Russia-China real gold standard means end of US dollar dominance
RT.com
9 Dec, 2017
The BRICS counties are considering starting an internal gold trading platform, according to Russian officials. When this happens, the global economy will be significantly reshaped, and the West will lose its dominance, predicts a precious metals expert.
In 2016, 24,338 tons of physical gold were traded, which was 43 percent more than in 2015, according to Claudio Grass, of Precious Metal Advisory Switzerland.
Gold moving from the West to the East
“We have to put the BRICS initiative into a broader context. It is just part of a geopolitical tectonic shift which started decades ago. We have seen a constant outflow of physical gold from the West to the East. At the same time, the West has lost the economic war, and as a consequence, the focus now turns to the financial system. China dominates the world economy and has displaced the US as the world’s most formidable economic powerhouse,” he told RT.
The creation of a new gold standard by BRICS is also a step to end the US dollar’s domination of the global economy
“As Bejing and Moscow understand that America used the dollar to control the world, by implementing a new kind of ‘Gold standard 2.0’ they want to distance themselves from this control. Furthermore, the vast majority of the people in Asia sees gold as superior, or ‘real’ money, something the West has forgotten, because of all the paper wealth (credit) they have accumulated,” said Grass.
The expert notes the BRICS countries account for 40 percent of the world’s population and around 23 percent of the world’s domestic product.
“In combination with the announcement of pricing oil in yuan, using a gold-backed futures contract in Shanghai, the establishment of the Asian Infrastructure Investment Bank and the New Development Bank, China is setting up an alternative to the post-Bretton Woods establishment. This is certainly a game changer,” said Grass.
Physically backed precious metals market spells the end of paper gold trade
The level of trust between BRICS countries can help them establish intragroup gold trading, which would be 100 percent physically backed.
“This will present a viable challenger that could over time lead to a break up of the current system since the West will likely still trade paper gold in the meantime,” Grass said.
According to London gold clearing statistics for 2016, the total trading volume in the London Over-the-Counter (OTC) gold market is estimated at the equivalent of 1.5 million tons of gold. The volume of 100oz gold futures on New York’s COMEX reached 57.5 million contracts during 2016 or 179,000 tonnes of gold, the analyst notes.
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