Russia, BRIC Global Reserve Currency Debate Good For Gold Investors?

During Tuesday’s summit between Brazil, Russia, India and China (BRIC) at Yekaterinburg, in Russia, Arkady Dvorkovich, a top economic aide at the Kremlin expressed a need for a cautious approach to changing the system of the global reserve from over dependency on the U.S. Dollar.

The statement seems clear enough, take a cautious approach, but none-the-less it’s time to remove the U.S. Dollar as the world’s dominant reserve currency.

While the debate continues about whether to use a basket of different national currencies or to create a new super-national currency, this will all lead to a certain degree of uncertainty about the dollar’s future role - or for that matter, the future role of any major currency.  So our question at Shelter Offshore is: “what about gold instead?”

Whilst gold isn’t a currency of course, it is possibly the closest thing that we have to a super-national currency already.  And more than any other currency it has proven that it can stand the test of time in terms of demand and stability. 

Questions are already being asked about the future of the euro before the ink has even dried properly, and no one is really considering it as the successor to the dollar.  Other major currencies such as the yen or pound all have similar question marks about their stability too, and if inflation starts to creep back in then even more questions will be asked.

Collectively the BRIC nations already account for almost 15% of the global economy, and other nations have also made it clear that they would like to see a more balanced reserve currency system with less dependence on the dollar.  This must raise the question for many investors as to which currency is therefore a safe bet? 

Historically gold has always proven itself to be a good safe haven investment during times of uncertainty; and whilst current gold prices have fallen back slightly from their highs earlier this year, gold is still proving to be a far more stable investment compared to what’s going on on the current roller coaster currency markets!

So maybe it’s a good time to consider moving at least some of your portfolio away from any currency to enjoy some of the stability that gold will provide whilst the rest of the world continues to discuss the future of the Greenback.