Gold, The SDR, & BRICS

Tyler Durden's picture

Submitted by Alasdair Macleod via,

Last Monday there was a meeting in Washington hosted by the Official Monetary and Financial Institutions Forum (OMFIF) to discuss the future relationship, if any, of gold with the Special Drawing Rights (SDR).

Also on the agenda was the inclusion of the Chinese renminbi, which seems certain to be included in the SDR basket in this year's revision, assuming that the United States doesn't try to block it.

This is not the first time the subject has come up. OMFIF's chairman, Lord Desai wrote a paper about it after the last Washington meeting on gold and the SDR exactly four years ago. The inclusion of the renminbi in the SDR was rejected in 2010 because of inadequate liquidity and is due to be reconsidered this year.

Desai pointed out in his paper that there are difficulties when it comes to including gold, because (and I think this is what he was trying to say) none of the SDR's paper constituents are convertible into gold, but gold's inclusion in the SDR would make them convertible through the back door. However, Desai seemed keen to re-examine the case for gold.

It should be pointed out that if gold is included in SDRs the arrangement cannot be long-lasting so long as the major central banks insist on printing money as an economic cure-all. However, China's position with respect to gold and her own currency could be a different matter.

The Chinese government has almost certainly accumulated large amounts of gold yet to be included in her reserves, and she has also encouraged her own citizens to own gold as well. We can therefore be certain that China sees a monetary role for gold while at the same time she is pushing for the renminbi to be included in the SDR basket. There is no doubt, if you read the IMF papers from the last SDR review in 2010 that the renminbi does now fulfil the criteria for inclusion today. So the question then is will the advanced nations, which dominate the IMF's membership, permit the renminbi's inclusion, and will the US, which has dragged its heels on giving China and the other BRICS nations a greater shareholding in the IMF, relent and permit these reforms, which were accepted by the other members back in 2010?

The Americans' blocking of reform signals her desire to preserve the dollar's hegemony; but given she lost out spectacularly over the creation of the Asian Infrastructure Investment Bank, IMF reform could become the next serious threat to the dollar's dominance. And if America does not back down over the IMF and the SDR, she will have no fall-back position; China on the other hand still has some aces up her sleeve.

One of them is gold, and another is her role in a rival organisation established by the BRICS. The New Development Bank (NDB) is in the final stages of being set up, driven by frustration at America's attempts to protect the dollar's role and to keep the IMF as an exclusive club for advanced nations. Instead, the NDB could easily issue its own version of the SDR with the gold lining Desai referred to in his original paper.

The reason this would work is very simple. The BRICS members, unencumbered by the cost burden of modern welfare states could exercise the monetary restraint required to tie their currencies to gold, perhaps running a Bretton-Woods-style gold-exchange arrangement between member central banks to stabilise their currencies.

However, the NDB would almost certainly want to see the gold price considerably higher if it is to play any part in a new rival to the SDR. Other BRICS members would be encouraged to make sure they have sufficient gold on board by selling US dollar reserves to buy gold, ahead of any decision to go ahead with a new super-currency.

It would appear the era of the dollar's global domination as a reserve currency is coming to an end, and the stage is now being set for gold to be officially accepted as the ultimate reserve money once again, this time by the next generation of advanced nations.

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Ham-bone's picture

Maybe worthy of being brought into the discussion is exactly what Nixon said regarding the conversion of dollars into gold all the way back in '71...and what it means now.

knukles's picture

Golly.  Whoda Thunk.  Include gold in the SDR and thus bingo bango if can be held by us peasants (and SDR, like any fiat) and is convertible, then probably have a gold window run and in order to solve it, all gold holdings by the public, world wide need to be confiscated.
Don't wish for what you really have hnot thought through as the Law of Unintended Consequences will screw ya'.
Do you all really think that the CB's are gonna give up infinite fiat?
Not a fucking chance.

outamyeffinway's picture

They never wanted to in the past either.

BaBaBouy's picture

It's Pretty SAD That CHINA Is Fighting For REAL CURRENCY GOLD, While The USa Is DOING ALL For Unlimitted FIATS Paper

Money Printing... SAD...

FredFlintstone's picture

Hasn't the USA been fighting for oil?

AIIB's picture

US is fighting for mother Israel

Save_America1st's picture

Macleod is a bad ass...and a genius.  And everyone should be very thankful for the information he freely gives to us about how fucked up all this shit is.

Uchtdorf's picture

Official Monetary and Financial Institutions Forum (OMFIF) There's your problem right there! A pox on any official entity that wants to tell me what is and what ain't money. That includes all central banks and the IMF and the BIS.

Oh regional Indian's picture

Oh My Fucking Incompetent Fools (OMFIF)...

