Gold Overtakes U.S. Treasuries as the World’s Primary Trust Asset in Cross-Border Settlements
UPDATE: Global Flight from US Dollar Accelerating
by Jon Little’s intern
Mr. Carmine Lombardi
Great thinkers always find a way around the bully in the room.
When Cornelius Vanderbilt and Tom Scott colluded to raise shipping rates for John D Rockefeller of Standard Oil, they aimed to squeeze Standard Oil by eliminating discounted rates and tripling transport costs. This economic attack pushed Rockefeller to bypass the rail monopoly entirely by building a vast pipeline network, crippling the railroads’ dominance and reshaping the oil industry
Just as Rockefeller, faced with railroad collusion, built pipelines to bypass the rail monopoly and secure his oil empire, Russia, when cut off from the Western financial system and the US dollar through sanctions, sought an alternative route by turning to gold as a neutral settlement asset. Russian economist Sergey Glazyev designed a "gold for oil" policy, proposing that gold—not the US dollar—be used as the anchor for international trade, especially for commodities like oil. This approach undermines the leverage of US sanctions, much as Rockefeller’s pipelines broke the railroads’ stranglehold, and positions gold as a neutral, global currency.
Meanwhile, BRICS nations are rapidly expanding their gold reserves, now holding over 20% of the world’s total, and are building a global network of gold vaults—including facilities outside the Shanghai Gold Exchange, such as in Saudi Arabia, Hong Kong, and planned sites in Brazil and Mexico.
This vault expansion supports the use of gold for international settlements and further reduces dependence on the US dollar, echoing Rockefeller’s end-run around the railroads by creating an independent infrastructure for economic sovereignty
BRICS 2025 Summit: Gold, Dedollarization, and Strategic Implications for Gold Investors
Key Takeaway:
The 2025 BRICS Summit marks a pivotal shift in global finance, with gold emerging as the central collateral asset in a new, multipolar trade system. This development is set to accelerate dedollarization and elevate gold’s strategic role for investors.
Gold as the New Collateral Backbone
The BRICS bloc is moving beyond rhetoric on digital currencies and dedollarization by focusing on the internationalization of gold as collateral for global trade.
Gold will replace U.S. Treasuries as the primary trust asset in cross-border settlements, addressing concerns about the neutrality and safety of U.S. dollar assets amid geopolitical tensions.
A multi-jurisdictional gold custody network is being established, with vaults in China, Saudi Arabia, Southeast Asia, and Africa, ensuring geographic diversification and collective oversight of physical gold reserves.
Yuan-Gold Dual System: The Razor-and-Blade Model
China’s strategy involves pairing the yuan as the international medium of exchange with gold as the store of value, offering a dual system that provides both utility and trust.
The system allows optional convertibility between yuan and gold, introducing a “gold window” similar to the Bretton Woods era but without a formal gold standard. This flexibility is designed to attract central banks and trade partners wary of U.S. dollar dominance.
Blockchain and mBridge: Modernizing Gold Settlement
The integration of blockchain technology and the mBridge central bank digital currency platform enables real-time auditing, verification, and settlement of gold-backed transactions across borders.
This digital infrastructure solves historical challenges of trust and speed in gold-based systems, allowing gold to remain stationary while ownership changes instantly—combining the security of “slow money” with the velocity of “fast money”.
Strategic Moves: China’s Global Gold Vault Network
China is leading the rollout by building or certifying gold vaults in key locations, including Saudi Arabia (enabling direct RMB-gold conversion from oil sales), Singapore, Malaysia, and Africa. These vaults support RMB-denominated credit lines and infrastructure financing, bypassing U.S. dollar clearing.
The Shanghai Gold Exchange International (SGEI) has been quietly accumulating gold through non-dollar channels, stress-testing the system ahead of a formal announcement.
Dedollarization in Action
Recent data shows BRICS nations, particularly China and Saudi Arabia, are actively selling U.S. Treasuries in the lead-up to the summit, signaling a tangible shift away from dollar assets.
This fragmentation in global capital flows underscores the urgency and seriousness of the dedollarization agenda among BRICS members.
Implications for Gold Investors
The BRICS initiative positions gold as a central pillar of the emerging global financial order, increasing long-term demand and potentially driving up prices as more nations seek gold for settlement and reserves.
