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Gold Price Reaches New All Time High

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Precious metals continue to shine as a safe-haven asset as the gold price climbs to a new all-time high of over $2,555 per ounce, driven by economic uncertainties, a tame inflation report, and expectations of an upcoming Federal Reserve rate-cutting cycle.

ING projects that gold will average $2,700 per ounce by 2025, with a short-term target of $2,580 by the end of 2024. This surge in gold prices is attributed to lower interest rates, which make gold more attractive as a non-yielding asset, alongside growing geopolitical tensions and increasing central bank gold purchases. Additionally, gold-backed Exchange Traded Funds (ETFs) have seen renewed interest, adding to the positive momentum in the market.

Moreover, BRICS countries are discussing the potential for a gold-backed currency, which could challenge the U.S. dollar’s global dominance. This currency proposal aligns with the bloc’s broader goals of reducing reliance on the dollar and increasing economic sovereignty. At the same time, Switzerland’s imports of gold from Kazakhstan and Uzbekistan have raised concerns about potential sanctions violations, with suspicions that Russian gold is being smuggled through these nations. These developments underscore the growing demand for gold and the broader geopolitical implications of the global gold trade.

ING’s Gold Price Projections

A report from Dutch financial group ING projects that gold will reach an average price of $2,700 per ounce by 2025, with a short-term forecast of $2,580 by the fourth quarter of 2024. The anticipation of a Federal Reserve rate cut is a driving factor behind these projections.

During a recent speech at the Jackson Hole economic symposium, Federal Reserve Chairman Jerome Powell hinted that the U.S. economy may soon see a rate cuts. Analysts are expecting a rate cut of 25 basis points at next week’s Board of Governors meeting, which will likely further fuel the gold market. Additionally,

The Federal Reserve’s Impact on Gold

Gold thrives in low-interest rate environments and lower interest rates make it more attractive to investors. In addition, cutting rates and increasing the money supply could lead to higher inflation, making gold a hedge against further currency devaluation.

Despite some efforts to shrink the balance sheet, the Fed has only managed to reduce it by about $1.8 trillion of the nearly $5 trillion in liquidity that signficantly expanded during the pandemic. With signals of upcoming rate cuts and a halt in balance sheet reduction, the central bank is effectively preparing to reintroduce inflationary policies, which typically strengthen the demand for gold.

Could BRICS+ Adopt a Gold-Backed Currency at their October Summit?

There is speculation that the BRICS currency could be backed by gold, a proposal first floated by Russian President Vladimir Putin.

A gold-backed currency appeals to BRICS nations since it has a long history as a stable and universally valued asset, particularly in light of the U.S. dollar’s reliance on fiat money since the end of the gold standard in 1971.

Recent data indicates that BRICS countries are actively building substantial gold reserves, with Russia, China, and India ranking among the top 10 countries for central bank gold holdings. This comes at the same time that China and others have been dumping US Treasury Bonds.

Gold has been a significant focus for the BRICS bloc and the implications of a BRICS currency could be far-reaching. The announcement of new gold-backed currency would signal a shift towards a multipolar world order, where the dollar no longer holds monopoly status in international trade.

This would likely accelerate the de-dollarization trend and alter the balance of power in global markets. Sectors like oil and gas, banking, commodities, and international trade would be the most impacted, as trade agreements and transactions would start to involve the new BRICS currency.

Central Bank Gold Buying and ETF Inflows

Another critical factor driving the gold market is central bank purchases. According to the World Gold Council (WGC), central banks globally added 37 tons of gold to their reserves in July, marking a 206% increase from the previous month.

Gold-backed Exchange Traded Funds (ETFs) have also seen renewed interest. As the gold price reaches new highs, inflows into gold ETFs have picked up since May 2024.

Max Keiser on Bitcoin vs. Gold

Max Keiser, a longtime advocate of Bitcoin, highlighted an interesting distinction between gold and Bitcoin back in 2021. While Keiser is a vocal proponent of cryptocurrencies, he concedes that gold has one key advantage: fungibility. Gold can be melted down and recast while maintaining its intrinsic value and anonymity, which is not the case for Bitcoin. Bitcoin operates on a public blockchain, which, while secure, is transparent and traceable. This feature has led to a decline in Bitcoin’s use for criminal activities, with criminals now favoring cash or gold for transactions that require anonymity.

