➡ China plans to upgrade gold’s status to a high-quality liquid asset in BRICS countries, which would allow it to replace U.S. Treasuries as collateral in their system. This move is driven by a desire to protect their wealth from potential U.S. sanctions and to fund development projects. The BRICS countries are building vaults to store gold, which can be used as collateral for loans to finance infrastructure projects. This could lead to a shift in global finance, with gold becoming a key asset in international markets.
➡ The article discusses China’s potential financial strategies and criticizes the Federal Reserve’s power and effectiveness. It suggests that real money creation happens at commercial banks, not the Fed, and that the Fed’s policies often follow market trends rather than initiating them. The article also warns that falling rates may indicate an economic slowdown rather than growth. Lastly, it mentions that interest rates are decreasing for reasons beyond the Fed’s control.

Our central finding is that China intends to move gold from its tier-one status in Basel III—they rejected it as HQLA—toward recognition of it as a high-quality liquid asset, at least in the BRICS countries, unlocking its use in repo markets and trade finets. Such a change would allow gold to substitute for U.S. Treasuries as collateral within the BRICS system. Welcome to the Morning Markets and Metals with Vince Lancey, where each morning Vince brings you the financial and precious metals news to get you ready for your day. And now, here’s Vince. Good morning, everyone. I’m Vince Lancey and this is the Monday Morning Gold Fix Rundown at $7.54.

This could be the most important broadcast that we’re going to do, or at least that we have done. It’s certainly potentially the most risky of what we’re saying. You can see my notes there. There we go, that’s better. There are two topics we’d like to speak about today, and one of them is related to something we wrote over the weekend, and that’s in the lower left-hand side of your screen, exclusive China’s next golden move beyond Basel III. We believe that China is, and if they’re not, they should be, looking to put gold status as an HQLA, and in doing so, make it available for international repos.

And we think that’s something they’re working on. Now, we’ve had a lot of people contribute to this, but these are thoughts that we’ve had for some time. But we’ve got some confirmations from some people. And there’s more pieces coming after this, but I want to clarify something very important about that. It’s kind of academic and wonky reading. But I want to make it real so we understand why they’re doing this. Okay. We’re also going to talk about Jim Rickards wrote a piece. And we retitled it for our post. Fed independence has never really existed. It’s an amazing polemic, and we really enjoyed reading it and rereading it.

Anyway, we have a lot to talk about. And let’s get going. So we made a special graphic for today. 10-year yields are unchanged at $407. The dollar is $97.37, down 23. The S&P 500 is $65.95, up almost 11. The VIX is $15.01, up 26. Gold is $36.44, up a buck and three quarters. Silver is $42.20, up four and three quarters. Copper is $4.58 and change, up two. WTI is $63.18, up 35. Natural gas, $288, down three. Bitcoin, down 200. That should be a lot higher, I think. Ethereum, $45.31, down 74. Palladium, up three. Platinum, unchanged bid, gold, silver, $86.

All systems are go. Grains are mixed with wheat-defined gravity being a little bit higher. Okay. Before we get to the meat of it, the homepage, we put out eight stories or so on precious metals, the geopolitics involved in precious metals, the macroeconomics involved in it over the weekend. So gold’s not a pet rock. Top left-hand side, special, the real money is buying. That’s a popular piece. We couldn’t wrap our heads around why everyone was buying gold at $3,600, and we think we did figure that out. Top center, heart-net buy anything but bonds now. And let’s go through the two stories that we care about right now.

All right. So on Saturday, after slaving over a hot keyboard, we put out a post called Exclusive China’s Next Golden Move Beyond Basel III. Now, I’m just going to read the introductory paragraph before we get into what matters, right? The document presents two complementary pieces. The first is an essay outlining our research and conclusions. The second is a supporting academic PDF at bottom for readers seeking a more formal treatment. Both focus on the evolving role of gold in global finance. Our central finding is that China intends to move gold from its tier one status in Basel III, they rejected it as HQLA, toward recognition of it as a high-quality liquid asset, at least in the BRICS countries, unlocking its use in repo markets and trade finance.

Such a change would allow gold to substitute for US Treasuries as collateral within the BRICS system. Now, I think it’s important if you’re a Westerner and you’re not familiar with this, why it’s such a big deal. So, let’s look at the real reason many BRICS countries are shifting away from US Treasuries and towards gold and why we feel ultimately that gold must be put to work as an HQLA in repo form. The turning point was 2022, when the United States and its allies froze Russia’s assets. The world saw the dollar’s weakness laid bare, its vulnerability, I should say.

