6/23/23
BRICS+ will announce the creation of a new currency at their annual leaders' summit on August 22-24 in what will be the biggest upheaval in the global economy since 1971 with a direct impact on the dollar.

The new BRICS+ currency will be pegged to gold – a fact that reflects the strengths of BRICS members Russia and China.

These countries are the world's two largest gold producers and rank sixth and seventh respectively among the 100 countries with gold reserves.

The dollar, euro and sterling could all suffer a loss of confidence at the same time.

If gold goes from $2,000 to $10,000 per ounce, that will depreciate the dollar by as much as 80%: from 0.0005 ounces per dollar to 0.0001 ounces per dollar.

This would cause a breakdown in trust. All these coins will collapse at the same time.

The only objective measure of dollar strength is the price of gold in dollars per weight, as the yellow metal is not a central bank currency.

1. The strength of the dollar can only be properly measured in gold.
2. Gold is money but it is also a commodity.

3. BRICS are dollar poor but commodity rich.
4. A new BRICS+ currency will be pegged to gold.

So a collapsing dollar means higher inflation and a much higher dollar price for gold.
This means that the prices of other commodities will rise gradually.

The commodity boom generally favors the BRICS.

This dynamic could result in the upcoming BRICS+ currency replacing the dollar as the dominant payments currency sooner than most expect due to the relationship with gold.

The result will be a shock to the international monetary system. The market implications will upend exchange rates and capital markets for years to come.

And this begs the question: Since the price of gold is really a function of the paper gold market and therefore subject to manipulation – and considerable volatility – it would not be necessary for a gold-backed currency to fix gold to a specific price, as it had been set at $20.67 under the classical gold standard?

Otherwise, it would lack the stability that a currency requires.

The US obviously does not want a rival currency bloc, especially one led by Russia and China, and will have every incentive to engage in currency sabotage.

The big western banks could do anything to lower gold prices.

Indeed, it is not possible to have two parallel gold markets, one fixed at a specific price recognized by the BRICS and the other constantly fluctuating.

In other words, can a trading bloc adopt a gold-backed currency in the absence of an updated version of the classical gold standard with a fixed price?

Otherwise, the volatility introduced by the foreign exchange market would render the underlying commodity unsuitable as a currency, which is intended to be stable.

The "price" of gold can be expressed in dollars, euros or… BRICS+.

Of course, there will be different absolute values ​​in each currency, but this will be a function of exchange rates, not different prices for gold.

The BRICS+ currency will be valued in units of gold by weight.

An example would be 1.00 BRICS = 1 oz. gold.

In today's market, that would make 1.00 BRICS = $1,950 — but that's not a test rate.

Thus the BRICS currency will have a fixed value in gold.

At the same time, the dollar will have a floating value in gold as it has since 1971.

This means that the BRICS/USD cross rate will fluctuate based on the value of gold measured in each currency.

You will be able to calculate the value of BRICS currency in dollars.

If the dollar price of gold rises, the value of 1.00 BRICS will rise against the dollar.

If the dollar price of gold falls, the value of 1.00 BRICS will fall against the dollar.

If I'm a member of the BRICS, I might want the price of gold in dollars to rise so I can buy US goods and services cheaply.

Conversely, if I'm a BRICS member and a commodity exporter, I might want the dollar price of gold to fall so that dollar-denominated countries buy more of my commodities.

According to analysts, they are likely to seek a high dollar-denominated price for gold in order to make the BRICS currency more valuable.

This will help increase their wealth and destroy confidence in the dollar.

In effect, the BRICS currency and physical gold will be linked and immutable.

If gold hits $3,000 an ounce, it will actually collapse the dollar.

The dollar is expected to lose value measured against gold or BRICS currency.

It will also lose value due to inflation resulting from the lower price.

More dollars will be needed to buy imported goods or for Americans to take vacations abroad.

Moving money into stocks, bonds or savings accounts won't protect anyone because everything is denominated in dollars…