Keiser argues that Bitcoin’s lack of fungibility makes it less private and anonymous compared to gold. Criminals have shifted away from Bitcoin because law enforcement can track blockchain transactions, leading to arrests. Gold, on the other hand, can be reshaped and remelted without any record of its past, providing an extra layer of privacy.

Switzerland’s Gold Imports from Kazakhstan and Uzbekistan

A somewhat shadowy development in the gold market involves Switzerland’s surging gold imports from Kazakhstan and Uzbekistan. Trade data suggests that since the start of the Ukraine war, these Central Asian nations have become major gold exporters to Switzerland, raising concerns about the possibility of these countries serving as conduits for Russian gold.

As international sanctions have curbed Russia’s ability to export gold, there is a growing suspicion that some of the gold being exported from Kazakhstan and Uzbekistan may actually be Russian gold circumventing sanctions. An analysis by Swiss gold industry experts suggests that the quantity of gold imported from these countries exceeds their domestic production, pointing to the likelihood of Russian-origin gold being smuggled into the international market.

Swiss banks and refineries, including UBS and Valcambi, have been named as potential buyers of this gold. While these institutions claim to comply with due diligence and international regulations, the opacity of the global gold trade makes it difficult to trace the exact origins of the precious metal once it is melted down and re-refined.

Analysts argue that the potential influx of Russian gold into the global market through Kazakhstan and Uzbekistan poses reputational risks for companies and financial institutions involved in its trade.

Gold’s Favorable Outlook

With the U.S. Federal Reserve signaling an imminent rate-cutting cycle, combined with geopolitical tensions and rising central bank purchases, gold is set for a sustained rally. ING’s projection of gold reaching $2,700 by 2025 reflects these favorable conditions for the precious metal.

While Bitcoin remains a popular investment asset, gold’s fungibility and anonymity still give it an edge in many scenarios. As global tensions persist and economic policies evolve, both gold and Bitcoin may play important roles in investment portfolios, but for now, gold continues to shine as a reliable store of value, particularly during times of uncertainty.

Additionally, the complex issue of gold imports from Central Asia highlights the potential for ethical and legal complications in the global gold trade. Investors and institutions must navigate these challenges carefully, ensuring that they comply with international sanctions and avoid the reputational risks associated with trading gold of uncertain origin. With strong demand drivers and an array of factors boosting gold’s appeal, the future for this precious metal remains bright.

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BRICS Demand Driving Gold Prices and Dumping US Treasuries

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The BRICS nations and new prospective members have been actively increasing their gold reserves while reducing their holdings of US Treasury bonds.

The World Gold Council reported that BRICS countries were the largest buyers of gold in 2022 and 2023, with this trend continuing into 2024.

In 2024, China alone offloaded $53.3 billion worth of US Treasury bonds while accumulating substantial amounts of gold.

Similarly, India recently added an additional 9 tons of gold to its holdings after repatriating more than 100 tons of its assets from London vaults earlier this year, aligning with the broader BRICS strategy.

Growing Interest in BRICS Membership

The BRICS alliance is attracting interest from numerous developing countries, many of which are eager to join the bloc and participate in its de-dollarization agenda.

In 2024 alone, around 10 new countries have expressed interest in joining BRICS, with 30 countries formally submitting applications and another 15 expressing informal interest.

The 16th BRICS summit, scheduled for October 2024 in Russia’s Kazan region, is expected to discuss the induction of new member countries as well as the introduction of a new gold-backed currency unit.

This collective economic strength could challenge the dominance of traditional Western-led financial institutions like the IMF and World Bank.

This would reduce reliance on Western markets and create a more diversified global economy. Together the BRICS countries account for more than 40% of the world population and a quarter of the global economy.

By reducing reliance on the US dollar and increasing gold reserves, BRICS countries aim to strengthen their local currencies from the volatility of the US dollar.

So far, this strategy has led to increased gold prices in recent years due to higher demand from central banks, while simultaneously putting downward pressure on the value of the US dollar.

China and Russia Gold Reserves

Historically, gold was used to back currencies directly under the gold standard, where the value of a currency was directly linked to a specific amount of gold.

China has been one of the most aggressive gold buyers, adding approximately 225 tonnes to its reserves in 2023 alone.

China’s housing market is experiencing a downturn while the banking sector has seen instability, with 40 banks disappearing in one week and being absorbed by larger institutions.

While China has put a pause on buying in recent months, demand from Chinese investors continues to move gold from the West to the East.

