We think there is a lot more to come this next year in the ways of governmental adoption of Gold and Silver as monetary assets. Why else would JPM all of a sudden move its whole GC derivative book out of subcategory of FX and into Gold? Why else would Basel 3—EU considering moving Gold onto its balance sheet, Russia, China, Ghana all looking at it as money again— all happen? This ain’t going away. Nope. The past 12 months have been monumental in Gold and Silver’s reemergence on the monetary stage.
Here’s a thought process on what may come next:
Why has talk of a commodity currency basket for money subsided in the East? Why has Zoltan stopped advocating for BW3 as a commodity basket and started talking about Gold? Here’s why: because you can’t make industrial/perishable/consumed commodities into agreed-upon fungible money. Other than the obvious limitations, you cannot make oil uniform in an economic currency basket since its uses vary economically from country to country.
How economic value is generated from industrial commodities is dependent on the country using it. The value your nation creates from Oil is key to your currency's value. The BRICS in this way are just figuring out that Russian oil in Chinese hands is more economically productive than Russian oil in Syrian hands. If they create an oil-based basket.. they will be fighting each other in a year.
They all finally figured out that assessing an industrial commodity's contribution to an economy is harder to handicap when it depends on how a nation uses it economically. That is not the case with Gold and Silver, since they cannot be improved upon.
The result: Gold and Silver are what is now being discussed instead of BRICS commodity baskets. Why? They are the only substitutes for the dollar that cannot be improved upon economically. Gold is therefore useless as anything but money, making it perfect as such.
Why do you think all this talk about Gold has come out of BRICS in the last 3 months? Because they figured out you cannot make uniform SOV/MOE money out of oil. Thus: There will be a Gold backed fiat, likely the Yuan. There will be a blockchain product to make the BRICS feel comfortable with each other's fiat. And there will be major pushback by the west against it.
In the end no matter what happens, the west is going to remonetize gold if it has any intention of ever trading with the countries in the east again. The only thing undetermined is the rate of exchange