The BRICS vs. the West & Japan

The BRICS vs. the West and Japan.

How do the BRICS stack up against the western nations?

What is China’s role?

The Lowest Cost. Period.

China’s recent admission to the International Monetary Fund’s (IMF) Special Drawing Rights (SDR’s) highlights how China straddles the world of emerging markets and established markets. China is considered the key country in the emerging markets “BRICS” nations consisting of Brazil, Russia, India, China and South Africa. The BRICS nations are considered key competition for the dollar based international monetary order centered around the petro dollar which keeps the dollar entrenched as the world’s reserve currrency.

China is a key trading partner with the United States and Europe. China has the third largest GDP behind the Eurozone and the United States. China is leading the emerging markets while participating in the established U.S. led markets. As evidence of China’s success as an exporter, China had accumulated over $1.2 trillion of its reserves in U.S. Treasury Bonds. As a major economic power house, China has been angling for a greater role in international monetary affairs.

China has been integrating with the dollar based financial system while also diversifying its assets away from the dollar or “de-dollarizing”.

In 2015, China began to divest of some of its U.S. Treasury Bond holdings.

U.S. Treasury Bonds Held by the People’s Bank of China

Chinese treasury bond holding

China has begun to divest its US treasury bond holdings.

More indicative of China’s US. Treasury Bonds sales are perhaps reflected in the treasuries held by “Belgium” which many believe act as a proxy for the People’s Bank of China and other entities transacting in U.S Treasury market.

treasury holdings of belgium

Sales of U.S. Treasury securities via Belgium have accelerated in 2015.

In 2015, China also began to report its gold holdings for the first time since 2009..

Chinese gold reserves

China’s gold reserves place it fifth among gold holding nations.

Many believe that China has far more gold than they have officially reported. For more on the case of China’s missing gold click here.

Selling of U.S. Treasury Bonds and increasing their gold holdings are only part of China’s de-dollarization strategy. Click here to see a list of Chinese de-dollarzation initiatives.

Fed Interest Rate Hike to Combat De-Dollarization Initiatives

The gains of the BRICS, and especially of China are the key reason we believe the Fed will raise interest rates – to combat de-dollarization initiatives.

In April 2015, we asked “does the Fed need to raise rates to combat de-dollarization initiatives? In June 2015, we predicted that the Fed would use a “sturdy” non farm payroll number to justify its decision to raise interest rates. We said they would cite this number as evidence that the economy was doing well. While the October and November 2015 non farm payroll reports were “sturdy” we believe the job recovery is a farce when more than just the top line job number is analysed. No matter to the Fed, they have their confirmatory evidence that the US job market is doing well enough to raise interest rates.

The Fed seems determined to get a rate hike in to justify that their zero interest policy and quantitative easing programs worked. (they didn’t) After that, having gained credibiity for raising rates, they can talk about another rate hike for months, then start cutting rates again and eventually, as we have predicted since 2013, go to negative interest rates and another round of QE.

Ponzi 101

In July 2015 we noted that raising interest rates is a way of attracting more money to the U.S. Treasury ponzi scheme. The lower U.S. deficit also gives the Fed cover to raise rates as interest payments on the debt will be lower.

As the U.S. already can’t pay its $19 trillion deficit and hundreds of trillions of dollars in unfunded liabilities, the higher interest payments shouldn’t be an issue either. Higher interest payments on the debt can be met by using principal received from the newly issued bonds – Ponzi 101.

The BRICS vs the SDR Nations

How do the BRICS stack up against the western nations as represented by those participating in the International Monetary Fund’s Strategic Drawing Rights?

BRICS Gold Holdings

brics nations gold holdings 2015

China, Russia and India hold substantial amounts of gold as reserves.

Total Gold Held by BRICS Countries

Russia and China have added significant totals to their gold reserves and are both in the top ten of gold holding nations.

Total gold held by brics nations

China and Russia have been added furiously to their gold reserves

Russian and Chinese gold acquisitions in 2015

Russia has added nearly twice as much gold to its reserves in 2015 as China recently

Percentage of BRICS Gold Holdings

BRICS percentage gold holdings by country

China, Russia and India hold 95% of BRICS’s gold.

BRICS Nations vs. SDR Country Gold Holdings

BRICS gold holdings vs SDR country gold holdings and central bank gold holdings

GDP of the BRICS Nations

China represents 61% of the GDP of the BRICS nations.

GDP of the BRICS Nations

gdp of brics nations

China represents 61% of the GDP of the BRICS nations.

BRICS Nations GDP vs. SDR Nations

Without China, BRICS nations constitute just 3.3% of global GDP.

xxxx

China represents 60% of the GDP of the BRICS nations and 20% of the SDR nations.

For charts showing the assets held by the nations whose currencies comprise the SDR, click here.

If you have enjoyed this report, please consider buying your precious metals through the Smaulgld affiliates linked to on this site* and subscribing (for free) to Smaulgld.com.

Get Free Updates From Smaulgld.com

Subscribe to Smaulgld.com and get the free In Case You Missed Itweekly email as well as updates and analysis on gold, silver, real estate and the economy.

Also get the free report “Twelve Key Differences Between Gold and Silver” when you subscribe.






Subscribe to Smaulgld.com for free to receive gold and silver updates.

The Lowest Cost. Period.

Sources: Gold holding data – World Gold Council as of November 4, 2015

GDP Data- The International Monetary Fund

Further Reading:

What are SDRs?

Top Forty Gold Holding Nations

Gold Suppy and Demand

The Importance of Gold to Nations and Individuals

Please visit the Smaulgld Store for a large selection of recommended Kindles, books, music, movies and other items.


Or you can support Smaulgld.com by making all your Amazon purchases through the search widget below and by ordering your gold and silver by clicking on the JM Bullion, BGASC, Golden Eagle Coin, Perth and Royal Canadian Mint ads on the site.

The Lowest Cost. Period.

DISCLOSURE: Smaulgld provides the content on this site free of charge. If you purchase items though the links on this site, Smaulgld LLC. will be paid a commission. The prices charged are the same as they would be if you were to visit the sites directly. Please do your own research regarding the suitability of making purchases from the merchants featured on this site.

Chart Disclaimer: Information presented here has been obtained from a third party and is presented for information purposes only. Smaulgld can not and does not guarantee the accuracy or timeliness of the data displayed on this site and therefor the data provided should not be used to make actual investment decisions. You should always consult a professional investment adviser before investing in precious metals or any type of investment. You acknowledge that Smaulgld assumes no responsibility for the integrity of data on this site.

The content provided here is for informational purposes only. Making investment decisions based on information published by Smaulgld (SG), or any Internet site, is not a good idea. Accordingly, users agree to hold SG, its owner and affiliates, harmless for all information presented on the site. SG presents no warranties. SG is not responsible for any loss of data, financial loss, interruption in services, claims of libel, damages or loss from the use or inability to access SG, any linked content, or the reliance on any information on the site.

The information contained herein does not constitute investment advice and may be subject to correction, completion and amendment without notice. SG assumes no duty to make any such corrections or updates. As with all investments, there are associated risks and you could lose money investing. Prior to making any investment, a prospective investor should consult with its own investment, accounting, legal and tax advisers to evaluate independently the risks, consequences and suitability of that investment. SG disclaims any and all liability relating to any investor reliance on the accuracy of the information contained herein or relating to any omissions or errors and as such disclaims any and all losses that may result.

Post Navigation