The World Gold Council revealed in a recent report that the BRICS countries (Brazil, Russia, India, China and South Africa) together hold more than 20% of the world's gold reserves, the Jerusalem Post reported.
The report did not specify whether the gold reserves were for the founding BRICS countries of Brazil, Russia, India, China and South Africa alone or included the reserves of the new BRICS members, Egypt, Ethiopia, Iran and the United Arab Emirates, which joined on January 1, 2024. However, the significant gold reserves highlight the growing economic power and influence of the emerging economies of the BRICS group.
According to the report, Russia leads in gold reserves with 2,340 tons of gold, accounting for 8.1% of global gold reserves. Right behind Russia is China, which owns 2,260 tons of gold, contributing significantly to the BRICS gold reserves. Thus, Russia and China account for 74% of the total gold reserves of BRICS countries.
Other BRICS countries also have significant reserves, with India leading the way with 840 tonnes.
The BRICS countries' substantial gold reserves have several important implications. First, in terms of economic power, gold reserves help the group consolidate its position as a major economic player on the international stage.
Besides, owning a large gold reserve has an impact on financial stability because gold is a stable asset that helps reduce economic risks and protect against inflation.
Large gold reserves also contribute to the bloc's political influence. A BRICS currency, backed by gold, could challenge the dominance of the US dollar and change the global balance of power.
Another implication of the BRICS’s significant gold reserves is that it increases investment opportunities. As demand for gold increases, due to factors such as central bank gold purchases and economic instability, it creates more potential investment opportunities.
The BRICS summit in Kazan, Russia this week is expected to provide more details on the new BRICS currency and the expected launch date of the BRICS currency.
The introduction of a BRICS currency could accelerate the de-dollarization trend, as many countries are looking to reduce their dependence on the US dollar.
BRICS currencies are also likely to have an impact on global gold prices because as demand for gold from central banks increases, investors can push up the value of gold.
As BRICS nations continue to expand their influence and explore new economic models, BRICS gold reserves, along with the emergence of a new currency, could have far-reaching implications for the global financial system. Investors and policymakers should closely monitor these developments to assess the potential impact on markets and the global economy.