Prior to the start of the war in Ukraine, Russia’s long term strategy has been to diversify its reserves away from the US dollar. Overall, the sanctions placed by the West following the invasion have had little impact on the Russian economy.

Russia has also been a significant buyer of gold. Earlier this year, the country announced that it allocated $2.5 billion for foreign currency and gold purchases, with its reserves standing at around 2,352 tonnes.

Strategic Impact on Global Markets

The increased gold reserves of BRICS countries are part of a broader strategy to reduce reliance on the US dollar and bolster financial stability. Here’s how this affects global markets:

By increasing their gold reserves and reducing their holdings of US Treasury bonds, BRICS nations are pushing towards de-dollarization. This shift is aimed at reducing their vulnerability to fluctuations in the dollar and US economic policies.

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Gold Replacing the Dollar as Reserve Currency for BRICS Members

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In a significant shift in global financial dynamics, the Federal Reserve has acknowledged that the BRICS countries—Brazil, Russia, India, China, and South Africa—are progressively distancing themselves from the U.S. dollar as a reserve currency. This move is part of a broader strategy where countries are opting to transact with local currencies, signaling a potential reduction in the dollar’s dominance in international trade.

Central banks across the Global South have been quietly bolstering their gold reserves in recent years, while the US Treasury Bond market has been in a state of flux.

China plays a major role and has been consistently purchasing gold for 18 consecutive months. Since the start of the year they have sold a staggering $53.3 billion worth of U.S. Treasury Bonds.

Other BRICS countries are also following suit in enhancing their gold reserves. Russia, for instance, maintains official gold reserves of 2332.74 tons as of the end of 2023. The country’s significant gold production capabilities, coupled with the massive Sukhoi Log gold deposit—one of the world’s largest, estimated at 40 million troy ounces of gold—underscores Russia’s potential to further increase its gold reserves.

India has taken a step towards reclaiming its gold reserves by repatriating a portion of its gold from London, indicating a strategic move towards self-reliance and control over its financial assets.

South Africa, despite holding only 125 tons of gold reserves, possesses vast untapped gold deposits that could be utilized in the future.

Brazil, with 129.65 tons of gold in its reserves, has taken a proactive stance in this financial evolution. The country has recently announced a new trade agreement with China, which allows for transactions to be settled in their local currencies, the real and the yuan. This bilateral agreement is a significant step towards reducing the dollar’s role in international trade and enhancing the use of local currencies.

Saudi Arabia has expressed strong interest in joining the BRICS alliance. Rumors are circulating on social media suggesting that Saudi Arabia may have already officially joined the BRICS treaty, although official confirmation is yet to be made.

This potential addition to the BRICS alliance could have profound implications for the global financial landscape, particularly for the petrodollar system established in 1974 between the United States and Saudi Arabia. This system, which mandates that oil transactions be conducted in U.S. dollars, has been a cornerstone of the dollar’s dominance.

Saudi Arabia and China signed a local currency swap agreement last year which allows for the trading of oil in the yuan instead of the dollar. Additional, Saudi Arabia has joined a cross-border CBDC project sponsored by the Bank of International Settlements (BIS), which began in 2021 and has reached the level of a minimally viable product. The project already includes China, Hong Kong, Thailand and the UAE.

Turkey, another country mentioned in the Federal Reserve’s report, has been actively buying gold, becoming the largest buyer in several months during recent years. This trend reflects Turkey’s efforts to diversify its financial reserves and reduce its dependence on the dollar.

This shift by the BRICS countries and other nations towards local currency transactions and gold as a reserve asset represents a significant challenge to the U.S. dollar’s global supremacy. It suggests a move towards a multipolar financial system where various currencies and assets play a more significant role in international trade and the global economy.

China’s Belt & Road Initiative (BRI)

China’s actions appear to support the ongoing Belt and Road Initiative (BRI), a global strategy launched by the Chinese government in 2013 aiming to provide capital to developing countries for modernization and infrastructure.

In exchange, China gets preferred access to the country’s resources, including precious metals, minerals along with cheap labor. While simultaneously dumping excess industrial capacity of inferior products into developing markets.

China operates many strategic mining operations throughout Africa, some of which have been reported as using slave labor to harvest cobalt under harsh conditions.

In South America, China owns two of the five largest copper mines in Peru – the Las Bambas Project and the Toromocho Project. Other large scale investments include the a MegaPort in the Peruvian town of Chancay, while building a $50 billion dollar train line through the Andes and Amazon to connect ports in Peru to Rio de Janeiro. The train line is expected to cut through the Amazon Rainforest, which is already being utilized to exploit minerals and other resources from the Amazon.

