China is developing a closed-loop gold-yuan settlement system. At its core, it connects resource-rich regions with infrastructure-poor ones, using gold as collateral and yuan as the transaction medium.
If successful China's vault build out will be a “Golden Corridor.” This would be a corridor connecting Saudi Arabia, Southeast Asia, and Africa, bringing trade, infrastructure, and capital flows denominated in gold and yuan to where it is needed. The gold goes in as collateral and unit of accounting and if needed, the actual currency. That’s the core of it.
Gold becomes the commonality across every geo-economic region. The model therefore extends globally one nation at a time.
Saudi Arabia exports oil—so it’s oil for gold at their first vault expansion.
Russia? Wheat for gold, oil for gold—same idea.
Brazil exports soybeans. Then it’s soybeans for gold.
Argentina? Beef for gold hypothetically.
What does Africa need? Infrastructure. What do they have? Gold. So Africa’s gold goes into the local BRICS vaults in exchange for currency to build infrastructure. And who’s going to build that infrastructure? China.
China's “play”
Gold is the vehicle for yuan internationalization. It's the razor-blade model—get the gold system in place, and the yuan becomes the currency to settle it.
BRICS Gold-Pricing Trust 1 China is challenging U.S. gold pricing dominance. We’re already seeing it in the trading volumes. Once China dominates gold pricing, it sends a signal to the world: don’t mess with China when it comes to setting the gold price. “We’ve got the gold price covered; we’re not going to let anyone bully us.”
BRICS Collateral Trust —is built through distributed vaulting and joint oversight. China’s approach is: To address fears of too much centralized control, they’re placing vaults everywhere. That way, everyone’s gold is essentially held hostage by everyone else—shared custody.
Currency Liquidity- The challenge with the yuan, and any currency, is internationalization. That requires a large enough float that can’t be cornered or manipulated. and that involves seeding it in contracts, deals, and beltroad initiatives being done for years
So, those three pillars—gold pricing power, shared gold ownership, and yuan internationalization—are all being developed to allay fears and minimize rollout fragility. Risk is centralized for functionality, but the physical gold is diversified for safety. Dividing money into its 3 components, a mercantile solution, using modern techniques can work
In other words, the Belt and Road is being paved with gold.
Saudis: Oil for gold
Brazil: Soybeans for gold
Russia: Wheat and oil for gold
Africa: Gold for infrastructure and goods
Parting Idea: What does this mean for the West?
Assuming it works and Gold isn’t synthesized or driven to zero value, the US needs to upgrade Treasuries to compete.
If the US has truly damaged the safety aspect of treasuries beyond repair, then it no longer is “as safe as gold”. Thus, in light of its diminished downside protection, the US could then add upside potential to incentivize use of USD/UST as collateral.
Got tethered Bitcoin? Got stablecoins?
The USD is superior as currency and is in the incumbent position. Swift is the 1 payment chain mechanism that covers the whole supply chains globally. But it’s just not trusted anymore. It needs to compete as a “call” now.
“Freezing” the Russian reserves by far the greatest geopolitical mistake for the U.S. in my 60+ years on this planet. Who trusts the US? Who trusts SWIFT, which was supposedly independent but co-opted by the U.S.?