The brics nations are moving towards a New common currency to challenge the US Dollar and we know that the Dollarization cries getting louder and Louder with Brazil being the latest Country looking to break free Brazil's President Lula is urging the brics Nation to end the dollar dominance Asking the block to develop their own Currency and he made a striking Statement that tells us how this new Challenge to the dollar could start and He said why can't a bank like that of The bricks have a currency to finance Trade relations between Brazil China and Other countries and we get even more Clues from Russia State Dumont chairman Alexander babakoff about the composition Of the new brics currency its Composition should be based on inducting New monetary ties established on a Strategy that does not defend the US Dollar or Europe mentioning how the Currency could be backed by gold and Other Commodities such as rare Earth Elements now if this currency is backed By gold it will be the greatest Challenge that you US dollar has ever Faced it will be stronger than the Yuan The Yen or the Euro combined because the New currency will retain its value and Why because it's backed by gold and not By any government promise there are two Main digitalization camps right one side
Believes that they're throwing the US Dollar is very easy and all it takes is Bilateral trade countries they just need To trade using their own local Currencies right and the other side Believes that the King Dollar can never Be the throne that talks of a brics Currency is flawed and there's no Escaping the world Reserve currency the US dollar will always be on top and I Want to be clear that the dollarization Will continue with or without a new Brics currency it's just a matter of Time but try to replace the dollar as The primary currency as the number one Currency is not an easy task it's nearly Impossible unless you have a clear Advantage and this Advantage is Something that gold brings to the table So here's the truth right unless gold Comes into the equation no currency on Earth can overtake the US dollar because He has an insanely wide lead not the Euro or the Chinese Yuan and we need to Understand why now remember that the Dollarization does not mean detroning The dollar in order to Dethrone the Dollar you need to replace what the Dollar system provides the world which Is access to the deepest Capital markets In the world so let me explain the Capital markets are where you can invest And trade your money in right when you Are buying stocks bonds or Commodities
You are accessing the capital markets Using your money and what the US dollar Offers the world is a very deep Marketplace that attracts a ton of Investors there are many places for you To invest your dollars compared to other Markets globally for example the U.S Equity markets are the largest in the World worth over 51 trillion dollars it Is over four times bigger than the next Big biggest Market which is China in Fact it represents 46 percent of the World's Equity market cap and that's how Deep the American Stock Market is and The U.S bond market is just as gigantic At around 46 trillion dollars it is Bigger than the next three Bond markets Combined which belongs to China Japan And the UK so what does this do it Attracts investors to use the reserve Currency because the dollar has meaning To it you can use it to buy a ton of Stuff you can buy oil gold stocks and Bonds and understand why this is so Important when Saudi Arabia sells their Oil for US dollars they obviously have To invest the cash somewhere you can't Have it sitting in a ball when inflation Is just so high so they invested into The U.S capital markets by usually Buying treasury bonds and they aren't Selling the majority of their oil yet in Other currencies because the markets There aren't as deep and that's why many
Experts believe that the King Dollar Will never die because they have set up A system where the dollars the more most Useful coupon in the world the US has The biggest Fanfare with the most stalls And they only accept dollars and Remember it took time for America to Develop such a system it took them 80 Years after the Bretton Woods agreement And decades after Nixon sealed the Petrol dollar arrangement to reach this Point it was not an overnight Affair and This is why we are seeing the Dollarization taking ages to proceed yes The dollars losing market share versus Other currencies yes drop from 70 Percent to under 59 percent in just 20 Years and this gradual slide down will Continue year after year especially After the sanctions in 2022 and this is Why the brics Nations they are Discussing backing up their currency With gold the fire of the dollarization Is already set but gold it is the field That will accelerate the process so why Does brics need a go back currency why Can't they just back it with another Basket of currencies like the rupee or The Yuan and the answer is simple Because like the dollar they are all Fiat currencies and Fiat currencies they All share one similar property and they All lose value over time gold is Different you stop value for thousands
