in 2024, the cumulative reserves by other global central banks have experienced a decline, according to data shared by TrendSpider on October 15. BRICS members gold accumulation trend. Source: World Gold Council Brazil is leading the gold rush, with its reserves index close to 300 above 2018 levels by 2024. India and Russia have also steadily increased their holdings, with indices around 200 and 180, respectively. Elsewhere, China’s reserves index has increased by approximately 180 over the past six years, while South Africa’s has shown a moderate but noticeable rise to nearly 150. The same momentum is evident among other prospective BRICS members, such as Egypt and Saudi Arabia. Implication of BRICS members’ gold accumulation The exact reason for this unprecedented accumulation cannot be pinpointed. However, amid the uncertainty in the global economy, gold could assume its historical role of serving as a hedge in tough conditions. Additionally, the yellow metal also acts as a hedge against fluctuations in the value of the U.S. dollar, a currency the BRICS are currently discouraging, with the countries working towards developing an alternative payment system. Notably, reducing reliance on the dollar has emerged as one of the key focus areas for BRICS member states. Interestingly, the accumulation warrants attention, considering that the prevailing economic conditions are bearish for gold’s growth. For instance, with gold gaining by almost 30% in 2024, bond prices have declined, and the U.S. dollar is experiencing a significant rally. Historically, a combination of these…
Filed under: News - @ October 15, 2024 11:19 am