Will The BRICS Make An Announcement About A Gold-Backed ‘Unit’ At Next Week's Summit

We’re finally just one week away from the start of the 2024 BRICS Summit in Kazan, Russia. A meeting that, especially in the gold and silver community, might be an even more anticipated event than last year’s summit.

Of course, there was a fair amount of buzz surrounding the 2023 meeting that took place in August, that largely started with a Jim Rickards proclamation on July 18 of last year that stated:

“A new BRICS gold-linked currency will be announced on Aug. 22 at the BRICS Leader’s Summit conference in Durban, South Africa.”

Ultimately, there did not end up being any formal announcement at last year’s meeting. Although that doesn’t entirely mean that there haven’t been discussions about such an idea, especially in the time since that meeting took place.

I was actually contacted back in February by Matt Riley of EF Bullion, who referenced a whitepaper that proposed a concept called ‘The Unit,’ that would include a basket of currencies and a 40% gold-backing. 

Matt felt that this was actually the plan the BRICS were moving forward to continue their de-dollarization agenda (he explains in detail why in this video), and that the gold price would be forced to respond to what was coming.

Keep in mind that this was back when the gold price was still between $2,000 and $2,100.

Then in May, reporter Pepe Escobar (who many feel is given information that the Russian government wants to broadcast publicly) put out an article confirming much of what Matt had said in February (two other relevant Escobar updates for those seeking the background can be found here and here). 

There have also been reports from the Tass Russian news agency referencing that the Unit would be a topic of discussion. As well as commentary from Putin himself, who recently mentioned that “we’re working on shaping an independent payment system, free from political pressure, abuse, and external sanction or interference.”

So now with the meeting only a week away, someone recently asked me if I think there will be a formal announcement, whether they will actually launch the Unit, and whether it will impact the gold price.

To be clear, obviously the BRICS officials haven’t yet stated whether they plan any official commentary beyond what Putin has already said. So there’s a large degree to which we can only make some educated guesses at this point.

Yet with that said, what I see as the most likely outcome is that by the time that the meetings have concluded, we will see more comments like Putin’s, or comments similar to what Russian economist Sergey Glazyev, a member of the Russian Academy of Sciences and the Minister of Integration and Macroeconomics of the Eurasia Economic Union, mentioned earlier this year:

“I have been following the development of Unit for more than a year and can confirm that Unit offers a very timely, feasible solution. It is academically sound, technologically innovative and at the same time complementary to the existing banking infrastructure.

Launching it under the auspices of a UN institution gives Unit legitimacy, which the current Bretton Woods framework is clearly lacking. Recent actions by the US administration and loud silence from the IMF clearly indicate the need for change.

A decentralized approach to emission of potential global trade currency, whose intrinsic value is anchored in physical gold and BRICS+ currencies, makes Unit the most promising of several approaches being considered. It balances political priorities of all participants, while helping each sovereign economy develop along its optimal path.

The New Development Bank (NDB) and BRICS+ shall embrace the concept of Unit and help it to become the pinnacle of the new emerging global financial infrastructure, free from malign political interferences while focused instead on fair trade and sustainable economic growth.”

Yet despite that, I don’t expect that the Unit will be officially launched next week. And I see it somewhere in the neighborhood of 50/50 in terms of whether there’s even a formal statement about the idea.

However, whether there’s an official statement or not does not rule out that the idea is being worked on and moved forward. Certainly the curious part of my mind would be excited to see the details if there were a public statement. But I do not see it as a guarantee that there will be an official statement.

On the other hand, given what Escobar mentioned in his May article, if accurate, that would at least suggest to not entirely rule out the possibility. 

“As it stands, the priority for the Unit conceptualizers – whom I followed for over a year during several, detailed meetings in Moscow - is to inform the general public about the new system.”

If that really is their desire, then next week’s summit would certainly sound like an ideal place to make an announcement if they did feel the project is at a sufficiently advanced stage.

Still, I see the most likely outcome being that we get additional commentary from various officials. And some probability that there is some sort of statement, possibly with details, and a far lower probability that something is actually launched.

In terms of the possibility that something is launched, I just don’t get the feeling that they are there just yet (although we will be hosting a live call with Matt Riley on Monday at 2 PM  to get his latest thoughts heading into the summit).

Lastly, in terms of a gold price impact, depending on what happens, and given the current environment that we’re in, of course it’s possible that what comes out of the summit has an impact.

Yet keep in mind, that if the BRICS nations have indeed been working on this, and they knew that they were going to announce something, they would ideally position themselves BEFORE the meeting. 

Which is not to rule out that there would be other market participants or countries who could buy in response to a statement if they had not already been privy to the announcement. 

But if what’s been reported about their plans to pursue The Unit are accurate, then a lot of the impact of that preparation could well have been the driving factor behind the rally we’ve already experienced this year.

Which is not to suggest that the rally can’t continue. Or that additional buying wouldn’t still be necessary. 

But more so to say that in a year where interest rate cuts took a lot longer to arrive than the markets had priced in, and while BRICS nations China and India have been two of the larger gold importers this year, it’s worth considering that what has actually been driving this year’s gold and silver rallies could well be the BRICS de-dollarization efforts.

So what’s a reasonable approach to go into next week’s meeting with? 

Perhaps it’s to treat the timing of an official announcement similar to whether the Fed cuts 25 or 50 basis points. In that you can see the longer picture, and if you continue to confirm new information and put reasonable probabilities around the various legitimate outcomes, I think that’s ultimately far more useful.

But hopefully this article offered a few things to consider, and in just a week we’ll find out the answer.

Sincerely,

Chris Marcus