The BRICS (Brazil, Russia, India, China, South Africa) summit in Johannesburg could have far-reaching ramifications for the world of finance, specifically for precious metals and the US dollar. As the bloc contemplates expansion and expresses discontent over the dominance of the US dollar in global trade, investors worldwide should be attentive to these seismic shifts in economic power dynamics.

Historically, in periods of political and economic instability, gold and silver have been considered safe-haven assets. As BRICS nations push for a greater role in shaping the global financial landscape and challenge Western supremacy, uncertainties could cause a surge in demand for these precious metals. Additionally, the inclusion of Saudi Arabia, the world’s second-largest oil producer, could provide a further boost. If the bloc promotes trading oil in currencies other than the dollar or even in gold, it could drive up the prices of these metals.

The US dollar’s preeminence in global transactions is under scrutiny. As highlighted in the summit, there’s a growing consensus among BRICS nations to conduct trade in local currencies. While the immediate dethroning of the dollar seems unlikely, a gradual move towards a multipolar financial world, where several currencies co-exist in global trade, is plausible.

Cobus van Staden’s, an analyst at the China Global South Project, analogy of “a lot of paper cuts” perfectly encapsulates the situation. BRICS may not deliver a knockout punch to the dollar, but a series of smaller actions could erode its dominance. These “paper cuts” may include bilateral trade agreements in local currencies, establishment of alternative payment systems, or even gold-backed financial instruments.

An erosion of confidence in the US dollar could trigger a bull market for precious metals. As nations seek to diversify away from dollar-centric systems, they might increase their gold and silver reserves. A multipolar currency world, where local currencies gain prominence, would likely have fluctuating exchange rates. This volatility could further push central banks and investors towards the stability offered by gold.

The US and its allies are closely watching the geopolitical aspirations of BRICS, especially the inclusion of nations like Saudi Arabia. As the bloc grows and its influence expands, it might create a counterweight to Western financial institutions. While the geopolitical repercussions are vast, from a financial perspective, it introduces a new set of players determining global precious metal demand and currency flows.

In conclusion, while the BRICS bloc grapples with internal differences, their united front against the dollar’s dominance signals a transformative phase in global finance. Precious metal investors and dollar watchers alike should keep a keen eye on the bloc’s decisions, as they have the potential to reshape the world’s economic landscape.

Source: FX Empire

Even though the timing of the new BRICS (Brazil, Russia, India, China, and South Africa) currency is still a big unknown, it is an inevitable outcome, according to Andy Schectman, President and Owner of Miles Franklin.

“I do believe that the BRICS will issue a common settlement currency, and it will be backed by something,” Schectman told Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News. “It’s coming. Whether or not it is a gold-back currency that is introduced in a few weeks or in a few months, or next year, to me, the alliance that is being built represents the majority of the human population.”

In the lead-up to the BRICS summit taking place in Johannesburg on August 22-24, there have been conflicting reports about whether a gold-backed currency was going to be discussed.

According to Anil Sooklal, South Africa’s Ambassador at Large to Asia and BRICS, told reporters last month that a BRICS currency was not on the agenda for the upcoming summit.

“There’s never been talk of a BRICS currency, it’s not on the agenda,” Sooklal said. “What we have said and we continue to deepen is trading in local currencies and settlement in local currencies.”

The more immediate goals for the BRICS bloc are to sidestep the SWIFT system and have the ability to avoid Western sanctions. And there is one event that investors need to closely monitor concerning this – Saudi Arabia’s participation at the upcoming BRICS summit.

The BRICS alliance is expected to expand its membership soon, with over 20 countries formally asking to join the BRICS, including Saudi Arabia, Argentina, Iran, the United Arab Emirates, and more.

But how the BRICS bloc expands will play a vital role in the global de-dollarization move as member countries continue to push to ditch the greenback and trade using their own currencies.

Schectman sees Saudi Arabia as an essential player in this transition, with eventually 85% of the global population dumping the U.S. dollar.

“There is this cohesion of countries that have joined together to break free from the Western hegemony,” Schectman said. “And I look to Saudi Arabia as the linchpin of all of the issues surrounding the de-dollarization and the dollar hegemony.”

This all hinges on the petrodollar and how other countries need to hold the greenback to buy oil from Saudi Arabia.

Schectman referred to the deal struck between the Nixon administration and Saudi Arabia in the 1970s, which saw Saudis trade oil exclusively in dollars in exchange for security guarantees from the U.S. Following this deal, there was also a shift within the OPEC itself to keep oil in dollars.

