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Goldman Sachs economist Jim O’Neil predicted that four countries would grow to dominate the global economy by 2050 over twenty years ago. He coined the acronym “BRIC” as a shorthand at the time. A fifth country joined the list in 2010, creating “BRICS.”
What is BRICS? Which emerging powers are represented, and why might BRICS countries be of special interest to people investing in gold and precious metals?
You’ve got questions. We’ll answer them.
Which Countries Are in BRICS? Why Do They Matter?
Each BRICS country is a strong regional player that makes significant contributions to the global economy.
Brazil, the B in BRICS, is the largest country in South America. While Brazil has a diverse economy, it is globally famous for its natural resources and rich agricultural market. Brazil exports coffee beans, soybeans, and a lot of beef. It also has a rich service industry and a strong manufacturing sector.
Russia was well-known for its rock-solid oil and gas market when the term “BRICS” initially emerged. As the country with the largest landmass, Russia has vast mineral reserves. It also historically contributed significantly to aerospace and technology.
India has a rapidly-growing economy best known for its IT sector, textile industry, agriculture, and emerging pharmaceutical industry. It’s the second-most populous country in the world and an essential player in South East Asia.
China has become a global economic powerhouse in the last couple of decades, focusing on manufacturing and technology. Few people still doubt that China, the most populous country on Earth, will play a critical role in the global economy moving forward.
South Africa was added to the “BRIC” list of emerging economies in 2010. Its economy is impressively diverse, expressed in its rich mining (including gold and precious metals), IT, tourism, and service sectors.
O’Neil highlighted these countries as economies to watch. BRICS isn’t, and never was, a global trading block or political alliance, but the acronym gave investors and analysts an interesting framework.
Is BRICS Still Relevant?
“BRICS” was a global buzzword not that long ago. That’s changed in recent years. Most of these countries still remain global powerhouses, and they have only strengthened their positions in the global marketplace (with the exception of Russia).
However, the acronym BRICS is used less frequently now, largely as a result of the 2014 crisis that caused oil prices to drop. In today’s market, it may be more logical to view each of the “BRICS” countries individually.
Why Should You Care About BRICS if You Invest in Gold and Precious Metals?
People who are serious about investing in gold and precious metals, including through Gold IRAs and Precious Metals IRAs, may be interested in keeping an eye on BRICS countries for multiple reasons.
BRICS represents a substantial portion of the global economy, and (most of) these countries remain emerging economies expected to enjoy substantial growth over the coming years and decades. As wealth in BRICS countries grows, competition for gold may increase — leading to price spikes.
The governments of BRICS countries may also consider investing in significant gold reserves as their trust in the US dollar drops. Investing in gold and precious metals is a key diversification strategy, even at the level of a nation.
BRICS countries are, furthermore, some of the largest producers of gold and precious metals. It’s interesting to note, for example, that China (a BRICS country) is the world’s largest producer of gold. Russia, Brazil, and South Africa are also global powerhouses when it comes to mining.
This means that fluctuations in the mining industry and geopolitical events pertaining to BRICS countries can affect the production of gold. In turn, the state of affairs in BRICS countries can impact the global price of gold and precious metals.
Whether or not they remain a buzzword in economics, BRICS countries continue to reshape the world and its economy. Paying attention always pays off, and these countries are worth watching.