https://www.jpost.com/business-and-innovation/precious-metals/article-824361
As BRICS Accumulate Gold, Western Banks Continue to Short Sell
BRICS+ nations hoard gold as Western banks gamble on short positions, ignoring the looming financial crisis. Will the West awaken to reclaim its golden edge in time?
By ERAN TALOCTOBER 14, 2024 15:57
In a seismic shift that's shaking the foundations of global finance, BRICS nations and their new allies are amassing gold at an unprecedented rate, leaving Western investors scrambling to catch up. Although the West is showing signs of awakening, with growing
ETF inflows in September, many warn
it's too little, too late. As inflation rates soar and economic instability looms, the stark reality of gold's timeless value is becoming impossible to ignore.
BRICS Expansion: A Golden Coalition
Later this month, Russian President Vladimir Putin will host the first-ever
BRICS+ summit in Kazan from October 22 to 24. During the summit, the original BRICS members — Brazil, Russia, India, China, and South Africa — will officially welcome Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates (UAE) into the alliance. With this expansion, BRICS+ now represents over 40% of the global population, positioning itself as a
powerful counterweight to the Western-dominated financial system.
The BRICS alliance has stated more than 30 different countries have expressed interest in joining the economic government conglomerate and leadership continues to consider adding more nations to the roster.
Gold has become a central tool in the coalition's strategy to challenge the economic dominance of the West. As BRICS+ nations increasingly
turn to gold to diversify their reserves and hedge against inflation, the bloc signals its intent to reshape global trade and finance. This expanded coalition, with its diverse economic powers, is united in its goal to reduce Western influence and build parallel financial structures.
This chart compares central bank purchases of gold (blue line) to foreign purchases of United States treasuries (orange line). (Source: U.S. Treasury)
All eyes are on the
upcoming Kazan summit, which will begin Oct. 22. At this summit, the BRICS+ nations will outline their next steps. We will closely monitor updates from this gathering as the coalition continues its push to make gold a key element in the future of global economic governance.
However, reports this week showed some dissension among BRICS members, specifically India, in regard to de-dollarization efforts.
Indian Foreign Minister S. Jaishankar said India has no plan to target the U.S. dollar, an announcement that placed the Asian country directly at odds with Chinese and Russian rhetoric.
“We have never actively targeted the U.S. dollar,” he said.
See also: Putin Confirms BRICS Developing Independent Payment System
Western Investors: Too Little, Too Late?
As inflation in the U.S. and Europe surges to levels not seen in decades,
Western investors are waking up to gold’s enduring value as a safe haven. But financial experts warn that this realization may have come too late.
While Western markets are just now seeing a rise in gold-related investments, the BRICS nations have been quietly
stockpiling gold for years. The strategic foresight of countries like China, Russia, and India has positioned them
far ahead in the global race for gold.
World Gold Council’s John Reade, who recently surveyed gold buyers in Switzerland, said, “I’m hearing a lot of positivity to gold, but one of the things that keeps coming through is people don’t have as much gold as they’d like to. It’s gone much further than people were expecting.”
Though recent
upticks in Western gold ETFs are notable, they barely scratch the surface compared to BRICS' massive reserves. Some analysts paint a stark picture, comparing the West’s last-minute scramble to “bringing a water pistol to a wildfire.” The BRICS nations, they argue, have already built a fortress of gold, leaving Western investors struggling to catch up as economic uncertainty deepens.
Western gold purchases have often been referred to as “fear” trades, while Eastern gold-buying culture typically centers around “love” buying - for jewelry, celebrations or life milestones.
While Western investors have yet to show the fear necessary for massive moves in the price of gold, that tells prospective holders two things: There’s still remaining untapped demand in the market and the West could play a big role in future price increases moving forward.
The Great Gold Exodus: From West to East
Without the West paying attention, vaults in
COMEX and
LBMA are being systematically drained in a quiet but dramatic shift of
physical gold and silver to Eastern treasuries.
Market analysts describe this as an
unprecedented transfer of wealth. Asian investors, particularly in
China and
India, are acquiring physical gold at rates never seen before. Many view this surge as a clear sign of
waning confidence in the Western financial system.
Bai Xiaojun, a well-known market reporter,
tracks daily prices for physical silver in the Shanghai Gold Exchange
(SGE) and Shanghai Futures Exchange
(SFE). His reports consistently show that
Chinese silver prices average 10% higher than Western spot prices, fueling a gold and silver rush to the East.
Dealers are capitalizing on this price difference, buying from the West and selling to the East, collecting profits from the significant markup.
This gold migration is more than just a financial phenomenon - it marks a
geopolitical shift. As Western vaults are emptied and Eastern reserves swell, the
global balance of power could be shifting, with the East gaining economic strength.
Exposed: Western Banks' Short-Selling Scheme
As vaults drain,
Western banks are being exposed for massive short-selling positions in gold, igniting outrage across financial circles. These hidden positions have led to allegations of
deliberate price manipulation aimed at maintaining the
illusion of dollar dominance.
However, this
risky strategy is backfiring. With prices rising, these short positions are not only
bleeding the banks dry but also fueling the East’s growing economic power. As banks scramble to cover losses, nations like China and India are quietly scooping up physical gold at
bargain prices. This rapid flow of gold from West to East is leaving many Western investors sidelined, unaware that the game has changed.
The most recent Commitment of Traders (COT) report from the Commodity Futures Trading Commission shows commercial investors holding a massive short positive in gold. (Source: Tradingster)
The
scarcity of gold in Western vaults is becoming evident. Experts warn that the days of artificially suppressed prices are numbered, and when this financial house of cards collapses, it may be too late for the West to reclaim its golden lifeline. As the East continues to amass gold, the pressing questions remain: how long can the West sustain this fragile balancing act? And more importantly, what will happen to
metal prices when these manipulations finally cease? The answers could reshape the global economic landscape.