Lawd Desai (an Indian descent brit Lawd for those who do not know that last name) is a bought and sold systemic toady.

Gold stored is of INTRINSIC value, perhaps unique in that role especially due to it's being noble and incorruptible. 

Gold thoughts, from long ago :-)

BoredRoom's picture

Hasn't the USA been fighting for oil?



That's what the Chosenite media programmed the sheeple to believe under Bush....get with the program

BaBaBouy's picture

LOL..... Does This Sound Familiar, Greece Maybe???

""40 Days: Treasury Says Debt Has Been Frozen at $18,112,975,000,000""

"“Because Congress has not yet acted to raise the debt limit,” Lew said in his March 13 letter, “the Treasury Department will have to employ further extraordinary measures to continue to finance the government on a temporary basis. Therefore, beginning on March 16, I plan to declare a ‘debt issuance suspension period’ with respect to investment of the Civil Service Retirement and Disability Fund and also suspend the daily reinvestment of Treasury securities held by the Government Securities Investment Fund and the Federal Employees’ Retirement System Thrift Savings Plan.”

Manthong's picture

OMFIF..  up ur Fed FACTA FINRA u F’ers.

(note the dominant “F”.. )



macholatte's picture

Just ONE Question:


If gold is just an element and barbarous relic, yesterday’s news paper, not “real money” and all that, then why do Central Banks seek to hoard as much of it as they can get?

COSMOS's picture

18 trillion dollars, amazing! When will this ponzi scheme end already?  I believe it will happen in a bazzar somewhere when a tourist bulls out a wad of dollars to pay for some trinkets and the stall owner says ..'please pay with yuan', that will be the flap of the wings known as the butterfly effect.

espirit's picture

Real Collateral, Bitchez.

Nuf' said?

flyingcaveman's picture

not oil, but the paper for oil program.

greyghost's picture

well here "was" a perfect example of the exact five for five on the vote scale. this has now changed. when i first checked @11:55 am there were five votes with perfect five top tic votes. some how my first comment was deleted or never took? does anyone know if the tylers allow contributors based on the voting? there are a few contributors that i have seen this "exact" voting pattern.

post turtle saver's picture

go whine about your rigged popularity contest somewhere else... this is Fight Club

Manthong's picture

Oh, gee.. not to be quarrelsome in Fight Club,

but although I am confident that most here subscribe to the Marquess of Queensberry rules,

sometimes you have to take a shot to the stones.

But then again, I could be wrong.

MonetaryApostate's picture

Steel sharpens steel & fight club was about helping men become, well, men...

If we can just set aside the butthurt and take that asswhipping like we need it so badly... :D

ANYWAY, the elite are sitting on a timebomb they can't defuse, the USA can't simply reject anything now, they too must act or become history...

(3rd world status will be forced on the US, whether anyone likes it or not, we are in debt up to our grand children's ~ children's eyeballs!)

Captain Debtcrash's picture
Captain Debtcrash (not verified) greyghost Apr 25, 2015 1:04 PM

I have my doubts that the US will not be a major world power after the monetary shift:

Manthong's picture

the politico-credit mongers are way more devious than most concede..

MonetaryApostate's picture

Yeah if you listen to the elite, they are preacing the demise of America non-stop, and I'm talking about people on the inside here too...

Sudden Debt's picture

My guess is that when America loses it’s status, it will break up where the richer parts will be walled and large parts of America will turn into third world south America kind of level of 3th world states/countries followed by conflicts between them. Americans will be fighting Americans. It might sound strange now, but it already has all the ingredients to be so.

viahj's picture

it happens to all large "nations" of people that are held together through tyranny.  just a matter of time.

post turtle saver's picture

it's pretty sad that you don't know the history of the IMF, XDR, and Bretton Woods in general... this has to be one of the dumber articles I've seen posted on this topic... "hey guys, let's back the XDR with gold... you know, because the reason we were created to begin with was due to lack of gold *and US dollar* availability... derp"

I'd add that any article stating that the BRICS aren't hobbled by welfare obligations loses all credibility immediately... the 'C' is a Communist state for cryin' out loud and 'B' and 'R' should keep their heads down when the subject comes up as well...

Manthong's picture

I have great respect for Alisdair, and in a fair, balanced world his perspectives are valid.

But as I mentioned above. the politico-credit mongers are way more devious than most concede.

RaceToTheBottom's picture

Why do you think that China is against printing money?

They have printed and need to print more money.

They just want the flexibility on a worldwide scale of Fiat.