Investors should watch for formal announcements at the BRICS Summit, as these could trigger significant market reallocation toward gold and gold-related assets.
The establishment of a gold-backed, blockchain-enabled trade system could reduce reliance on the U.S. dollar, creating new opportunities—and volatility—in global gold markets.
The 2025 BRICS Summit is set to formalize gold’s return as a foundational asset in global trade, paired with the yuan and enabled by blockchain. For gold investors, this represents a structural tailwind, as gold transitions from a passive reserve to an active, indispensable tool in the world’s new financial architecture
Ray Dalio’s analysis of global power cycles shows how dominant empires decline when they abuse their reserve currency status and lose competitiveness, as seen with the Dutch guilder, British pound, and now the US dollar.
Sir James Goldsmith described “labor arbitrage” as the process where capital chases the cheapest labor globally, undermining domestic workers’ bargaining power and wages. The US, in its arrogance, relied on the dollar’s reserve status—backed mainly by military might, not productive strength—racking up $37 trillion in debt while offshoring industry for profit, leaving the American workforce ill-equipped to reshore manufacturing or benefit from tariffs.
This mirrors Rome’s decline: excessive spending, military overreach, and neglect of core economic strength. While the US focused on wars and threats, China built infrastructure and forged strategic partnerships across Africa, Asia, Europe, and now into the Americas, including Peru and Colombia.
Mexico, with its pivotal Morena party, may soon tip the balance as BRICS expands its influence and gold vault network even into the Western Hemisphere. The US’s overreliance on financial and military power, rather than productive investment and skilled labor, has left it vulnerable to the same fate as past empires, while China and BRICS quietly build the foundations of the next global order.
Another Trump Mistake (Now there are too many to count)
Recent developments in U.S.-Mexico relations have highlighted sharp contrasts in the approaches of major international actors.
Under Donald Trump, the U.S. administration allowed 17 family members of Sinaloa Cartel leaders to enter the country as part of a negotiated deal involving Ovidio Guzmán López, son of "El Chapo."
Mexican officials confirmed that this arrangement was likely tied to cooperation agreements with U.S. authorities, raising concerns about the optics and strategic wisdom of such negotiations. Critics, including U.S. lawmakers, questioned the message this sends regarding U.S. resolve against organized crime. This off the heels of Trump hanging out
Meanwhile, China is strengthening ties with Mexico’s left-leaning Morena party, led by President Claudia Sheinbaum. Morena’s legislative dominance is expected to facilitate major infrastructure projects and increased Chinese investment, particularly in sectors like electric vehicles, telecommunications, and logistics. This growing partnership is seen as part of China’s broader strategy to expand influence in Latin America, potentially complicating U.S. interests in the region.
Trump’s recent call with President Sheinbaum, where he suggested deploying U.S. military support, was met with a diplomatic but firm response, reflecting the complexities and potential miscalculations in the current U.S. approach to Mexico.
Why does Trump embrace terrorists like Cartel members and members of Al Qaeda?
Was it just Cartel members Trump embraces or is this becoming a disturbing pattern?
The Syrian figure recently embraced by Donald Trump is Ahmed al-Sharaa, also known by his former militant nom de guerre Abu Mohammed al-Jolani. Al-Sharaa led the insurgent coalition Hayat Tahrir al-Sham (HTS), which was previously known as the Nusra Front, al-Qaeda’s affiliate in Syria.
He was placed on the U.S. Specially Designated Global Terrorist list in 2013 due to his leadership of al-Qaeda’s Syrian branch and his alleged orchestration of suicide bombings across the country. The U.S. once offered a $10 million reward for information leading to his capture.
Al-Sharaa came to power in Syria after leading a rapid offensive that toppled the Assad regime, and he has since attempted to distance himself from al-Qaeda, rebranding his group as HTS and publicly severing ties with the global terror network in 2016. There is no direct evidence in the provided sources that al-Sharaa personally murdered a U.S. journalist. However, his organization, while affiliated with al-Qaeda, has been implicated in attacks on Westerners, including journalists, during Syria’s civil war. Trump’s meeting with al-Sharaa in Riyadh, and his subsequent decision to lift U.S. sanctions on Syria, marks a significant and controversial shift in U.S. policy toward a figure with a well-documented jihadist past.
end of segment
Jon Little is on an academic sabbatical and will return with some new facts surrounding Mexico’s left leaning Morena party
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