“That was the deal we struck with Saudi Arabia and, by extension, OPEC, who has for almost 50 years [conducted] about 90% of all the oil sales across the globe in dollars,” Schectman said. “And this has created a synthetic demand for the dollar.”

This has given the greenback its petrodollar status. But the recent moves from Saudi Arabia should be alarming to the world’s reserve currency, Schectman pointed out.

“I see Saudi Arabia as a very important cog in that [de-dollarization] movement because when Saudi Arabia accepts other currencies for oil, the lack of settlement in the dollar will have substantial effects,” he said. “The glue that will make all of this work is indeed having a currency backed by commodities, presumably gold, using distributed ledger technology or blockchain.”

This whole move against the dollar also goes far being the BRICS bloc, Schectman added. If all the new alliances come together, it would represent 85% of the human population. “If you put together the Belt Road Initiative, the BRICS, the Shanghai Cooperation Organization, and the Eurasian Economic Union … it is a very big deal,” he noted.

Another recent development was Saudi Arabia approving the decision to join the China-led Shanghai Cooperation Organization (SCO) as a dialogue partner. The SCO is a political, security and trade alliance created in 2001 to counter Western influence. Its members include China, Russia, India, Pakistan, and four central Asian countries.

“This is a very big deal. The Shanghai cooperation organization is the largest regional military and financial organization in the world. It represents about 60% of the Eurasian landmass and 40% of the global GDP,” Schectman said. “We can see how they are pushing away from the Western influence and getting very close with some powerful entities.”

The de-dollarization trend has not only been accelerating, but it is also irreversible at this stage, we are at a point of no return – “past the Rubicon”, according to President and Owner of Miles Franklin. “When you see all of this settlement outside the dollar, that’s significant. It creates less demand for the dollar and an environment where the dollar has to fall, and interest rates have to rise to compensate.”

Schectman sees 85% of the global population dumping the greenback in due time. “It’s like a game of Jenga. You keep pulling out these pieces of the dollar hegemony one by one. At what point does it tumble? It’s not going to happen overnight, but you can see the acceleration. So little by little, and then all at once.”

Source: Kitco

Gold buying by central banks reached its highest level in 55 years this February 2023, according to the World Gold Council. The uptick in gold buying is part of a decades-long shift away from the U.S. dollar as the world’s primary reserve currency, and has coincided with the strengthening of emerging economies like Brazil, Russia, India, China, and South Africa. In recent weeks, members of the BRICS economic coalition have announced plans to introduce a new, alternative currency to further challenge the U.S. dollar’s role as primary world currency.

Since the U.S. dollar was officially decoupled from gold in 1971 and the gold standard was fully abandoned in 1973, central banks have bought gold in times of market volatility and uncertainty. Gold can act as a hedge against the U.S. dollar, and may be in higher demand in times of high inflation and political tension with the United States. In recent years, central banks in emerging markets have led the gold buying spree, signaling uncertainty in international relations and a shift towards independence from the U.S. monetary system. (Yet the U.S. is by far the largest holder of gold – here are the countries with the most gold.)

To determine which countries are buying up the world’s gold, 24/7 Wall St. reviewed data on gold reserves by country from the World Gold Council. Countries were ranked based on the net change in gold reserves held by their central bank from 2017 to 2022. Data on the value of gold reserves and gold reserves as percentage of all foreign reserves also came from the WGC and was calculated using the LBMA (London Bullion Market Association) Gold Price for the fourth quarter of each year. Population figures are from the World Bank and are for 2021.

The largest buyer of gold from 2017 to 2022 is, by far, the central bank of Russia (though data for Russia is actually only until the end of 2021. The U.S.-imposed sanctions on Russia in response to its invasion of Ukraine effectively made the hundreds of billions of U.S. dollars the Russian central bank holds worthless. Russia recently said it further increased its bullion holdings in 2022. (Here are the most sanctioned countries of all time.)

Other countries whose relations with the U.S. may be worsening have also purchased gold. From 2017 to 2022, the central banks of Russia, Turkey, India, and China were the largest buyers of gold. 

And while Russia, Turkey, India, and China account for nearly 60% of the net change in gold reserves globally from 2017 to 2022, it is small countries in the Middle East and North Africa that are buying gold at the fastest rates. Mauritania, Qatar, and the United Arab Emirates all more than tripled their gold reserves from 2017 to 2022, while Oman increased its once meager gold supply by more than one hundredfold. 