The newly established Bank of BRICS is headquartered in Brazil, where China has already invested more than $71 billion in infrastructure. China and Brazil have already established a local currency trade agreement, with trade in the yuan ramping up, while China is pushing the digital yuan, the CBDC project and other cross-border payment systems.

In Argentina, Chinese firms own or have large partnership stakes in 6 of 16 active lithium mining projects. Argentina has also received funds for almost a dozen infrastructure projects ranging from railways and dams to solar power and nuclear power plants.

Bretton Woods Accord

The U.S. dollar became the world’s reserve currency in 1944, following the Bretton Woods Conference, where delegates from 44 countries agreed to the creation of the International Monetary Fund (IMF) and the World Bank. This agreement established the U.S. dollar as the primary reserve currency, backed by the world’s largest gold reserves at the time. This decision was made to provide stability and prevent currency wars, and it propelled the U.S. dollar to its current position as the world’s leading reserve currency.

Collapse of Bretton Woods

By the late 1960s, the U.S. was facing a growing deficit due to its spending on the Vietnam War and social programs, which led to a decline in the value of the dollar. The U.S. was simultaneously experiencing inflation, further weakening the dollar.

In 1968, the U.S. stopped converting dollars into gold, which was a key part of the Bretton Woods system. This decision was made because the U.S. was running out of gold reserves to back the dollar.

In 1971, President Richard Nixon announced that the U.S. would no longer convert dollars into gold at a fixed rate, effectively ending the Bretton Woods system. Known as the Nixon Shock, this decision had ripple effects that changed the face of world trade, leading the country into a long, deep recession with high unemployment.

The Nixon Shock marked a turning point in the global monetary system, signaling the end of the post-World War II era of fixed exchange rates and the beginning of a more flexible and dynamic system.

Petrodollar Era

The Petrodollar agreement helped stabilize the U.S. economy by ensuring that oil-producing countries would continue to use U.S. dollars for their oil transactions. This created a consistent demand for U.S. dollars, which helped maintain the dollar’s value and the U.S. economy’s stability.

Henry Kissinger, the U.S. Secretary of State under President Richard Nixon, played a key role in negotiating the agreement with Saudi Arabia in 1973-1974. The high-level terms of the Petrodollar agreement were that Saudi Arabia would price its oil exports in U.S. dollars and invest its surplus oil proceeds in U.S. Treasuries and other U.S. assets. In return, the U.S. would provide military aid and equipment to Saudi Arabia.

Today, the agreement’s effectiveness is being challenged by various factors, including the weaponization of the dollar with sanctions against Russia, the emergence of a BRICS currency and the increasing role of renewable energy sources.

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Fed Report Admits that Gold is Displacing the Dollar in Central Bank Reserves

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Earlier this week the Federal Reserve released a report that showed that some countries are moving away from the dollar as their main reserve currency in favor of gold.

While the Fed tried to downplay the revelation, former Coinbase chief technology officer Balaji Srinivasan pointed out in a post on X that the small group includes China, India, Russia and Turkey, which “represents 3 billion people. So 37.5% of the world is moving away from dollars towards gold.”

“The Fed now admits some countries are moving to gold,” tech investor and former Coinbase chief technology officer Balaji Srinivasan posted to X, pointing to what the Fed says is a “small group” that “represents 3 billion people. So 37.5% of the world is moving away from dollars towards gold.”

This helps to provide some explanation for the steady and continuous increases in the price of gold over the last 18 months. While the price of the shiny metal goes up and down based on global activity and futures trading, physical gold continues to move from the West to the East.

Buyers in the Shanghai Exchange are paying a higher premium for gold, which is driving up prices in the New York and London and brokers make a commission on the arbitration of buy/sell spreads between markets.

China

China’s central bank, the PBOC, has been the largest buyer of gold in recent years, topping 2,235 tons at the end of 2023. According to reports from the Gold Council, the bank has continued its buying levels at a steady pace this year. Analysts expect the bank to continue to drive demand for central bank gold throughout other member nations. Roughly 4.3% of the nation’s official foreign exchange reserves are held entirely in gold.

India

In recent weeks, the Reserve Bank of India, RBI, transferred more than 100 tons of gold from London to be stored in vaults inside the country. However, the country’s consumers are already represent one of the largest group of buyers in the world.

