Gold update: gold stable after worse than expected jobs number and BRICS vs gold standard

The US jobs data for June was released last Friday. The figure was lower than expected. 209.000 jobs have been added, while analysts had expected 240.000 jobs. This brings growth to the lowest point since 2020. In addition, the figure for May and April has been significantly revised downwards.

The provisional figure for the month of May stood at 339.000 jobs and has been adjusted to 306.000. The month of April was adjusted downward from 294.000 to 217.000 jobs. Despite the disappointing figures, the Fed will most likely raise interest rates by 25 basis points on July 26. Core inflation is still too high and the labor market has plenty of room to raise interest rates.

The gold price could therefore not really benefit from the disappointing jobs data and closed this week at €56.430 per kg / $1.924 per troy ounce. Silver prices rose 1% this week to close at €676 per kg / $23.06 per troy ounce.

BRICS vs gold standard

Last Friday there was a report on RT (formerly Russia Today) that the BRICS countries (Brazil, Russia, India, China and South Africa) want to introduce a currency linked to gold. It concerns a tweet on Twitter from the Russian embassy in Kenya: “The BRICS countries are planning to introduce a new trading currency, which will be backed by gold.”

Striking because, according to Willem Middelkoop, the BRICS Development Bank (New Development Bank) announced on July 5, 2023 that it had no immediate plans to introduce a currency. Such a move will logically be announced by the BRICS Development Bank or by a president of one of the BRICS countries.

On the other hand, the rumor has been doing the rounds for some time. There are several unofficial reports that the introduction of the BRICS coin will be announced between August 22 and 24. Then there is a meeting of the BRICS countries in Johannesburg, South Africa.

Russia confirms that they are launching a BRICS currency backed by #gold.

It will be on the agenda at the BRICS South Africa meeting in August. Many other countries have applied to join BRICS.

De-dollarization is accelerating.

🔊 pic.twitter.com/TM8A9d5Wie

— Wall Street Silver (@WallStreetSilv) July 8, 2023

If the fundamentals of the BRICS currency are good, such a currency can be strong internationally at the expense of currencies such as the US dollar and the euro. Monetary discipline and higher interest rates are then necessary to support the value of fiat money. And that is risky given the high government debts.

The BRICS countries have expanded their gold reserves considerably in recent years. Brazil will double its gold reserves by 2021. As of this year, the country has the largest gold reserves in the last 23 years. Russia, China and India have been very active in the gold market in recent years and all three are now in the top 10 of the countries with the largest gold reserves.

South Africa’s gold reserves have increased slightly since 2004. The country has relatively little gold in the vault (125 tons) but the underground reserves are huge. Australia has the world’s largest underground gold reserves with 8.400 tonnes. Russia is number 2 with 6.800 tons followed by South Africa with 5.000 tons. Brazil has 2.400 tons of gold in the ground, which is number 7.

This week it emerged that China’s central bank bought 21 tons of gold in June. It is the eighth month in a row that China has added gold to its reserves. In this series, China bought a total of 165 tons of gold, increasing its total gold reserves to 2.113 tons.

BRICS gold reserves:
Russia (R) 2.330 tons
China (C) 2.113 tons
India (I) 794 tons
Brazil (B) 129 tons
South Africa (S) 125 tons

The total above-ground gold reserves of the BRICS consist of 5491 tons of gold. Four of the five BRICS countries are in the top 10 countries with the largest underground gold reserves. If the money supply is limited to the amount of gold, then the BRICS countries have the best cards.