It wasn’t inflation or deficits or even debt. It was counterparty risk. Washington could unilaterally weaponize the dollar system, SWIFT included, freezing or confiscating wealth that nations had assumed was safe, and that’s been our focus as Westerners. That’s why gold’s going up. We don’t trust the US anymore. Let’s get a little more practical here. Imagine you’re a smaller BRICS country, an African nation, for example. If the US can do that to Russia, a nuclear power, what could it do to you? You ask yourself. And you know the answer, because you’ve already seen sanctions used against Iran. So we ask yourself, where can I put my wealth that cannot be frozen or stolen? And the answer is gold, but there’s more.

Gold matters not just because it’s immune to confiscation, but because it enables development. That’s where the BRICS gold vault system comes in. Anyone who’s long gold, like the small African country, seeks to leverage gold’s buying power for in-country development. The vault system comes in like this. The BRICS are building and linking vaults across member states, from Saudi Arabia to Hong Kong, and eventually in Africa itself. The system allows you, as a nation, to hold your gold locally, or at least geographically diversified, while centralizing the accounting and diversifying the counterparty risk. Here’s why it matters. This is why they’re doing it.

As a resource rich but infrastructure poor country, you want to modernize. They’ve been wanting to modernize for years, more or less. You want highways, you want airports, you want refineries. Under the BRICS plan, eventually, if they get it right, you can pledge your gold into a vault. We catalog this in May. Use it as collateral and borrow against it, often in yuan, to pay for those projects. So, I need a highway built. I go to another country. I don’t have dollars. I have gold. Okay, where’s the gold that’s in the vault? We’ll blockchain the gold in the vault.

Okay, now we’ll convert the gold into, we’ll give you a yuan loan against it. And then we will start building your highway, or your airport, or whatever it is. The collateral is there. I’m comfortable as the African nation because the collateral is not going to be confiscated. The US is out of the loop. And they’re comfortable because they have accounting procedures, block chaining the gold as well. Now, consider the alternative, or what they’re doing now. If you pledge US treasuries for your infrastructure, Washington remains in the loop. The US could pressure you, block you, or threaten to cut you off.

And with gold, that leverage disappears. For the United States, this is a loss of influence. But for smaller countries, whether it’s well founded or not, it creates a neutral ground. A neutral ground bias towards China because you’re using their currency, but you’re not using their currency as a store of value. It’s not the collateral. It may or may not be wise to invite China to build your infrastructure, but you could have the West do it too. You can use your gold and collateralize it and have an American company come in, or a European company. The key is you choose gold as your collateral.

And the key is China is accepting gold as collateral. And that’s why the West needs to accept gold as collateral if they do this. I’m not saying they will definitely do it. But this is the path they must be on. I believe that because they explicitly stated we’re setting up the vaults for project finance, so people can monetize their gold, and they can get their infrastructure and their economies modernized. Now, it may or may not be wise to invite China to build your infrastructure, but the choice is yours, not Washington’s. At the end of the day, this comes down to trust.

None of the BRICS countries trust the US. Not to do to them what was done to Russia. They don’t trust China either. And until that fear is gone, they cannot modernize through the dollar system. That’s part of the global reserve currency suppressing economies. In their opinion, I can make the case for the US infinitely well as well. But this is where the West is ignorant. We need to make sure people understand their case before addressing it. And we believe that’s why China is working to make gold a high quality liquid asset, so we can back international repo markets and fund BRICS development projects.

And that’s why, ultimately, if the West hopes to compete in developing those countries, just as it developed Japan and Germany and Taiwan, and they say we’re going to use gold now, well, we have to accept gold as collateral, and our own gold markets have to be modernized. Thank you. That full analysis is in the exclusive China’s next golden move beyond Basel III. Now, there are many people I’d like to mention, because over the weekend after I put this information up, other people had pieces that were all around it. And we had the core because of the vault information.

And so I want to just just mention a couple names, Eric, Eric Young, Kathleen Tyson, and her multi currency thing should be touched on as well but not not today. It’s going to happen. Everyone in the community, you know, Matt Riley, Chris Marcus, by Jiajun, David Lee, and a bunch of other people. Anyway, so from here, we can build. If I’m wrong, I’m wrong. I don’t think I am, but we’ll see. Okay, next story. Jim Rickards fed independence has never really existed and that’s not his title, but it’s like such a great statement. Jim Rickards delivers to what what to amounts to as a polemic against the Federal Reserve this is a free post we sent out this morning, saying its power is overstated and often damaging.

True money creation happens at commercial banks, Richard Warner stuff, but not the event that not the Fed, its models are broken. Its independence is overstated and its policy rate targets on market. At that barely functions, the Fed, he actually makes the case, the Fed reacts to a sofa, and he’s right, the market reacts, the market acts, and the Fed complies government never initiates ideas like that. Anyway, rate cuts simply follow the bond market and signal recession, not growth. Rickards warns that falling rates will not be stimulus but evidence of a slowdown Trump will eventually own, which is It’s a shot across the bow there.