In India, gold holds a significant cultural, religious, and economic value. It’s most common form is in the form of 22-karat gold jewelry. It is considered a symbol of wealth, power, and status, and is often passed down through generations as a form of inheritance and also for financial security and stability. Many families invest in gold as a means of saving and wealth preservation

Russia

Despite the sanctions targeting its financial system, oil sector, and individual oligarchs, Russia has managed to maintain economic growth.

The Russian economy grew by 3.6% in 2023 and is projected to grow another 2.6% in 2024. This growth is partially attributed to the country’s strategic response to sanctions, including the pegging of its currency, the ruble, to gold.

Russia is now the second largest producer of gold, second to China. Mines in the country produced 324.7 tons of gold in 2023, with it expected to increase production capacity over the coming years.

Turkey

Turkey led central bank gold buying in April, adding 33 tons to their reserves. In 2021, Turkey began a policy that allows commercial banks to accept gold deposits and use them to meet reserve requirements. This has led to a significant increase in gold demand in Turkey.

The country is the 5th largest gold market in the world and stands out with a long tradition of gold demand underpinned by a deep cultural heritage. Not only does gold play an important role in weddings and other aspects of religious life, generations of Turkish savers have turned to gold as an effective hedge against the ravages of inflation and currency weakness.

The BRICS Alliance Pushing Dedollarization

The BRICS countries continue to wage economic war against the Western economies, promoting dedollarization through various initiatives.

The BRICS alliance is pushing dedollarization through various initiatives. One of the most significant steps is the creation of a common currency, which is expected to be unveiled at the 2024 BRICS Annual Summit in October. This aims to reduce the dominance of the US dollar in international trade.

In 2024, several countries officially joined the BRICS alliance. These include Saudi Arabia, along with four other nations. The Saudi membership was due to start on January 1, but there was a delay before it was confirmed.

More than two dozen countries have expressed their desire to join, and 97 countries have confirmed their participation in the BRICS 2024 Games in Russia.

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Why did RBI Repatriate 100 tons of Gold?

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During the last year, the Reserve Bank of India upped its gold holdings from 794.63 to 822.10 tons.

According to the central bank’s fiscal year 2024 annual report, over 308 metric tonnes is currently held inside the country to provide backing for circulating currency. This shipment of 100.28 tonnes in gold bars will be held locally as an asset of the banking department.

Economist and a member of the Economic Advisory Council to the Prime Minister of India, Sanjeev Sanyal, said on Friday that India will now hold most of its gold in its vaults.

“One of the prime reasons for this is the decline in confidence in dollar assets among central banks. Even the US Treasury Department data suggest that the non-US central banks’ holdings of US Treasury bonds have dropped from 50.1 percent (of what?) in January 2023 to 47.2 percent as of January 2024,” the report said.

This brings India’s domestic gold holdings nearly equal to those held by foreign banks and trading partners. The last time that India experienced such a large shift in its gold holdings was in 1990-1991 when the country was forced to raise funds to avoid a potential sovereign debt default.

Although the loans were repaid, the gold remained vaulted in London for logistical reasons. Storing gold abroad provides potential returns by entering into swaps and other trading activities. Additionally, the central bank is a regular gold buyer and allocated storage in market locations is practical.

This move reflects the central bank’s broader strategy to diversify FX reserves and hedge against the ongoing inflation of the dollar and other currency volatility.

It’s being reported that current geopolitical tensions played a role in the bank’s decision to repatriate the gold, citing the freezing of Russian assets by Western nation raising concerns about the safety of assets help abroad.

Following the Russian invasion of the Ukraine in 2022, the US government imposed sanctions against Russia, freezing foreign reserves and prohibiting the country from trading in dollars. The sanctions were intended to disrupt the flow of Russian oil, since oil has been traded exclusively in dollars since 1973.

It’s widely reported across Asian news sources that China is rapidly reducing its holdings of US Treasury bonds while boosting its gold reserves. This follows the BRICS strategy, aiming to remove the dollars dominance in cross-border trade.

Sergey Ryabkov, the Deputy Foreign Minister of Russia, revealed in a recent interview that the dedollarization agenda would take center stage at the BRICS summit in October 2024. 

“The notion of a multi-polar world holds the key to dedollarization, where BRICS countries will break free from their dependence on the US dollar,” he said.

The BRICS alliance is exploring strategies to create a new international reserve currency, potentially backed by gold to reduce reliance on the US dollar.

