International Man: There have long been rumors that Russia or China would create a gold-backed currency, but there was never a formal acknowledgment… until recently.
The Russian government recently stated:
“The BRICS countries are planning to introduce a new trading currency, which will be backed by gold.”
Analysts expect a formal announcement at the next BRICS summit in Johannesburg in the coming weeks.
What is your take?
Doug Casey: Let’s try to parse the words in the statement. In particular, the use of the word “trading.” I’m not sure what the difference between a “trading currency” and an ordinary currency might be. My guess is that it would only be used for settling accounts internationally. Also, if it’s going to be backed by gold, where will that gold be held? Will the amount of this currency—let’s call it the BRIC—that different governments get be based only upon the amount of gold that they have in their treasury? And will the currency be just for governments, or will it be available to companies or the average guy?
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