I understand what he’s saying there. Some, some couple worthy quotes, the Fed is irrelevant, unless it’s doing damage to the economy and it’s a great quote. The actual dollars are not lent spent or invested they’re sterilized on the Fed balance sheet. It’s all mirage. That’s what QE, that’s how QE kept inflation out of the markets. The Phillips curb is a joke, you can always draw it on a graph, but it has no predictive analytic power. The relationship between unemployment and inflation is, is a myth that worked during the Goldilocks era. We’re not in the Goldilocks era anymore.

Political theater to single out Trump as a unique threat to independence is untrue and historically wrong. That’s right. We’ve done pieces on that as has zero hedge. I mean, they’re all over that all the time, but I’m We would just say the thing about Trump is he’s an accelerant. He points out what everyone’s been doing and says I’m going to do it more. And who’s going to stop him. They’re all guilty of it. Conclusion interest rates are coming down for reasons bigger than the Fed and that the Fed cannot control Rickards polemic. That’s what we’re calling it is in Rickards federal dependence has never really existed.

Weekend posts. We’ll give you one line from each of these to see if you have interest. Aren’t they buy anything but dollars now basically he’s taken all of his His ideas and he’s consolidated into they all have one thing in common sell dollars and gold and bonds international stocks big big or that founders the real money was indeed buying that’s our Early preview of a Goldman Sachs report that that zero hedge posted on their premium account and We’re going to be sharing some of that later on tomorrow with a premium. The economists put out a piece trying to ditches the US dollar.

We covered it. We broke it down. We wrote our own summary of it. It was very good. I’m surprised, frankly. Solar silver use kid at 40% of global supply by 2030. The title says it all. See FTC banks covered shorts as macro bought banks are now for running long buying they’re not for running short selling anymore. Market has changed Thailand to launch its own benchmark. We can be a BMA probably preparing for these other things that we’re talking about. Golfix PM thoughts on the next crisis. That’s a macro comment. If there is a crisis in the in the US stock market, it could manifest in the end with a weaker dollar and weaker bonds.

We’re not sure that and then a founder special we sent out yesterday. Anyway, that all went out from Friday Sunday. Chat. Chat’s gotten really robust and we wish we could have been in it more this weekend, but you could see the work we were doing. So hopefully we’ll stop by today. Let’s look at a couple A couple charts here. Right. So that’s that’s a busy one. Right. All right, gold. Now I said, that’s Polly. You’re looking at there. Let’s get rid of Polly there for a second. Now I did say Let’s make that a little bit bigger.

I did say yesterday last night and I’m saying it again that That The market Has a lot of buying coming in from it to paraphrase the what Goldman just said three high conviction buyers have come in one central banks are buying at these levels. Put it this way 34 3500 at these levels. They’re buying. Number one, number two, The biggest hedge funds are buying macro discretionary my my secret crush And they usually do what Goldman does. And finally, American ETF buyers are here simultaneously with Chinese buyers. So these are all reasons to be bullish.

And then of course I threw water on it last night by saying the following referring only to Sunday as a trader This day open interest went up by 19,000 contracts And the market didn’t do shit. Okay, that says to me that this selling up here may not be a lark. It may not be light. It may be big. And that’s why this buying got absorbed very quickly is the selling moving down. It could be I don’t care. Point is I’ve seen these long weeks before and these long weeks signal to me A market that’s pausing.

It’s going to be a bull flag. That’s going to be a four month trading range. I’m not saying that’s going to happen, but you pay attention to these wicks these wicks with small red candles would happen right after Three out of last four times over the last three years. Central bank selling coming out of Europe. And kind of keeping the market stable. So the market catches breath kind of like a circuit breaker. And so usually the market would just start dropping but this market is just being bought by everyone. So what I said to subscribers last night was technically as a short term trader, you should not be longer right if you’re trading us on a one or three day window, you should not be long until we get above 3675.

Why? Well, because this could really be big selling because this absorbed 20,000 contracts and didn’t budge. Okay. And there has been a ton of buying getting it up to here. Even if you’re bullish, you have to be pausing for the cause here. So the trade is the trade is you’re short with a stop at above here. That’s the best risk reward. It’s $30 $35 of risk reward. But you’re saying if you’re right, you’re going to make it down to here. There’s one to make two. If you’re bullish, you do nothing. And you wait for a new high.

And you buy a new high, but to buy it here. I don’t think it makes sense. After 20,000 contracts, and the market doesn’t budge. I mean, relatively speaking, after what it has done. That’s a market that’s at least pausing. Silver, gold, silver is in play. Alright, I’m Vince. Have a great day, please. And hope to see you tomorrow. Please contact your financial advisor before making any decisions. And thanks for watching. [tr:trw].

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