Gold BRICS in 2024

As most of you are aware it was a good year for the gold price as it was up over 30% year on year but from a BRICS and SCO pesrpective it was excellent as both China and Russia are the World's two top gold producers and between them mine around 30% of Global production.Given that annual production is around 2,500 tons
2024 proved to be a successful year for gold as an asset, with a price increase of approximately 30%. Demand for the precious metal increased in most areas, but the key factor was the ongoing central bank purchases, which set many records. Prices were influenced by a multitude of factors. These included disappointment in fiat currencies due to the escalation of sanctions and the transformation of the US dollar into an economic weapon. In terms of projections for 2025, experts anticipate a continuation of these trends, with the price of an ounce potentially reaching $3,000.
Now its interesting that Central Banks were buying as over the last two years there has been a lot of talk about a gold backed BRICS currency. Now personally I think that is unlikely as I know the focus of the newly expanded is to fully develop trade in national currencies and through their payment systems a gold backe BRICS currency or any other gold backed currency is going to happen.
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Now that said the members of the BRICS can defend their national currencies by having less exposure to the US dollar as this tends to devalue them, every time there is a blip in international affairs foreign investment vanishes,
However China, India and Russia have now proved that you can have a successful economy that is based on your own national currency if you have sufficient gold in your reserves and don't borrow in and use dollars in your trade.
Now the majority of Russia's trade globally is now in National currencies and  it actually sells its gold not for dollars in the London Bullion Market Association in London from where its companies have been banned but at the Dubai Gold and Commodities Exchange ,the Hong Kong Precious Metals Exchange and the Shanghai Gold Exchange for a variety of currencies,do notice all are in countries that are members of the BRICS.Given that Russia produces around 340 tons of gold we could be talking about up to $24 billion at current prices.
Plus it is known that Russia has gold reserves of around 2,300 tons and alllegedly has around 2,600 tons but informed sources actually think its more like 7,500 tons.Do bear in mind that the US is credited with 8,000 tons in its vaults but as they they not been audited since 1957 I don't believe that for a minute,because when Germany repatriated some of its gold stored in the vaults of the US the bars they got did not correspond to the ones they sent.Other countries looking to repatriate their gold from storage in London have encountered problems and the UK even confisicated Venezuela's gold.
So its interesting that gold is not broken through the barriers of its being tied to the dollar currency rate, the gold price going down as the dollar rose.We all know that was from the price fixing in the paper gold Market in London and Chicago and nothing to do with the physical and real gold market.Do bear in mind that actual gold transactions are a fraction of the paper gold markets and are far more transparent despite what the World Gold Council says.          

Now those like myself that knew that gold was ready to really break out as the dollar the Euro and the fiat currencies were facing serious problem any body who bet on gold rising made a good decision.
.At the beginning of 2024, the price of gold, although quite high by historical standards (around $2,000), had been stagnant for several years since the pandemic. However, during the year, there was a rapid and explosive growth. Over the 12-month period, the precious metal appreciated by almost a third, and in certain periods exceeded the $2,700 per ounce mark. The growth was relatively stable throughout the year, although the biggest surge occurred in the spring.

What were the driving factors behind this growth?
The US Federal Reserve's decision to reduce the base rate appears to have been a contributing factor. The US financial regulator's decision to ease monetary policy (as evidenced by fluctuations in stock prices) has been widely welcomed by various sectors of the financial markets. Gold was no exception. It is noteworthy that gold demonstrated resilience in the face of several years of high interest rates, which previously led to a sharp decline in prices. However, in recent years, this has not been the case.

The demand for physical gold has increased dramatically, with Q1 seeing the best result since 2016 and Q2 and Q3 reaching all-time highs. Its important to note it was the demand for physical gold all across the board from a reatail to a Central bank level.

While the final quarter data has not yet been released, demand is likely to remain strong relative to the average for recent years, despite the likelihood of some drawdown. In 2024, Russia's international reserves, which are currencies and bonf holding s but not physical that had been deposited in foreign banks, remained frozen, and the G7 countries agreed to utilise the income from these reserves for the benefit of Ukraine. Concurrently, numerous new sanctions were imposed on Russia and several other countries. However, the primary concern is not the direct sanctions per se, but rather the secondary sanctions that affect the majority of states.
Now many countries who once kept their reserves in US treasuries or various foreign bonds have realised they can be stolen on the whim of the US and their is noting they can do about it, if the can take ,Iran's,then Venenzuela a major power like Russia's then they can take ours. This has led to many countries including those in the BRICS to make plans and accumulate gold reserves and physical gold and not paper derivatives on the Western markets which to be honest are not worth the paper they are printed on    