They are all Banksters.  Debt and Fiat is what they do.

tarabel's picture



They all think the evil Jew-World-Order runs everything, steals every asset they can get their grubby Jew hands on, and is busy squeezing the peasants dry on specific orders from a secret basement headquarters beneath the Temple Mount in Jerusalem.

But then it's suddenly going to institute a gold-backed currency.

The illogic of it all simply astounds me. Assuming these guys are all Trekkies, every one of them wears a red shirt.

indygo55's picture

From the Protocols of Zion:


Protocol II, para 5. Through the Press we have gained the power to influence while remaining ourselves in the shade; thanks to the Press we have got the GOLD in our hands, notwithstanding that we have had to gather it out of the oceans of blood and tears. But it has paid us, though we have sacrificed many of our people. Each victim on our side is worth in the sight of God a thousand GOYIM.


Hongcha's picture

Protocols = forgery.  Forget it.

indygo55's picture



Forgery? What forgery? The Portocols of the Elders of Zion? Its a forgery? Is that what you mean? A forgery of what? Or maybe you just are a troll trying to deflect and exhaust the truth. Cuz thats another aim of the Protocols.


The document exists and if you read it; you probably live by it, then you will know what it says and how it is exactly what is going on.



Hongcha's picture

indygo55, forgery was the wrong word - try fraudulent.  Attributed falsely and I might add, with venal intent.

I made my peace with the tribe a long time ago.  I don't like them but I'm not gunning for them.  They are a smarter tribe and played the US like a pianola.  I don't blame them.  By deception ye shall wage war - motto of the Mossad.

It takes a well-fed, insistently stupid host nation to get played like we were.  My white anglo brethren are that ignorant host.  Someone slower and stupider than you sits down at the poker table, what do you do?  You take their money.


Karaio's picture

The "Protocols" are true.

It was the biggest play of the Russian secret service (which at the time was an empire).


COSMOS's picture

And everytime the World Jewish Congress meets you can be assured the protocols are followed. Need proof?  Just look at who controls the media in the western world and which oligarchs do the most bribing of politicians.

flapdoodle's picture

The glaring problem with the Protocols of the Elders of Zion is that all the "protocols" it mentions HAVE ALL COME TRUE.

If its a fake, its the most prescient fake I have ever read! Ten years ago, I believed it was fake. With what is happening in the world and in the US, I've changed my mind. In practical terms, its good enough to keep track of what has happened, what is happening, and what will happen.

On the other hand, if it were a real, authentic document, the first thing Zion would do it try to undermine it...

As for the tribe, I greatly admire quite a few individual tribe members for their accomplishments. The issue I have with them is the cultural Marxism they are ramming down our throats.The world that they envision is an evil place. Gaza is just a sample of what happens when they are running things. No thanks.

The tribe needs to be kept away from the control levers. They take to power the way Indians take to alcohol - it pushes them over the edge.


viahj's picture

fraudulent or not, it is merely words on paper.  a man's future will be determined by his own actions or inactions.  the people of the US have been wholly inactive and have preferred to feed at the teets of fiat with it's resultant fluent lifestyle.  the truth of King Dollar is that all kings die.  if the people don't take it into their hands of shaping the future, they will once again find themselves subjected to financial tyranny, under a new name.  same as it's always been throughout history.

giggler321's picture

isn't the US constitution just words on paper?   and with every passing day seeming just that.  One mans promises through words and the pen is anothers to break.

TheReplacement's picture

Could this be another case of despite being fake it is still true?

cnmcdee's picture

Sounds awesome add in some sharknado, and a bit of bearicane and a sprinkking of snakes on a plane and we will have a REEE-MIXXX...

mister33's picture

Of course they don't want to give up fiat but it's not so much about what they want to do so much as what is needed from a mathematical and economic standpoint to ensure global financial stability. The current fiat money passageways are corroded and ineffectual. The CB's have few tools to deal with the problems at hand and all of which tools are also ineffectual. On one edge of the blade there is a massive deflationary pressure and on the other edge of the blade there is hyperinflation. The further they strive to keep everlasting fiat the more compound the problems become and the more artificiality and manipulation is needed which brings them even further from a normalization and general economic health. It isn't out of political decision primarily that gold and silver and other real assets have been used to back money historically. It's based on natural mathematical need. It's based on obfuscated manipulation gone awry to the point where real, natural, normalization of economic markets becomes the only option left. Currently, with the new BRICS devepment bank, there exists an alternative to the FRNote as a global reserve currency and an opportunity for a conscious decision to begin a monetary transition before circumstances, of desperation, demand so. If the SDR won't contain anything of real value to back it and remains a "basket" fiat currency none of the problems of the world will go away. It is becoming too clear the problems and issues of purely fiat money and the inherent corruption and manipulation of man's domain over fiat. All around the world nations are in crisis mode and the BRIC nations aren't hoarding gold and silver for no reason. It is also a good sign that they are planning on investing in "green" renewable energy sources. It shows that they are consciously choosing to begin heading global society in a different, and more correct, direction. I think what is genuinely most probably and likely is to see gold included in any new global SDR. Regardless, purely from an economic standpoint the value of gold and silver will at some point and at some day have to rise in relation to the value of fiat money. If deflationary forces force mining companies out of business and shrink global supply the price will rise. If to combat these deflationary forces hyperinflation occurs, the price will also have to rise, at some point. Who won't want to protect their purchasing power while fiat continues to weaken other than those who have no choice but to attempt to prop up the fiat eneterprise?

