Keep an eye on gold stocks.
For one, it’s still attractive with the gold market showing signs of cooling. In fact, a softer than expected jobs report for June suggests we may see some tempering in Federal Reserve hawkishness when the group meets again in a few weeks.
As noted by Investing.com, “Gold rallied after the Labor Department reported that U.S. employers added 209,000 nonfarm payrolls in June, a number that came in below economists’ estimates for the first time in 16 months, signaling progress in the Federal Reserve’s bid to fight inflation with higher interest rates.”
Two, the world could see a gold-backed currency – and a sizable boost to the metal – this August. All after Brazil, Russia, India, China, and South Africa (BRICS) agreed to introduce to introduce it at the BRICS Summit.
However, even when introduced, it could take some time before its impact is felt in the market. In fact, according to Thorsten Polleit, chief economist at Degussa, as quoted by Kitco.com, “At first glance, a new transaction unit, backed by gold, sounds like good money – and it could be, first and foremost, a major challenge to the US dollar’s hegemony.”
“For making the new currency as good as gold, a truly sound currency, it must be convertible into gold on demand. I am not sure whether this is what Brazil, Russia, India, China and South Africa have in mind,” he added. “Using gold as money, the unit of account would be a true game changer, no doubt about it. It could lead to a sharp devaluation of many fiat currencies vis-à-vis the yellow metal (including the BRICS fiat currencies), and it could catapult up goods prices in terms of fiat currencies. It could be a shock to the global fiat money system. I am not sure that this is what the BRICS wish to achieve.”