These developments have led to a decline in the confidence placed in the dollar and, to a greater extent, the euro. Consequently, states are exploring alternatives to dollar reserves.However, the creation of a full-fledged currency from, for example, the BRICS group appears to be a distant prospect.
Apart from gold, there are limited options for the secure storage of formed reserves.Many individuals are also concerned about the stability of fiat currencies, even those that dominate global markets. The combination of a record ratio of US and EU (and Japanese) public debt to their respective GDP, coupled with budget deficits of more than 5% year after year, also gives rise to concerns about the future.
If we examine individual categories of demand, we find that in 2024 there was a slight slowdown in purchases by central banks. For instance, in Q3, they purchased 186 tons of the precious metal – half as much as in the same period last year.
However, it should be noted that purchases by regulators remained high by historical standards, similar to the levels observed in 2022. The decline in purchases compared to 2023 can be attributed to the exceptionally high figures recorded the year before year. This decline was largely offset by a surge in investment demand for gold, which surged by 132% in Q3.

Gold purchases by central banks have declined due to unusually high prices. Notably, Poland has been a prominent leader in investment for several quarters, acquiring 42 tons in Q3, for instance.
Conversely, the People's Bank of China has not made any purchases on the market for six months consecutively up until October. However, purchases were resumed in November. The price was a key factor in this decision, with the Chinese anticipating a decline in the precious metal's value and choosing to hold back from purchases. This did not materialise (the price decline in October-November was relatively modest), leading bankers to conclude that it was unfeasible to anticipate a perpetual decline in prices.
What changes can we expect next year?
Most experts believe that current trends will continue – gold will rise in price and remain a "safe haven" for investors.According to Elman Mekhtiev, founder of the Credcheck service, gold is growing and will continue to grow due to economic and political turbulence, which is increasing worldwide.

He anticipates an increase in the purchase of gold and other assets by central banks, driven by rising risks for their countries, particularly the potential impact on foreign exchange reserves due to the increasing cost of cryptocurrencies.Dmitry Puchkarev, an expert on the stock market at BCS World of Investments, projects gold prices in 2025 to range from $2,600 to $2,900. The primary drivers of this growth are expected to be expectations of a softening of interest rates by the Federal Reserve and ongoing purchases of precious metals by central banks.

Ivan Efanov, an analyst at Tsifra Broker, anticipates a potential surge in the price of gold to $3,000 per ounce by the end of 2025, despite the likelihood of a strengthening US dollar.

— Gold's ongoing demand persists amidst market turbulence and geopolitical instability. Central banks worldwide are rapidly replenishing their gold reserves at unprecedented levels, thereby driving up the price of this precious metal, — the expert explains. In a world where fiat (paper) savings can be frozen one day, mistrust in assets not backed by gold is growing, and historically gold has also been very resistant to inflation, which affects not only the Russian economy.
Finam analyst Nikolay Dudchenko has stated that he believes the growth potential has not yet been fully realised, and that external geopolitical risks may still be underestimated. He notes that the political regime in Syria has recently changed, the US continues to threaten and impose sanctions on Iran, and there is now a view that Israel is preparing to strike Iran. This could potentially lead to Iran becoming embroiled in a full-scale conflict, according to the expert.Another factor that could contribute to price growth is a potential increase in the deficit if the profitability of gold mining decreases, leading to a potential decrease in supply. In this scenario, we acknowledge the potential for the price of gold to reach $3,000 and even $3,300 per troy ounce by 2025, contingent on the fulfillment of specific criteria.Conversely, within our alternative scenario, we are also exploring the possibility of a correction.
Gold and BitcoinDespite its significant growth, gold has been facing competition in recent years from its digital counterpart, Bitcoin, which, like the precious metal, has a limited supply and is considered a hedge against currency troubles.It has soared several times this year, surpassing the $100,000 mark, but it has yet to displace gold.

As Elman Mekhtiev observes, the potential of cryptocurrency as a reserve is compelling, but for an asset to serve as a reliable store of value, it must be universally and consistently accepted.
Nikolay Dudchenko observes that Bitcoin is not a direct competitor to gold, given the significantly larger size of the gold market. For instance, the World Gold Council reports that central banks have purchased approximately 295 tons of gold this year (equivalent to 9.5 million troy ounces), at a cost of $25 billion when considering the current price of gold of about $2,650 per troy ounce. The total gold owned by banks is just over 36 thousand tons (1.2 billion ounces), with a total value exceeding $3.2 trillion.The total number of bitcoins in circulation is 19.6 million, and it is estimated that 21 million bitcoins will be mined by 2140. At the current price of about $100 thousand per bitcoin, this would give a market capitalisation of $2.1 trillion. If we consider the number of bitcoins currently in circulation, the market capitalisation is approximately 1.96 trillion, which is about 1.6 times less than the total reserves held by the world's central banks.