Of years that have outlasted any Civilization and monetary system so There's been a legacy of trust when it Comes to Gold every culture and Country Today identifies true money with gold And I want us to see the biggest problem With the dollar which is the loss of Purchasing power now a lot of us already Know this but if we really quantify how Big the problem is you're in for a shock According to the BLS just between 2021 And 2022 the dollar has lost 7.4 percent In purchasing power and that is an Insane amount of value that has been Printed Away by the Federal Reserve that Is a crazy rate of inflation and this Isn't just affecting domestic Americans It affects holders of US Dollars all Over the world and if brics introduces a Gold backing it will stabilize the value Of their currency the new currency will Preserve its purchasing power much Better than a dollar which is purely Fiat and we can see how badly the Purchasing power of the dollar has Eroded since the Fed was established in 1913 if you started with just one dollar You will need over 30 dollars today to Have the same purchasing power but Here's the interesting thing the US Dollar was on the gold standard until 1971. and you can see its value staying Relatively stable until Nixon removed The gold pack from the dollar and this
Is not a conspiracy the data shows us The truth and understand that this is What the brics nations are trying to Accomplish this is what I mean by Attacking the Dollar's biggest weakness Now the second weakness of the dollar is The threat of sanctions and this is the Most straightforward to understand if Your phone holder of dollar assets and The US doesn't like what you are doing Your Holdings could get Frozen it has Been done multiple times in history that Includes Russia and Iran and that's why We are seeing countries like China the Dollarized by dumping their us responds To an overtime loan they know the hidden Threat when it comes to holding U.S Treasuries or any other dollar assets Right it can be taken away from you we Have think tanks in America already War Gaming the idea of Western sanctions Freezing away China's foreign reserves So this is not some fairy tale scenario It could come true and this is why gold Is just so important it is a neutral Asset that is free from sanctions at any Currency system and you can be sure that It brics Nations they issue a go back Currency they won't make the same Mistake of weaponizing it so how would a Brics currency work is it even feasible For the brics Nations to replicate a Kind of gold standard and the answer is Yes it can be done go can be used to
Back up a new currency to challenge the Dollar and this is where we need to dive Deeper into the mechanics because once You understand this you'll realize that This could become a reality very soon And to back up a currency with gold you Obviously need gold and lots of it in a Previous video we talked about why the United States can't return to a gold Standard because if they do they will Have to revalue all hard assets which Will destroy the American economy it Could cause instant hyper inflation and The reason is simple the FED has spitted Up too many dollars and the system is Literally drowning in all that excess Money so if they want to back up all Those dollars with gold they will have To devalue the dollar against goal and If you take the US dollar monetary base Which is 5.3 trillion dollars and we Divided by 260 million ounces of gold in The treasury we get a gold price of over 20 000 and that is insane plus if the United States goes out to the open Market to buy gold it will destroy any Trust left in the dollar system the US Is trapped so the safest way for bricks To proceed is to create a separate Currency backed by gold it won't be the Yuan the rupee or the ruble that's Backed by gold it will likely be a Totally separate unit and this is how it Can work the brics Nations can
Consolidate all their goal together Allowing for an independent audit of Their Holdings this means Brazil Russia India China and South Africa can Consolidate all their gold together with The claims managed by the brics bank and This doesn't mean they will transport All the gold to the Bank located in Shanghai but the bank will manage the Accounting and issuing of the go back Currency so the more gold the brics Nations contribute to the stockpile the More go back currency they can issue and If member countries don't have enough Gold no problem they can always expect To include oil silver and other Commodities but let's just stick to gold For now now here comes the tricky part Through the brics Nations have a 100 Reserve ratio for the gold backing that Means holding enough gold to account for Every single currency unit so if Countries decide to redeem the currency For gold brics can honor every single Redemption request if tested countries Or companies that hold the currency can Head to the brics bank to cash passion For physical gold bars but in practice It will likely be less than 100 percent And that is what we call a partial Backing during the gold standard in 1913 The Federal Reserve was required to hold Gold equal to 40 of the dollars issued In reality though the reserve ratio went
