Signs of Diminishing American Influence
Recent developments suggest that America's global influence is waning, and the world economy is evolving.

Key shifts include:

• Shifting Alliances: The fissure within the G20 is widening as significant regions move away from US influence. The expansion of the BRICS+ bloc underscores this trend, with more countries aligning with BRICS+ objectives.
• Diverging Economic Paths: Major economies are facing similar challenges—post-pandemic inflation, the ongoing war in Ukraine, Japan's economic recovery, China’s deflation, and unrest in the Middle East—though each is following a different trajectory.

This global realignment is challenging the dominance of the U.S. dollar, opening the door for alternative reserve currencies and hedging strategies like gold.

Tomorrow’s BRICS+ Summit and Global Financial Shifts
As BRICS+ prepares for its highly anticipated summit from October 22-24, 2024, the global financial landscape is on the verge of significant change. One of the most noteworthy developments is the potential unveiling of a new settlement currency, "The Unit," designed to rival the U.S. dollar. This currency, backed by 60% BRICS+ currencies and 40% gold kilo bars, could signal a monumental shift in global trade and finance, particularly as BRICS+ looks to reduce its reliance on the U.S. dollar.

Saudi Arabia’s decision to sell oil in currencies other than the dollar, alongside its acquisition of 160 tonnes of gold since 2022, marks a key signal of this shift away from the petrodollar. Additionally, Operation Sandman, which involves nations like Turkey reducing their reliance on the dollar, demonstrates the growing momentum of countries seeking to diminish the dollar’s influence in global trade.

Central Banks and Gold
Amid these global shifts, central banks are increasingly turning to gold. While the U.S. dollar remains the world’s reserve currency, its share in global central bank holdings has fallen from 72% in 2000 to 58% in 2023. This decline has fueled a surge in gold prices, which rose by 26.5% as of September 30, 2024, and reached new all-time highs, crossing the $2,700 barrier on Friday.

Many central banks, including those in BRICS+ nations like India, Turkey, and China, are shifting their reserve portfolios toward gold as a hedge against dollar risks. In the last 28 months, BRICS+ central banks have purchased over 4,000 tonnes of gold, further indicating a move away from reliance on the U.S. dollar. For instance, Poland has increased its gold reserves to over 400 tons, aiming for gold to comprise 20% of its total reserves.

Investment Implications
The traditional 60/40 stock-bond portfolio has become increasingly volatile as stocks and bonds have correlated in recent years. With central banks and countries diversifying into gold, individual investors may want to consider a similar approach. Historically, a 20% allocation to gold has proven effective in maintaining value during periods of economic uncertainty, with an average return of 8% over the last decade.

Additionally, silver is gaining attention as a potential store of value, given its industrial applications and increasing demand. As BRICS+ continues to challenge the U.S. dollar’s dominance, gold and silver’s role in investment portfolios is becoming even more essential.

Next Steps
For a no-obligation consultation on how to include precious metals in your investment portfolio, contact us at 610-326-2000. We can help you safeguard your financial future through tailored investment solutions. 

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