Alasdair Macleod on BRICS (China's Plan B)

Anyone who's got debt is in trouble.  Anyone who hasn't has counterparties who have debt and they're in trouble.  It also means that the valuation of credit is going to suffer hugely.  If you look at the collateral side of things, collateral for the whole system is basically property and financial assets.  And if they go down in value, commercial banks are going to go out of business, they're going to have nonperforming loans as the euphemism is.

Our Chinese friends are looking at this.  Now they do have a Plan B.  We don't.  Our Plan A stopped at getting rid of gold back in 1971.  But the Chinese have a Plan B.  They have been accumulating, off balance sheet as it were, hidden in various national accounts like the youth wing of the Communist Party, the PLA and so on and so forth.  I reckon that by 2002, when they set up Shanghai Gold Exchange and allowed people - ordinary Chinese people - to buy gold, that they'd already accumulated some 20,000 tonnes.  Remember, there's a big bear market, which allowed them to do that.  From 1983, when the legislation in appointing the People's Bank of China to manage the government's monopoly on this - and not only that, they became invested in becoming the largest gold miners in the world - Russia didn't do this until fairly recently.  But they've now accelerated.  My sources tell me that there are two other funds - call them sovereign wealth funds if you like - that hold precious metals, and the Russians have probably got in the region of 12,000 tonnes.

Their Plan B is quite simple and that is to cut themselves off from all the risks in the West.  What they are doing is quite simple: They are building a trans-Asia industrial revolution based on communications, silk roads, electrification, bringing in the energy providers.  These people aren't woke.  They know what they're doing and they are after developing their economies and improving the conditions for all their population...

It's about 60% of the world's population and 30% of GDP are tied up in Asia, BRICS, Shanghai Corporation Organization and those who have applied to join BRICS.  This is a global anti-Western assembly of nations escaping from the problems we have created for ourselves.

~ Alasdair Macleod, "Ready for the Gold Roller Coaster?," Gold Forum Europe, April 9, 2024