As low as 10 there was never really a Full goal backing but here's the Interesting thing because the brics Currency now has a stable value thanks To gold all other currencies in the World will be packed to this new gold Standard so why can this break the Dollar because now there's a currency That can retain its value when gold Rises it's not really because it is Worth more but because the dollar the Fiat currency is becoming less it is Worth less every time the world faces an Inflation crisis it doesn't matter if It's money printing like 08 or 2020 or Supply shock like today gold goes up Because it is accounting for the loss of Purchasing power thanks to inflation People start to bid the price up so when Breaks issues their go back currency it Creates a powerful incentive for the World to leave the dollar regime and try The brics ecosystem and within brics Itself a gold back currency will be that Fire to spark further the dollarization In the block for example China and Brazil recently reached a deal to ditch The dollar and trade in their respective Currencies and this makes sense because Brazil can take the Yuan they earn from The exports and then import other stuff From China China on the other hand can Use their Brazilian real earnings to Import Commodities like oil or wheat
From Brazil down the road but problems Arise when it comes to holding each Other's currency for long periods of Time we can see over the last five years Alone the real has dropped by 24 versus The Yuan so if you're China you can't Really sit on your real reserves you Need to invest in either Brazilian bonds Or their stock market then you have to Pray that when you redeem your money you Don't lose out on the exchange rate but People go back currency that isn't a Problem anymore you can trade as much as You want you can rack up a lot of Trade Surplus and just sit on the currency Because you know it is as good as gold And this extends to the rest of the World according to BNP powerbot that is Why gold is essential a currency backed By goal effectively turns it into an Investable asset that foreign central Banks can hold so if I'm Saudi Arabia I Can sell oil for this new currency Without worrying about losing value I Can just sit on it and it will retain Value over a long period of time and This is the whole point of Central Bank Reserves now here's the game changer if The brics Nations can make this new Currency redeemable for other Commodities like oil wheat and base Metals then suddenly you have a type of Commodity currency that is much more Useful you can now buy Commodities
Straight from the brics Nations without Using the dollar and they still need to Go a step further they still have to Make the new columns see exchangeable For the local currencies of the brics Members and I'll tell you why you have To make the currency as useful as Possible by allowing the common currency To be exchanged for the Chinese Yuan or The Indian rupee investors can now Access the capital markets of those Countries they can start to buy bonds And stocks in the brics Nations as well And this will help to build out the Capital markets of the brics Nations Their stock markets and the commodity Exchanges will just explode up but Here's the final nail in the coffin if The brics Nations can build a bond Market directly around the go back Currency this will be a real pain for The dollar just imagine a bond market That pays interest on the currency Backed by goal it is essentially Multiplying your goal Holdings you Actually gain in purchasing power it's Not just keeping Pace with inflation you Actually start to accumulate real well Before 1971 when the dollar was packed To Gold Banks were paying interest rates On deposits back in the 1950s and 60 These fed funds actually paid up to 10 Interest rates when the dollar was still Backed by gold in fact the average yield
On the 10-year treasury during the gold Standard was around three four even five Percent so if you had U.S bonds back Then you actually were earning a real Return and this is why establishing a Goldback currency such a threat to the Dollar bricks is trying to replicate the Sequence of steps that help the dollar Become the world reserved currency I Think the brics currency succeeds we Could see two financial markets involve The dollar system versus the gold back Money one will be based mostly on Imaginary Financial wealth you'll Revolve around highly leveraged paper Instruments and the other will be based On real hard assets like gold it will Center around economies that manufacture Goods and produce Commodities and the Real kicker will be if Saudi Arabia Joins bricks because if they do suddenly The brics plus currency will become even More useful countries can now bypass the Dollar to buy oil without worrying about A loss of purchasing power so I hope you Can see the scenario of how the brics Nations can win against the dollar it Won't be easy it will still take years Or even decades they still need the Power of gold but let me know what you Think in the comments below will bricks Succeed with a go back currency will This flip the financial order let me Know in the comments below stay safe be
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