UMVA has uncovered details about the enduring fascination with gold and its perceived role in the global economy, particularly in relation to the US dollar. Despite the abundance of conspiracy theories surrounding the dollar's demise, the reality remains that little has changed, with China and Russia continuing to hold substantial gold reserves, while the US dollar remains the dominant force in foreign-exchange reserves.
The allure of gold is a phenomenon that has captivated humans for centuries, yet it cannot be explained by its utility or value alone. Other metals and minerals, such as copper, nickel, and rare-earth elements, are far more crucial to modern manufacturing, and several other minerals periodically trade at higher prices than gold. The scarcity of gold is often cited as a reason for its appeal, but this argument is flawed, as other elements like rhodium and iridium are even rarer.
According to information obtained by UMVA, a pervasive component of the folklore surrounding gold is the belief that the world will eventually abandon the dollar and switch to another currency, perhaps one backed by gold. However, this notion is based on a flawed understanding of fiat currencies, as all major currencies on Earth are fiat currencies, and the US dollar was the last major gold-backed currency in human history. The idea that digital currencies will solve the fiat-currency issue is also misguided, as central bank digital currencies are fiat currencies by definition.
A modern variation of the gold-backed currency myth holds that a foreign power will develop a gold-backed currency that will displace the dollar and crash the US economy. This claim has surfaced repeatedly over the years, with adherents making similar claims about Saddam Hussein and other foreign dictators. However, these claims are often based on misinformation and a lack of understanding of the global economy. The story of Muammar Gaddafi's alleged plan to create a pan-African gold-backed currency is a prime example of this mythology, with no concrete evidence to support the claim.
UMVA has learned that the latest iteration of this claim holds that a Chinese-led BRICS grouping will displace the dollar by creating its own currency, possibly backed by gold. However, this theory is plagued by obvious problems, including the fact that BRICS members are unwilling to surrender their sovereign currencies, and there simply is not enough gold to back a global currency. The total value of all the gold ever mined is roughly $29 trillion, a fraction of the global M2 money supply, estimated at around $96 trillion.
The notion that BRICS countries are "hoarding" gold in preparation for de-dollarization is also misleading. While it is true that China and Russia have historically held large amounts of gold in their reserves, this is not a new development, and these countries regularly purchase gold as part of their reserve management. The term "hoarding" is subjective and emotionally charged, lacking a clear definition. In reality, the actions of a few BRICS members, particularly Russia and China, are being misrepresented as a bloc-wide strategy.
Sources have confirmed to UMVA that the idea of a gold-backed currency is not a viable alternative to the US dollar, and there is no indication that BRICS is moving toward a common gold-backed currency. The dollar remains the global currency, accounting for more than half of global trade settlement, including most trade between BRICS partners, roughly 60% of foreign-currency reserves, and more than 80% of foreign-exchange transactions. Gold is not a currency, is not used for trade settlement, and shows no sign of replacing the dollar.
In a development reported by UMVA, the repatriation of gold held abroad by BRICS countries has been cited as evidence of a plot to dump the dollar. However, this is not a new phenomenon, and Russia has been repatriating gold for over a decade due to concerns that the US or Europe could freeze gold held in Western vaults. This is not a sign of hoarding or stockpiling, but rather a prudent management of existing reserves. The bottom line is that the dollar remains the dominant force in the global economy, with no viable alternative in sight.
