BRICS member China has been the top purchaser of gold since 2022 and is accumulating tonnes every month. The World Gold Council reported that China is inspiring other BRICS nations to buy the precious metal as reserves and not the US dollar. China has accumulated more than 300 tonnes of gold worth $561 billion in the last 18 months alone.
Also Read: BRICS: India & Nigeria Finalize Major Partnership Ditching US Dollar
Financial commentators speculate that China along with BRICS are procuring large amounts of gold to topple the US dollar. According to the speculations, BRICS and other developing countries are waiting for a recession to hit the US. The idea is to offload US dollars from their reserves and buy gold as a safety net against a recession.
Also Read: BRICS: Economist Predicts One Final Rally Before the Markets Crash 50%
BRICS: Gold To Be Used To Topple the US Dollar?
If gold dominates their reserves and not the US dollar, their native economies will not be affected by a recession. Their economies will dodge the bullet by keeping gold as reserves as the US dollar is spiraling with debt. Therefore, BRICS could be using gold to protect their native economies and currencies from the damage the US dollar might do during a recession.
Also Read: BRICS: 20% of Oil Payments Settled in Local Currencies, Not US Dollar
Read here to know how many sectors in the US will be impacted if BRICS ditches the dollar for trade. A recession in the US will only benefit BRICS nations as they are now moving away from the dollar. The de-dollarization initiative could add further pressure on the US economy leading to the dollar bills coming back to the homeland.
If BRICS and other countries stop using the dollar, the US economy could reach a stage of hyperinflation. The prices of day-to-day essentials could hit the roof while wages across the country remain stagnant. A string of job cuts could also not be ruled out as firms will indulge in cost-cutting measures.
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