Countries have also made significant changes to the composition of their central bank holdings, with upper- and middle-income countries in Central Asia and Latin America doubling down on their gold positions the most. In Pakistan, Kazakhstan, Turkey, Lebanon, and Venezuela, gold as a share of central bank holdings increased by more than 15 percentage points from 2017 to 2022, while in Bolivia gold as a percentage of central bank holdings increased by a world-leading 49 percentage points. Globally, gold as a share of total central reserve holdings rose from 9.7% to 12.9%.

25. Czech Republic
> Chg. in gold reserves since 2017: +2.5 metric tons, reaching 12.0 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$305.6 million, reaching $697.4 million in 2022
> Chg. in share of total reserves since 2017: +0.2 ppts, reaching .5% in 2022
> Population, 2021: 10.5 million

24. Kyrgyzstan
> Chg. in gold reserves since 2017: +3.2 metric tons, reaching 10.2 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$306.0 million, reaching $594.4 million in 2022
> Chg. in share of total reserves since 2017: +11.0 ppts, reaching 24.2% in 2022
> Population, 2021: 6.7 million

23. Mongolia
> Chg. in gold reserves since 2017: +3.7 metric tons, reaching 7.9 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$285.3 million, reaching $462.0 million in 2022
> Chg. in share of total reserves since 2017: +10.5 ppts, reaching 16.4% in 2022
> Population, 2021: 3.3 million

22. Ireland
> Chg. in gold reserves since 2017: +6.0 metric tons, reaching 12.0 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$452.8 million, reaching $701.9 million in 2022
> Chg. in share of total reserves since 2017: -0.3 ppts, reaching 5.4% in 2022
> Population, 2021: 5.0 million

21. Argentina
> Chg. in gold reserves since 2017: +7.0 metric tons, reaching 61.7 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$1.3 billion, reaching $3.6 billion in 2022
> Chg. in share of total reserves since 2017: +3.9 ppts, reaching 8.0% in 2022
> Population, 2021: 45.8 million

20. Belarus
> Chg. in gold reserves since 2017: +7.1 metric tons, reaching 53.6 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$1.2 billion, reaching $3.1 billion in 2022
> Chg. in share of total reserves since 2017: +15.3 ppts, reaching 41.8% in 2022
> Population, 2021: 9.3 million

19. Serbia
> Chg. in gold reserves since 2017: +19.1 metric tons, reaching 38.5 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$1.4 billion, reaching $2.2 billion in 2022
> Chg. in share of total reserves since 2017: +5.8 ppts, reaching 12.5% in 2022
> Population, 2021: 6.8 million

18. Ecuador
> Chg. in gold reserves since 2017: +22.0 metric tons, reaching 33.8 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$1.5 billion, reaching $2.0 billion in 2022
> Chg. in share of total reserves since 2017: +3.3 ppts, reaching 25.9% in 2022
> Population, 2021: 17.8 million

17. Singapore
> Chg. in gold reserves since 2017: +26.3 metric tons, reaching 153.7 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$3.7 billion, reaching $9.0 billion in 2022
> Chg. in share of total reserves since 2017: +1.1 ppts, reaching 3.0% in 2022
> Population, 2021: 5.5 million

16. Cambodia
> Chg. in gold reserves since 2017: +29.9 metric tons, reaching 52.4 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$2.1 billion, reaching $3.1 billion in 2022
> Chg. in share of total reserves since 2017: +9.4 ppts, reaching 17.1% in 2022
> Population, 2021: 16.6 million

15. Iraq
> Chg. in gold reserves since 2017: +40.5 metric tons, reaching 130.3 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$3.9 billion, reaching $7.6 billion in 2022
> Chg. in share of total reserves since 2017: +1.4 ppts, reaching 9.0% in 2022
> Population, 2021: 43.5 million

14. Egypt
> Chg. in gold reserves since 2017: +48.9 metric tons, reaching 125.3 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$4.1 billion, reaching $7.3 billion in 2022
> Chg. in share of total reserves since 2017: +14.2 ppts, reaching 22.9% in 2022
> Population, 2021: 109.3 million

13. Kazakhstan
> Chg. in gold reserves since 2017: +51.8 metric tons, reaching 351.7 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$8.1 billion, reaching $20.5 billion in 2022
> Chg. in share of total reserves since 2017: +17.9 ppts, reaching 58.4% in 2022
> Population, 2021: 19.0 million

12. Uzbekistan
> Chg. in gold reserves since 2017: +59.4 metric tons, reaching 395.9 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$9.1 billion, reaching $23.1 billion in 2022
> Chg. in share of total reserves since 2017: -4.4 ppts, reaching 64.5% in 2022
> Population, 2021: 34.9 million

