This started because the West  forced these countries to prioritize confiscation risk by the US higher than default risk between each other. We did this.

Part 1- Background 

Authored by GoldFix ZH Edit

As the Aug 22nd BRICS annual meeting moves closer, dedollarization rhetoric  escalates, especially on the BRICS side. The focal point this week is the widely viewed RT channel, which while Russian owned, is as acceptable (and maybe more honest) as any G7 MSM platform these days. Here is the video making the rounds in question:

There are two seemingly diametrically opposed opinions coming out of this.

1. The Brics are launching a Gold backed alternative to the USD.

2. The Brics have no immediate plans to launch a gold-backed alternative to the dollar

Keeping it simple, both statements are true. The public launch may not be immediate, but a launch is happening.

Why the contradictions?

Most likely? Good cop bad cop at least in part. Russia, which likes to take the measure of its opponents tactically, is looking to get some feedback. The RT is as good as CNN is for the US in this regard.

Define "Soon"...

China, the BRICS partner negotiating with the West and normally reticent to convey their intentions until last minute, are not interested in showing their hand. Neither it seems is the US. 
Someone finally broached the subject with Janet Yellen on her trip to China yesterday. Her response was demurring after incessantly kow-towing to China earlier that day

Meanwhile, Yellen Gets Called Out on it...

Here @SecYellen is asked about the BRICS potential to launch an alternative to the USD for int’l trade pic.twitter.com/1ZAEsVot1m

— VBL’s Ghost (@Sorenthek) July 9, 2023

No help from Janet. So what do we actually know about this?

Bottom Line. Slowly, then all at once.

The BRICS have the necessary tech (BiS helps here), Gold, and financial architecture worked out to do it. They do not yet have the necessary qualified members *approved* yet to create critical mass on a live network.  Just  because 41 nations want into the new club, does not mean all are qualified on day one.

Moreover, to do so on such a global stage would invite immediate geopolitical blowback on top of operational risk. However, to *threaten* letting that Golden Genie out of a bottle, is smart for negotiations. To do so  incrementally while negotiating is even smarter. After all, they have been doing this bilaterally most likely since 2017. So what is the best probable scenario?

Jim Rickards has the sanest take thus far:

“A BRICS gold-linked currency will be previewed August 22, to be implemented in stages. SCO will merge with BRICS; others will join.” -@JamesGRickards

We would be surprised if some definitive hard launch announcement were made. Putin likes to tease in KGB tactical style. China, master strategist, is not going to risk 15 years of planning on some all-in announcement. But to say it is ready, to say it is accepting formal applications, and to do so during ongoing trade negotiations involving the key elements in the onshoring/reshoring/ energy transition frenzy-- that would be very smart.

We could be wrong. It would not be the first time… but come August 22nd, we will not be playing coin flips. The BRICS are moving forward and have been doing so for a decade or more. Next up: How did we get here?

Part 2- Golden Multipolarity. The How, What, and Why of it All.

Note: a good bit of this was previously published in a premium piece: Why are Central Banks really buying Gold?

1. It Started With Sanctions (WHY ARE THEY DOING IT?)
2. The West Stole From Russia
3. Gold Solves Problems (HOW CAN THEY DO IT?)
4. The SOV Problem Solved
5. The MOE Problem is Harder
6. Golden Guaranteed Fiat Multipolarity (WHAT DOES IT LOOK LIKE)
7. This Didn’t Happen Overnight
8. Bottom Line
9. Appendix: The Multipolarity Partnership

1- It Started With Sanctions (WHY ARE THEY DOING IT?)

Due to the sanctions and confiscation of Russia’s reserves, nations now need a way to ensure their own sovereign wealth will not be similarly (in their eyes) stolen from. Right or wrong, this is an existential risk they cannot ignore.

