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BRICS, Central Bank Gold and Oil

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BRICS is loose term created by Goldman Sachs to represent the world’s five leading emerging economies. The original list included four: Brazil, Russia, India and China. South Africa was added to the list in 2010.

Combined, the BRICS nations represent 3.21 billion people, roughly 41.5% of the global population.

Over the last year more stories have emerged in the news about the desire for BRICS nations to seek an alternate currency to the US dollar for their international trade. Often referred to as de-dollarization. The removal of the dollar as the reserve currency used in international trade.

Russia has already established the Moscow World Standard to compete with the LBMA and other legacy markets.

In response to economic sanctions following the invasion of Ukraine, Russia’s gas agency began demanding payments for oil and natural gas in Rubles.

Russia’s Central Bank began exchanging gold for Rubles and many countries are now trading oil on a new gold-standard.

The PBoC, the central bank of China continues adding gold bullion to its reserves and holdings.

Worldwide central Bank gold holdings have now reached their highest point since the 1970s.

The 1970s was a time of global economic crisis. Following the oil crisis of 1973, Nixon led the collapse of the Bretton Woods system as part of his measures to fix the stagnant economy.

Nixon resigned in August of 1974 following the Watergate Scandal. Days later, President Ford signed legislation which repealed Roosevelt’s executive order restricting private gold ownership.

This global appetite for gold has the potential to give emerging nations an advantage over the value of their assets and international trading dynamics.

Many emerging nations are rich in oil, minerals and mining. Some of which are necessary components in the development of batteries, solar panels and other advanced manufacturing.

Private ownership of precious metals now continues to grow every year. During the pandemic, from 2020 until 2022, investors bought more than 75 million troy ounces of American Silver Eagles.

The US Mint has been unable to keep up with investor demand which has caused premiums to rise.

Over the same period gold investors bought more than 5 million troy ounces of Gold Eagle and Gold Buffalo coins.

Government silver coins from Canada, United Kingdom, Austria have become popular alternatives for investors looking for lower premiums.

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A New Global Gold Standard?

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Gold has been an instrumental component of the economy since before the American Revolution.

Our founding fathers had the forethought to include gold and silver coins in the Constitution.

A metallic standard was a central foundation for the economy in the United States based on gold and silver coins.

The US Mint was established on April 6, 1792, prior to the Declaration of Independence.

Recently, legislation has been introduced into the House of Representatives that is intended to move the United States back towards a gold-standard.

The sponsor of the bill, Representative Alex Mooney (R-WV), has stated that the purpose of the Bill is to give greater visibility of the spending by politicians in Washington.

Jerome Powell has said that gold bullion has no purpose in the US economy. The rest of the world is still remembers the Nixon Shock and other major events in the global commodities markets caused by US foreign policy.

Gold has been a core, instrumental component of the global economy, politics and international trade for thousands of years.

With the Moscow World Standard posited to compete with the LBMA, COMEX, Shanghai and other global trading markets.

* gold.org

Many speculate that Moscow is trying to position itself as an economic leader in the global economy. Earlier this year, the Moscow World Standard was announced by the Russian Finance Ministry as an open and fair competitor to the LBMA.

Moscow hopes that many of the BRICS nations and developing nations that are abundant in natural resources have opportunities to trade more fairly in global markets.

Minerals like cobalt, lithium, manganese, nickel and other rare earth minerals that are necessary for the production of batteries for electric cars, houses and other future energy needs. Silver is used in the manufacturing of solar panels and other electrical components.

All of these natural resources are also part of a national initiative to secure resources necessary to build new supply chains for the reemergence of high-tech and semi-conductor manufacturing on American soil.

An emerging Global Gold Standard built on Blockchain Auditing

Outside of the US, private gold ownership continues to grow, particularly amongst Asian markets including China and India.

Russia responded to economic sanctions by starting a program to buy gold from citizens in exchange for rubles and began requiring payment for oil, natural gas and other energy needs in Rubles as a way to stabilize the Russian economy following the invasion of Ukraine.

Bloomberg reports that at least 4 accounts in Rubles have been opened with Gazprom PJSC.

The government of Zimbabwe began to issue gold coins as currency as a way to stabilize their economy following decades of inflation due to corruption.

Many developing nations in Africa, Central and South America and Asia are rich and abundant with natural resources.

Having direct access to global markets for selling commodities such as lithium, cobalt and other minerals is of interest to leaders and businesses of many nations, some of which may be looking to renegotiate contracts with global conglomerates as a way to better leverage their local resources to rebuild their local economies following the pandemic.

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