Enter The Golden Kraken: Multipolar Fair Gold Standard
The MWS must be understood as another element in the context of a broader de-dollarization trend, of a dying petro-dollar trend and the rise of alternatives to the SWIFT and credit payment networks.
Any discussion of precious metals or of the institutions which regulate the price of these metals is sure to come across the geopolitical lines that are crossed whenever gold is mentioned. The geoeconomic manifestations of the global systemic transition towards multipolarity can be considered as the changes in the practices between actors as geopolitical shift events become more frequent.
In 1971, President Richard Nixon took the U.S. off the gold standard. Thus to artificially support the US dollar, Nixon canalized a system of benefits exchanged with the Saudi government where the U.S. would grant the royal family's regime arms and protection through US defense while Saudi Arabian oil transactions would be exclusively denominated in US dollars. Following that, OPEC endorsed this system, allowing the U.S. government to go even further with its inflationary monetary policy, during which time the U.S. dollar experienced a supply expansion. Though governments do not require that all of their money be backed by gold as perhaps it was once upon a time for their respective currencies, the reality is, however, that they still store vast amounts of the golden metal for a variety of reasons that range from protecting against hyperinflation to following some economic or monetary strategy to better deal with a given situation.
Observers must take notice of the multiple long standing efforts put into motion by global south nation-states, from the alternative payment systems, to the creation of currencies backed by gold and or other resources, to finally neutral truly free market based metrics for the price signal of precious metals – and everything else for that matter. Russia favors the development of a new monetary unit, like the recently suggested BRICS currency for international commerce. Vladimir Putin, the president of Russia, thinks that a new currency based on commodities will be more stable than strictly fiat currencies and will be beneficial to member countries as the multipolar monetary paradigm is quite vast and carries a rich complexity of its own.
Further evidence of gold’s inherent geopolitical worth was the banning of Russia by the London Bullion Market Association (LBMA) as part of the sanction against Russia for its Special Military Operation in Ukraine which has evolved in military potency since then. Russia is now proposing its own international standard for gold and other precious metals, called the Moscow World Standard (MWS). Russia is claiming that creating the MWS is critical to normalizing the proper functioning of the precious metal sector. Russia was practically being pushed into creating its institutions for precious metals because of the western weaponization of the precious metals markets. The London Bullion Market Association (LBMA) which many experts – as does Russia – believe has played a role in manipulating and suppressing the price of gold. Russia's finance minister has come out and said that there needs to be an alternative to the LBMA to counter the blatant price manipulation of said institution. The MWS is just one out of a plethora of policies, partnerships and strategies, of geo-economic significance which has been proposed, yet it aims at a key target of multipolar strategy to release the golden Kraken.
This strategic desire for greater monetary independence on the part of the BRICS nations is longstanding, so this multipolar talk of evading Western sanctions, the logic of the Rules-Based Order of the Pax Americana, and the West’s Golden Billion controlled market pricing mechanisms was long overdue. The proper geopolitical manifestation of the global systemic transition to multipolarity hitherto has been mainly nations entering into bilateral relations with BRICS nations and with other global south nations – or also entering into the Shanghai Cooperation Organisation (SCO) – as these sorts of partnerships almost guarantee plenty of trade, investment, cooperation and growth for the players involved. But as mentioned before there are phenomena that involve business practices, contextual information, regulatory frameworks, legal codification, informational metabolism, financial environs and pricing mechanisms all of which make possible the multiple geopolitical relations between peoples across the world.
Even the amount of gold that each nation has is a thing shrouded in geopolitics, propaganda, and deceit. We are constantly bombarded by western financial media about the supremacy of the west's Golden Billion gold reserves while leaving the BRICS block nations a close second. But in reality, the amounts of gold are not as clear cut as they may seem, which prompts us to question the validity and the methodologies in which gold is reported. Officially, the People's Bank of China (PBoC) is said to have around 1,9 tonnes of gold reserves. According to rankings by the World Gold Council, the People's Republic of China (PRC) is home to the sixth-largest gold reserves in the world. However, there is conjecture that China's actual gold holdings are significantly bigger thanks to China's recent gold acquisitions. The recently updated estimates do not take into account domestic gold output and imports for China, but the Asian giant has produced the most gold in recent years, so it is unknown how much of that was kept for government reserves.
The eternal connection between gold and geopolitics is always present – though sometimes it is more implicit in our post-Keynesian age – yet events stemming from the global systemic transition towards multipolarity make this principle highly visible for all, and we observers of geoeconomics remember that gold is still king. A good example of this is the theft of Venezuelan gold by the Bank of England (BoE). The Bank of England received the Venezuelan gold in 2008, which was not unusual given that the Bank offers gold custodian services to numerous developing countries and was trusted as such. Yet Venezuela-United States relations degraded given the American sanctions regimes against the south american country. Requests to return the gold to Venezuela were routinely postponed by the BoE from 2018 until it was effectively seized. In the coming weeks perhaps, we shall see how the story of the Venezuelan gold evolves as Juan Guaidó, who was regarded as the real president of Venezuela by the BoE, had recently lost the power he had as the pretender president chosen by Trump to lead Venezuela.
India, Russia, China, and other partners of the global south are fully immersed in the leading methodologies of industry, finance, trade and commercial efficiency. Any nation may place value on other things besides money, for there are indeed hard assets that have a value unto themselves in terms of goods, fertilizer, gold, petroleum, food and other hard assets. Thus the BRICS nations – and their GS partners – move to reprice and normalize the pricing mechanisms of the LBMA. In conclusion, the MWS must be understood as yet another element in the context of a broader de-dollarization trend/effort and also in the context of the dying petro-dollar and the rise of alternative methods to pay for assets, to store value, and to engage in exchange.