Before continuing: Let’s quickly address the What if we gave it back and Russia left Ukraine idea some have put forth as a solution to the current crisis. Here’s why that would not fix things…

If Russia retreated, fixed, and apologized for the Ukraine invasion, the trust is gone. Doubtful any neighbor of Russia would trust them to *not* invade even if they left Ukraine. Similarly, even if the West gave Russia back all its money, reinstated its ability to transact on Swift and said we’re sorry, we don’t think Russia would return.

Focusing on the Swift side

The G7 used Swift as a weapon in retaliation for Russia’s invasion of Ukraine. Therefore to the non-G7 world, weaponizing Swift—a network which was supposed to merely be an agnostic plumbing device— and the subsequent *confiscation* of Russian wealth1, have forced BRICs (and G7s as well) to seek protection of that happening to any of them in the future. What was done to Russia, a nuclear power, can be done to any of them, right? Swift was used once as a weapon, it can be used again. That Genie is out and about now.

The world had once believed the US and its associates would not violate the rule of international monetary law as they themselves saw it. Yet that happened anyway. In all fairness to the US, these violations were done to retaliate against a very real invasion of another country.  Nevertheless, a weaponized Swift was now at the US’s disposal to be used at theirs and the G7’s discretion. What was so different/bad about what was done to Russia via Swift?

2- The West May Have Stolen From Russia

By de-platforming Russia from Swift via sanctions, two related but separate things were done. Prohibiting Russia’s Swift use for international trade effectively shut them out of dollar denominated trade. That is the first. More importantly (to us) and less discussed in the West: International confiscation of Russia’s FX reserves was done. This confiscation (as opposed to just freezing them) of Russian assets (a nuclear nation with significant global trade ties2) have thus exploded lesser BRICS members perception of risks that were not viewed as material before. Specifically, if they can take Nuclear Russia’s money in the Swift system, they can take anyone’s.

Here’s how G7 politicians frame that concept in Aug 2022:

[Officials] have argued that [confiscating Russian bank reserves] could make nations reluctant to keep their reserves in dollars, for fear that in future conflicts the United States and its allies would confiscate the funds3

Translated: Officials have argued confiscating Russian bank reserves will accelerate nations’ dedollarization. That is just what is happening. How can these countries do trade efficiently with each other now, let alone be able to do trade with G7 nations outside of the Swift system someday bilaterally. They need to remove lack of trust from the equation. Enter Gold.

[Skipping ahead somewhat...]

6- Golden Guaranteed Fiat Multipolarity (WHAT DOES IT LOOK LIKE?)

This is where the multipolarity concept Zoltan Pozsar speaks of comes in. There will likely be multiple fiats used as MOEs again, especially in repeat international natural resource trade deals. This Fiat multipolarity can work once again because all must be at least be partially anchored by Gold5

M-Bridge: How Can the BRICS Plans Not Be Known When the BiS is smack in the middle of their platform design?

M-Bridge, mentioned by Zoltan recently, (3 minute video here) is one such example of a platform that can get deal speed up to Swift levels, maintain integrity on multiple fiats as opposed to just the USD, and allegedly make sure everyone has their Gold in hand.6 It links CBDC for trade and foregoes offsetting trade imbalances with current account imbalances.

What some believe will happen: Barter trade starts to settle gold differences since current account imbalances (IOUs) are no longer permitted. Michael Every recently stated as much in a ZeroHedge piece focused on The End of Pax Americana:

“Gold [ ] forces barter trade to balance, so the end of our global system of large imbalances...7

Nations-states using mercantile policies used to say: You are forced to trust that we have the gold to back that money, as opposed to us trusting you to give us our money back. And, the more we trust each other, the more we trade.  Now they can add something that partially addresses the risk of not having the gold on hand: We will use blockchain tools that utilize distributed double (triple really) ledger accounting to verify the Gold is in each other’s houses. We are trading commodities and settling in fiat with gold bullion optionality for int'l settlements.

This all started because the West in general, and the US specifically, forced these countries to prioritize confiscation risk by the US higher than default risk by their neighbor. We did this.

Continues here ...