11. Qatar
> Chg. in gold reserves since 2017: +62.0 metric tons, reaching 91.8 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$4.1 billion, reaching $5.4 billion in 2022
> Chg. in share of total reserves since 2017: +3.4 ppts, reaching 11.6% in 2022
> Population, 2021: 2.7 million

10. Brazil
> Chg. in gold reserves since 2017: +62.4 metric tons, reaching 129.7 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$4.8 billion, reaching $7.6 billion in 2022
> Chg. in share of total reserves since 2017: +1.6 ppts, reaching 2.3% in 2022
> Population, 2021: 214.3 million

9. United Arab Emirates
> Chg. in gold reserves since 2017: +72.3 metric tons, reaching 80.0 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$4.3 billion, reaching $4.7 billion in 2022
> Chg. in share of total reserves since 2017: +3.3 ppts, reaching 3.6% in 2022
> Population, 2021: 9.4 million

8. Japan
> Chg. in gold reserves since 2017: +80.8 metric tons, reaching 846.0 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$17.6 billion, reaching $49.3 billion in 2022
> Chg. in share of total reserves since 2017: +1.5 ppts, reaching 4.0% in 2022
> Population, 2021: 125.7 million

7. Thailand
> Chg. in gold reserves since 2017: +90.2 metric tons, reaching 244.2 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$7.8 billion, reaching $14.2 billion in 2022
> Chg. in share of total reserves since 2017: +3.4 ppts, reaching 6.6% in 2022
> Population, 2021: 71.6 million

6. Hungary
> Chg. in gold reserves since 2017: +91.4 metric tons, reaching 94.5 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$5.4 billion, reaching $5.5 billion in 2022
> Chg. in share of total reserves since 2017: +12.9 ppts, reaching 13.4% in 2022
> Population, 2021: 9.7 million

5. Poland
> Chg. in gold reserves since 2017: +125.7 metric tons, reaching 228.7 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$9.1 billion, reaching $13.3 billion in 2022
> Chg. in share of total reserves since 2017: +4.2 ppts, reaching 8.0% in 2022
> Population, 2021: 37.7 million

4. China
> Chg. in gold reserves since 2017: +168.0 metric tons, reaching 2,010.5 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$40.8 billion, reaching $117.2 billion in 2022
> Chg. in share of total reserves since 2017: +1.2 ppts, reaching 3.6% in 2022
> Population, 2021: 1.4 billion

3. India
> Chg. in gold reserves since 2017: +229.3 metric tons, reaching 787.4 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$22.8 billion, reaching $45.9 billion in 2022
> Chg. in share of total reserves since 2017: +2.5 ppts, reaching 8.1% in 2022
> Population, 2021: 1.4 billion

2. Turkey
> Chg. in gold reserves since 2017: +339.8 metric tons, reaching 541.8 metric tons in 2022
> Chg. in value of gold reserves since 2017: +$23.2 billion, reaching $31.6 billion in 2022
> Chg. in share of total reserves since 2017: +18.5 ppts, reaching 27.6% in 2022
> Population, 2021: 84.8 million

1. Russia
> Chg. in gold reserves since 2017: +462.9 metric tons, reaching 2,301.6 metric tons in 2021
> Chg. in value of gold reserves since 2017: +$57.9 billion, reaching $134.2 billion in 2021
> Chg. in share of total reserves since 2017: +3.6 ppts, reaching 21.2% in 2021
> Population, 2021: 143.4 million

Source: 24/7 Wall St

A $2.6 billion deal announced last week has set the stage for a potentially landmark shift in the metal and mining investment landscape: the arrival of Saudi Arabia as a pivotal player.

The agreement with Vale SA gives the kingdom a 10% slice in one of the world’s crucial suppliers of nickel and copper — essential metals needed to decarbonize. It’s also held other talks, including with Barrick Gold Corp. about investing in a big Pakistan copper mine, according to people familiar with the matter. Speaking privately, executives at top miners said the value of Thursday’s deal made clear that the Saudis are ready to splash cash around.

The move comes as the question of who controls the commodities needed to both sustain and decarbonize the world’s economies has turned into a global flashpoint, jumping to the top of agendas in the US and Europe.

China has for years been the dominant buyer and a key source of funding, as it sought to secure supply for its rapid industrialization. But as tensions with the West have mounted, the mining industry is now facing increased pressure to look elsewhere.

Saudi Arabia is seeking to take minority stakes in global mining assets that will over time help provide access to supplies of strategic minerals. The country also is looking to build a metals-processing industry that could in turn make it more attractive for international miners to exploit its mineral deposits — a central pillar of Saudi efforts to diversify the economy away from oil.

