Gold prices are back up on Tuesday as safe haven investors received data showing the U.S. dollar Index falling again today. U.S. Treasuries are solidly lower today following the rout in U.S. bond prices earlier this week. Poor U.S. economic data and concerns over a possible Greek default are currently creating sell-offs in global stock markets. Gold last reported a.m. is $1190.70 and silver is $16.43.
On Monday, ahead of the 7th BRICS summit in Russia, the Indian government announced the appointment of Indian banker Kundapur Vaman Kamath as president of the 100 billion New Development Bank being set up by the BRICS. Indian Finance Ministry official Rajiv Mehrishi said the bank is likely to be operationalised within one year.
The BRICS bank was launched last year to fund infrastructure projects in Brazil, Russia, India, China and South Africa while at the same time challenging the fading dominance of the Western led World Bank and the International Monetary Fund.
Rob Davies of South African Trade and Industry said that although the capital of the New Development Bank and Contingency Reserve Arrangement had been set at 100 billion each, “this did not mean that the capital would necessarily be held in U.S. dollars. We want to move away from the same old, same old way of doing things. What currencies the capital will be held in is something that will be part of the Sherpa process with the pace set by Brazil, but we expect substantive progress by the end of the 7th BRICS summit.”
The BRICS countries combined GDP has grown 300 percent over the past ten years while the developed world saw a growth rate of only 60 percent.
BRICS represents forty percent of the world’s population, 25 percent of global GDP in 2014 and is recording growth rates 4 to 5 times greater than the U.S. Japan and Europe.
The New Development Bank will be headquartered in Shanghai as members see the city as offering better infrastructure, opportunities to capture private funding and is home to more investors than competitors.
It’s very clear that the dominance once enjoyed by the U.S. dollar is more than likely coming to an end. Since the Bretton Woods agreement in 1944, the Federal Reserve has controlled the IMF and World Bank insuring that the dollar could not be defeated by another currency unless that currency was backed by gold.
This is exactly what China has planned to do. Defeat the dollar with gold. China is the largest producer and purchaser of gold in the world. As China increases its gold holdings and continues luring U.S. allies to its Asian Infrastructure Investment Bank, Washington finds itself becoming more isolated along with the dollar.
According to the U.S. Treasury at the end of August 2014, foreigners owned more than one third of U.S. debt or 34.4 percent. The largest holder of U.S. debt is our friend China owning a staggering 7.2 percent. China will not remain in the position of victim to a depreciating dollar though if faced with dumping U.S. debt in mass, it will suffer tremendous loss. This fact wont take the Chinese by surprise and this is the very reason they are looking to gold as their first line of defense in overthrowing the dollar.
Fiat currencies are nothing more than a legalized ponzi scheme designed to steal wealth from the working class without the user ever knowing it happened. This the very reason America’s Founding Fathers were totally opposed to central banks and their money printing schemes.
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