Five additional countries joined the BRICS alliance in 2024; Iran, Egypt, Saudi Arabia, United Arab Emirates and Ethiopia.

More than 40 countries have expressed interest in joining the alliance, which is pushing for cross-border transactions in local currencies, reducing the need for countries to hold significant US dollar reserves, either in the form of Treasury Bonds or hard currency.

In recent years, the original BRICS members, Brazil, Russia, India, China, and South Africa, have seen significant economic growth in recent years. China has become the primary trading partner for over 120 countries, with exports totaling over $3.6 trillion, causing the the decline in the US share of global GDP and shifting towards a multi-polar world.

The ongoing federal budget deficit and growing national debt have been citing by several countries who have moved forward with a dedollarization strategy to safeguard their economies.

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House of Representatives Passes Bill to Block CBDC

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cbdc blockchain for tracking gold bars

The CBDC Anti-Surveillance State Act was introduced in September 2023 by House Majority Whip Representative Tom Emmer of Minnesota. This week, the House passed the bill 216 to 192, with 213 Republicans voting in favor. Three Democrats voted for the bill, while 192 Democrats opposed it.

Emmers introduce the bill as a way to halt the efforts of unelected bureaucrats in Washington, D.C. from issuing a central bank digital currency (CBDC) that dismantles Americans’ right to financial privacy. The bill was supported by 50 original cosponsors.

An press release from Whip Emmers office when the bill was introduced says:

“The administration has made it clear: President Biden is willing to compromise the American people’s right to financial privacy for a surveillance-style CBDC. That’s why I’m reintroducing my landmark legislation to put a check on unelected bureaucrats and ensure the United States’ digital currency policy upholds our values of privacy, individual sovereignty, and free-market competitiveness,” Whip Emmer said.

“If not designed to be open, permissionless, and private – emulating cash – a government-issued CBDC is nothing more than a CCP-style surveillance tool that would be used to undermine the American way of life,” Whip Emmer concluded.

CBDCs, or Central Bank Digital Currencies, are digital forms of a country’s fiat currency, issued, regulated and centralized by the respective central bank. They aim to provide a digital alternative to physical cash and traditional banking systems, with the potential to improve financial inclusion and streamline transactions.

The main differences between CBDCs and cryptocurrencies lie in their control and governance. CBDCs are centralized, meaning they are issued and regulated by a central authority, typically a country’s central bank.

In contrast, cryptocurrencies like Bitcoin are decentralized, operating on a distributed ledger technology called blockchain, without any central authority controlling them.

The controversy around CBDCs primarily revolves around concerns about privacy and government control. Since CBDCs are centralized and programmable, they could allow the government to monitor and control financial transactions, including rules that allow you to only spend your money at stores the government approves of and which products and services that you are allowed to pay for with your money

Critics and citizens argue that this level of control will likely be used to suppress financial freedom and impose restrictions on individuals’ economic activities, in much the same way that economic sanctions are imposed on foreign countries that go against US Government policies.

Federal Reserve’s Position

In the United States, the Federal Reserve has served in the role of central bank since 1913. In recent years, the Fed has issued a variety of white papers, hosted working groups as well as launching pilot CBDC projects with a variety of existing banking institutions.

In March, Fed Chairman Jerome Powell told Congress and news outlets that they are “nowhere near recommending, let alone adopting” a CBDC. Adding that if they were to implement a CBDC, that it would be done directly through the nation’s banking system.

This bill aims to curb the powers of the Federal Reserve by blocking their ability to implement a CBDC.

In the first part of last year, lawmakers in Indiana, Florida and Alabama passed legislation that would ban the implementation and use of CBDCs inside their states.

Since then, 11 additional states have similar pending legislation that aims to prevent the Federal government from implementing a CBDC due to the inherent privacy issues.

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Zimbabwe Launches Gold Backed Currency to Replace Dollar

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Despite being one of the most mineral rich nations in Central Africa, the economy of Zimbabwe has been a mess for decades.

To help battle the latest round of inflation, the Central Bankers and politicians are turning to the oldest form of money known to civilization. This week, Zimbabwe launched a new “structured currency” backed in part by gold.

The new currency is called the “Zim Gold”, or more simply “ZiG”, and will be backed by a basket of assets that includes foreign currencies, gold and other minerals.

John Mushayavanhu, the governor of Zimbabwe’s Reserve Bank said the ZiG would circulate alongside a basket of other currencies would also introduce a market-based exchange rate.