The kingdom has invested heavily into industrial and financial assets and even turned the world of sport upside down by essentially buying the game of professional golf and piling into soccer. However, the Vale deal announced last week is its first major foray into mining. Manara Minerals, a new venture between the kingdom’s sovereign wealth fund and state mining company, will get a stake in Vale’s base metals business, giving Saudi Arabia an interest in mines from Indonesia to Canada producing copper, nickel and other industrial metals.

For western producers, the kingdom offers access to deep pools of capital, which are appealing as Chinese funds become less politically palatable, but also as some institutional investors have turned less comfortable with mining over environmental concerns.

Investors from the region — Qatar is already a major backer of Glencore Plc — are now likely to become one of the most important financiers for the capital hungry sector, according to serial mine builder Robert Friedland, who spent the last few years developing one of the world’s biggest copper operations, in the Democratic Republic of Congo, with the help of Chinese funds.

“Now, probably, the largest supply of capital to the mining industry will come from the Middle East,” he said in an interview last month.

But Saudi Arabia offers something else beyond cold cash: political backing for companies looking to expand into the Muslim world as deposits in more traditional jurisdictions are depleted.

Canada’s Barrick has been in talks with the Public Investment Fund about a potential stake in its Reko Diq copper project in Pakistan, which is a relatively untouched frontier for the international mining industry, according to people familiar with the matter. Bringing the Saudis on board would not only ease Barrick’s funding burden, but also introduce a partner that has significant political influence in Pakistan, the people said.

Spokespeople for the PIF and Barrick did not comment.

Saudi Arabia’s deep pockets may also present some challenges for the biggest producers who are looking for deals of their own. Keen to get more exposure to copper and nickel, miners have started writing the biggest checks in more than a decade. BHP Group and Rio Tinto Group — the two largest — have just completed multi-billion dollar deals to grow in copper, while Glencore Plc tried to buy Teck Resources Ltd.

For years, the big producers have found themselves repeatedly outbid by Chinese companies when it comes to buying mines. China’s state-owned metal and mining companies have been willing to pay valuations that western firms simply couldn’t match. Saudi Arabia now seems willing to do the same, potentially putting some deals beyond the reach of the industry’s traditional buyers.

Executives at two of the biggest mining companies, which have spent years assessing base metal assets such as those owned by Vale, said privately that they were surprised by the price tag in last week’s deal, which valued the unit at $26 billion (RBC Capital Markets said it was worth about $21 billion.)

Still, unlike Chinese companies, Saudi Arabia is currently more interested in securing stakes — guaranteeing future supply of critical minerals — rather than buying outright and then operating the assets.

Saudi Arabia set down a marker earlier this year when it announced the new firm to invest in mining assets globally, with $3.2 billion for initial investments. The country holds an annual mining conference, which this year featured the CEO of the world’s biggest mining company, BHP’s Mike Henry, as well as the chairman of no. 2 producer Rio Tinto — a major step up from past speakers. CEOs from other top miners are expected to attend next year.

For mining companies looking for funds, the US and Canadian governments’ recent crackdown on Chinese investment in key metals companies has changed the investment landscape. That’s given an opening to Middle Eastern countries like Saudi Arabia to fill the gap.

“Everything’s changed,” said Friedland.

“The American government has an ‘ABC’ policy: Anything But China. So the American government instead goes to rulers in the Middle East and says, “You should be giving the African people an alternative for financing mines in Africa. Recycle some of those petro-dollars.”

Source: Mining.com

Financial stresses have translated into gold trading at near-record levels

Central banks are turning away from the US dollar and shifting to gold, Ruchir Sharma wrote.

Bitcoin’s rebound is just the start of a rally that will take it past $50,000 next year courtesy of a process known as halving that curbs the supply of new tokens, according to projections from crypto analysts.

US deficit blew out in the early 2000s, sparking a major bear market for the USD
This was a catalyst for a major increase in price of gold, from US$250 in 2001 to a high of ~$2,000 a decade later: Jesse Felder
Yesterday’s ASX News Highlights: Ramelius Resources, Breaker Resources

Equity Group CEO James Mwangi (left) and former Kenyan President Uhuru Kenyatta (2nd left) during the unveiling of EquityBCDC in DR Congo in 2021. Equity Group Holdings Ltd has increased its investment in DRC by $76.7 million. PHOTO | FILE

Three related forces are propelling gold toward a record price: economic concerns, lower bond yields, and a weaker U.S. dollar. A boost in buying this year by central banks has added fuel to the rally.