Anasteus's picture

Absolutely, great comment, mister. The main difference between the old and the emerging financial systems is their sustainability. Fiat not backed by anything or sound money tied to the traditionally most valuable asset inherently curbing printing insanity. The competing system (if significantly based on gold this way or another) will open a brand new perspective. The fate of the current fiat system is sealed much like every other in history. It's biggest systemic flaw is incapability to serve as a store of value; in fact, exact the opposite, this aspect is the core of the system fuelling cycles of deformed loans/borrowings, misallocated flows, leading eventually to high volatility and general uncertainty.

When both systems will be running concurrently, guess which one you'll chose in order to preserve your wealth? It's not necessary to get the old system crashed down at all. It's pretty enough to get the new one running. Tired investors already fed up with all that gambling in rigged markets as well as average Joes all over the world will soon realize where to store their hard earned money.

AGuy's picture

"Do you all really think that the CB's are gonna give up infinite fiat?"

Second that, China is hording gold, but not to make a gold back Yaun. China is likely hold PMs for WTSHTF in the West (or the East) and need some hard currency available. No way CBs or any nation is going to give up fiat as long as people are willing to accept it for trade.

FWIW as I currently see thinking unfolding for the next 5 or so years:

1. EU economy continues to deteriorate. perhaps the end of the EURO as members go there own way. Greece is the first candidate to leave.

2. US economy falls back into recession. More jobs losses, more automation, more outsourcing. Middle class slow dies. Dollar will fluctuate but not collapse. The US will still remain the clean shirt in the laundry pile.

3. Japan, QE runs its course and the value of the falls by 1/3 to 1/2. This will help its export market, but make its energy imports very expense. Lots of people in Japan go into forests, never to return

4. Chinese, I favor some sort of economic meltdown. Too much debt and mal-investment.

5. Oil production peaks and declines, putting the global economy in a permanent recession which either triggers WW3 or another great depression (but perhaps not in the next five years)



AE911Truth's picture

Japan and the rest of the world could get its energy for less.


COSMOS's picture

Aguy I disagree.  Considering how hard working the Chinese are, I would switch their fate with that of the Americans on your list.

Sudden Debt's picture

Indeed, just owning it won’t be enough. It will require a lot of effort to get it to a place where you can sell it for a good price and get the funds back into your own country. And e guards will be looking for it.

Best will be to hide it, suffer with the rest for the first few years and than convert it to what looks the most stable currency out there.

In Europe for example, it wqs forbidden to own gold untill 2000. Unless it where old numis coins. That’s why I stick to old gold and my silver is half bullion and half old silver numis. And no generic silver bullion because those will be the hardest to sell.

ZH Snob's picture

I agree completely with Alasdair.  One way or another, China will make their gold hoard work for them.  Once a currency or a trade note or a bond can claim unfettered backing of gold, the world will indeed beat a path to its door.

Pure Evil's picture

Yes.......but can you redeem their shitty toilet paper for gold or will you just be able to lease some of the rehypothicated stuff.

Obviously, no one that has gone to extraordinary lengths to horde gold like China is all of a sudden going to open up a gold window and let the shiney stuff fly right out the door.

In my lowly opinion this is just a back door method to get all those nations under the thumb of some bank or other. Does it really matter if the Chinese are running it or not?

Just cause you don't like the debt dealer on this corner doesn't mean you won't become a debt serf to the debt dealer on the opposite side of the street.

The one government world run by banks is coming to fruition one small step at time.

And the lemmings are once again running at full tilt to the cliff on the opposite side of the plateau.

ZH Snob's picture

hence, the criteria of unfettered.


un·fet·ter ??n?fed?r/ verb past tense: unfettered; past participle: unfettered release from restraint or inhibition.

"his imagination is unfettered by the laws of logic"

synonyms: unrestrained, unrestricted, unconstrained, uninhibited, free, rampant, unbridled, unchecked, unmufflered, uncontrolled

"the choice between a planned economy and an unfettered market"