“With effect from today … banks shall convert the current Zimbabwe dollar balances into the new currency,” he said.

The moved is aimed at establishing confidence in the country’s central banking system which has been in an extended period of hyperinflation since 2007.

The new banknotes come in eight denominations ranging from one to 200 ZiG. The new notes feature a drawing of gold ingots being minted, as well as Zimbabwe’s famous Balancing Rocks, which already appeared on the old ones.

Zimbabweans have 21 days to convert their old cash into new money, Mushayavanhu said.

The ZiG appears to be culminating from developments within the BRICS related countries, which have been reportedly leaning towards a commodity basket common currency for trade between countries. The development of the ZiG mirrors what has been happening in other countries.

Brazil adopted the Chinese Yuan in 2023 for use in international trade and provided a proposal requesting that Argentina accept the backing of a trade deal with Yuan.

Although the dollar remains the dominant currency in both countries, the Yuan has become the second largest currency in Brazil, overtaking the Euro.

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Zimbabwe Takes Steps to Move Towards a Gold Standard

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Amid an economic crisis with record high inflation over the last year, the country of Zimbabwe announced its plans to issue a gold-backed Central Bank Digital Currency (CBDC) as a way to facilitate easy payments and push for the adoption of local currencies over the US Dollar.

This week, finance minister Mthuli Ncube announced intentions to link the Zimbabwe dollar to the country’s growing gold reserves as the country attempts to stabilize the exchange rates and the economy by reintroducing the gold-standard.

In 2022, Zimbabwe enacted a law that required mining companies to pay a royalty on precious minerals and minerals to the country’s central bank. The royalty rates range between 5% for gold and platinum group metals and 10% for diamonds. Since then, the country’s central bank currently holds roughly 793kgs of gold in reserves valued at roughly $49 million at the current price with plans to grow reserves to around $100m.

Currently, the Zimbabwe gold-backed digital currency that was introduced in 2023, is in use as legal tender and a store of value alongside the Zimbabwean dollar and bond notes.

Zimbabwe has also expressed interest in joining the BRICS alliance, which has a strong preference for asset backed local currency transactions for international trade.

The land-locked Sub-Saharan country is home to a plethora of natural resources, such as large deposits of coal, chromium ore, asbestos, gold, nickel, copper, iron ore, vanadium, lithium, tin, and platinum group metals. Zimbabwe is a major exporter of platinum, cotton, tobacco, gold, ferroalloys, and textiles or clothing.

The country contains the second-largest platinum deposit and high-grade chromium ores in the world, with approximately 2.8 billion tons of PGM and 10 billion tons of chromium ore.

Leaders in Zimbabwe began the process of returning to the gold-standard in 2023 with the hopes of stabilizing its economy and establishing its local currency in global markets.

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New Catalyst $10 bill expected in 2026

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It’s been more than ten years since then US Treasury Secretary Jacob Lew announced a new project to redesign the nations currency, beginning with the $10 note.

At the time of the announcement, the designs for the new $10 bills were expected to be released in 2020 to correlate with the 100th anniversary of 19th Amendment, which granted women the right to vote.

For a while, the proposals were circulating in the media that a woman would be featured in the design. However, it was announced in 2016 that Alexander Hamilton would continue to appear on the $10 bill, due in part to his sudden resurgence in popularity due to the Broadway musical. That led to discussions of potentially Harriet Tubman being featured on the $20 note, but that movement seems to be flailing at the moment and the replacement for that is not expected until 2030.

While millions in taxpayer funds has been spent on research and development of new security features, along with the implementation of new intaglio printing processes, no prospective designs have been released to the public.

The USDebtClock has recently included some suggestions in their secret messages regarding what they think a gold-backed sound money currency design might look like.

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Much of the official information comes from court filings, reported by Coin World, that are part of an ongoing lawsuit against the Bureau from Women On 20s, an advocacy group for the visual impaired.

A scant amount of information can be gleamed from some of the Annual Reports issued by the Bureau

Recently, in the 2024 Federal Reserve Note Print Order includes a note indicating the need to allocate resources to achieve to meet the 2026 issuance of the new Catalyst $10 bill. With production of the new currency note expected to begin in 2025. The same notes related to resource allocation was also included in the 2023 Print Order.

The selection of the $10 note for redesign was determined by the Advanced Counterfeit Deterrence (ACD) Steering Committee, which is comprised of stakeholders from Treasury, BEP, the Federal Reserve Board, the Federal Reserve System and the U.S. Secret Service.

