BRICS to Steal Dollar Dominance

McAlvany Weekly Commentary

45 Countries attend BRIC Summit in Russia Gold seen as antidote to political/economic insanity Listen to Doug Noland’s analysis this Thursday: https://mcalvany.com/wealth/tactical-short-registration/ "Gold is sobriety in a world drunk on credit. Credit markets are where the action will be. Maybe that's over the next two to three years, not necessarily the next two to three months, but the downstream implications that stem from a credit bubble bursting will be like a flood, very difficult to contain." —David McAlvany Kevin: Welcome to the McAlvany Weekly Commentary. I'm Kevin Orrick, along with David McAlvany. David, yesterday I was talking to a client in North Carolina, and it's tragic in some places, what happened in North Carolina, and then there's other places that were relatively unaffected—the higher elevation, and my client was in the higher elevation. But what we're seeing right now in real time in the physical world, there seems to be an analogy to that, doesn't there? You've been talking about the debt problem, and we just heard Morgan talking about the debt problem. It seems to me like there's a flood coming, and that is something that we can predict ahead of time. David: I have a picture on my phone. I have a little picnic with my family, and it was in Asheville a year and a half ago. We were looking for colleges for my oldest, and we stopped off at this little arts community, and lots of things, almost like a flea market and art gallery combined. We're sitting there, and off in the distance is this big mural about two stories high of Ruth Bader Ginsburg. And I look at these pictures from Asheville just a few weeks ago, and that entire complex was underwater, entire complex. From the picnic where you don't think that something like that can happen to looking in shock that, wait a minute, that's the tree we sat under. And you can see just the tippy-top of the tree. Kevin: Well, and the problem that you have with something like that, anytime you have an enormous deluge like came through, the dams are the things that you have to worry about because you don't just get the water that came at the time, but you get all the water that's been stored going backwards. David: Yeah, a few weeks back I watched a video that recapped those floods, and one I found fascinating to watch was— I think it has a debt market corollary. Dam nearly overflowing. It's a trickle of water, finding a weak spot through which to run. It went from a trickle to a flood as the dam itself was eroded, and then blew out, and downstream, there was nothing that could be done. So as I think about the debt markets, it's the downstream implications that stem from a credit bubble bursting, very much like a flood. It's difficult to contain. Join us this Thursday, Doug Noland and I will discuss late cycle bubble fragilities. This is our quarterly Tactical Short call. That's 2:00 PM Mountain Time. Register for the call. I think you'll need these insights pre-election. Kevin: Dave, we've often talked about when you were doing triathlon very regularly, about having in reserves— You have to have reserves, toward the end of the race especially. Like a matchbook. We talked about the analogy. You get 24 matches in a matchbook. You don't want to burn them all right off the bat. But I look at our debt. Again, Morgan just gave us our latest update, and this is the year we've talked about the interest on our debt exceeds what we pay for the military, and then next year, it's going to exceed what we pay for Social Security. You've got countries right now that are meeting—we're not talking just four or five BRIC countries. We're talking dozens of BRIC or potential BRIC countries meeting in Russia, Dave. Could they be discussing a critical breach in the dam that they think might be triggered? David: Yeah. Barron's did a great write-up on the 25th. "China, Russia, Brazil Want to Demote the Dollar. Gold is the Answer.