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iBill Currency Reader

The new $10 bill will include new tactile features for improved usability for the blind and visually impaired. This is in addition to other features such as larger, high-contract numerals, new currency readers and mobile applications.

New $10 Bill Design

It has been ten years since this project was first announced, and so far, no prospective designs have been released to the public.

In 2017, the Bureau of Engraving and Printing released an updated on the Catalyst $10 project in the Chief Financial Officers Performance and Accountability Report.

“…the first note of the family of notes, currently known as the Catalyst $10, entered the BDP concept phase while the test note completed the BDP development phase. Family design activities, Project Salt, commenced by defining low-fidelity and exploring Catalyst family sub-themes based on the overarching Democracy theme.”

The BDP is an acronym for the Banknote Development Process, which is part of the Technology Development Process (TDP), which is responsible for governing research, development and maturation of security and other features to be incorporated into new currency designs.

In 2021, the Annual Financial Report from the BEP included a brief status update on Project Catalyst, indicating that work had already complete on a Pilot of a new design:

“to include two new public security features, …a raised tactile feature, a low vision feature to support individuals with visual impairments, and a new face portrait and back vignette.”

The BEP reportedly has begun feasibility trials using the intaglio printing process to apply the new Raised Tactile Feel (RTF). These machines are capable of printing currency notes at speeds of up to 10,000 sheets per hour, with 32 or 50 notes per sheet.

So far, the project duration without any public preview of prospective designs, along with the litany of three letter acronyms, are both indicators that one or more large teams of consultants are involved in the project, with taxpayers footing the bill for hundreds per hour for each consultant.

Although the prospective designs remain secret, the release schedule for a new $10 bill is expected in 2026, with the $50 bill following in 2028 and the $20 bill in 2030. Further down the line, a new $5 is expected before 2035. A redesigned $100 note is expected before 2038. With no plans for a redesign of the $1 or $2 notes, it’s highly likely that those will be replaced with $ 1 and $2 coins.

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US Government Debt now over $33.88 Trillion, USDebtClock.org

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Earlier this year, the US Government hit a new milestone. The amount of government debt in the United States has grown to exceed $33.88 Trillion as a result of overspending by elected officials. The growing U.S. government debt is a complex issue with significant implications for American citizens and taxpayers.

This is a significant issue effecting all American taxpayers, whether they realize it or not.

A higher national debt leads to higher taxes in the future. As the government needs to bring in more revenue to service its debt. This leads directly to increasing taxes, pushing the financial burden on citizens and businesses.

A significant portion of the government’s budget goes towards interest payments on the debt. These payments consume resources that could otherwise be used for public services, infrastructure, education, or healthcare.

To manage high levels of debt, the government has resorted to printing more money in recent years, which has directly caused the inflation that we feel today. Inflation diminishes our purchasing power, causing dramatic increase in everyday living costs.

High debt levels also hamper economic growth. Increased government borrowing leads to higher interest rates, making it more expensive for consumers and businesses to borrow and invest, potentially slowing down economic activities.

US Debt Clock

As more of the government’s budget is allocated to servicing the debt, there is less money available for other spending priorities like social security, welfare programs, infrastructure, and education.

A heavily indebted nation finds its global economic and political influence quickly diminishing. This has been happening throughout the world, as many nations join the BRICS initiative, moving towards a universal gold-backed currency and away from the dollar for international trade and oil. The US is likely to face additional constraints for defense funding, compromising national security measures.

Escalating debt also affects investor confidence. Many already see the debt as unsustainable, which has led to increased yields on government bonds, further exacerbating the debt problem.

Despite all the efforts to stimulate the economy during the last few years, the financial stability of the country has been on a downward trajectory, according to leading economists. High debt levels make the country more vulnerable to financial crises and recession. The Federal Reserve continues the struggle to reach the goal of sub-2% inflation target, while repeatedly raising interested rates to levels not seen in decades. The government’s ability to stimulate the economy through additional spending is limited if it’s already heavily indebted.

Younger generations today are already limited in their ability to buy a house, caused by a combination of the housing bubble and high interest rates. Future generations will shoulder the additional burden with the responsibility of paying off the debt incurred today.

A significant portion of U.S. debt is held by foreign entities. This dependence creates complex international dynamics and potential vulnerabilities, particularly as geopolitical relationships shift.