Weekly Update from RLA Tax and Wealth Advisory

By:  Dennis Tubbergen

BRICS Launches Gold-Backed Payment System

         The BRICS Group has officially launched its gold-backed UNIT payment system.  If you’re unfamiliar, BRICS is an acronym for the countries Brazil, Russia, India, China, and South Africa.  The BRICS coalition has been growing and has been openly developing a trade payment system to bypass the US Dollar.  While this has been one of the long-standing objectives of BRICS, the development of such a trade payment system accelerated when the United States froze all Russian assets denominated in US Dollars several years ago.

         As I have been reporting to you here, the BRICS countries have been increasing their investments in gold over the past several years, and now they are introducing UNIT.  UNIT is an attempt to put together a basket-backed, collateral-anchored settlement instrument intended for cross-border trade.

         UNIT allows member countries to trade gold, platinum, and rare earth minerals outside Western trade platforms.  UNIT has eleven participants presently, with twenty-two additional countries in the application stage.  (Source:  https://watcher.guru/news/brics-group-launches-gold-backed-unit-payment-system)

         One BRICS analyst noted, “UNIT reflects the rise of collateral-anchored settlement instruments and the geopolitical bifurcation of global payments into bloc-based parallel monetary systems.”

         This comes as no surprise; we’ve only been debating the ‘when’, not the ‘what’.  The weaponization and devaluation of the US Dollar made this development inevitable.  And, as I have been reporting, gold buying by governments and central banks around the world has been frenzied.

         Brazil added 16 metric tons of gold in September of 2025, marking its first gold purchase since 2001.  According to the International Monetary Fund, Brazil’s gold reserves now total 145.1 tons.  Russia’s gold reserves total 2,336 tons, China’s reserves stand at 2,298 tons, and India has 880 tons.  Central banks globally purchased over 1000 tons annually from 2022 through 2024.

         While the US Dollar is still the world’s currency of preference, this development is yet another move to undermine the global status of the US Dollar.  While the US Dollar is not in danger of losing its status anytime soon, in my view, savvy investors should see this as another sign to incorporate currency diversification into their portfolios.  For now, as I’m fond of quipping, the US Dollar is still the best house in a bad neighborhood.

Yes, Inflation Is Real

         Inflation has taken its toll on lower-income and middle-income Americans over the past five years.  Inflation combined with extreme levels of debt in the private sector will have to lead to a recession in the reasonably near future in my view.

         As an example of how inflation, technically defined as an increase in the money supply, has impacted consumer prices, here are some menu item prices from the quick-serve restaurant, McDonald's, in 2019 compared to the price of the menu item in 2024.  (Source:  https://x.com/MatrixMysteries/status/1991199290568634633)

                  Item                        2019 Price         2024 Price

                        Medium French Fry                $1.79                          $4.19

                        McChicken                             $1.29                           $3.89

                        Big Mac                                  $3.99                           $7.49

                        Ten McNuggets                      $4.49                           $7.58

                        Cheeseburger                         $1.00                          $3.15

Job Losses Accelerate

         While the official reporting of government jobs data has not resumed since the recent shutdown, the payroll company, ADP, is reporting that private companies have been eliminating 13,500 jobs per week since late October.  That’s a big increase from the last report of 2,500 lost jobs per week.  (Source:  https://www.dailymail.co.uk/yourmoney/article-15324783/jobs-apocalypse-americans-lose-positions.html)

         Challenger, Gray, and Christmas recorded 153,074 job cuts in October alone.  That’s an increase of 175% over last year and up 183% month-over-month.  That’s the largest jump in job losses in one month since 2003, at the time of the tech stock bubble collapse.

         Over the past three months, Amazon, Apple, UPS, Intel, Verizon, AT&T, Walmart, Target, Ford, and General Motors have all announced cuts in white-collar staff.

         We are beginning to see signs of an economic slowdown due largely, as noted above, to inflation robbing Americans of purchasing power and excessive private sector debt levels combined with rising interest rates.

Frustrated Gen Z’ers

         Generation Z, defined as Americans born in the late 1990s and early 2000s, is voicing its collective dissatisfaction with the current economy.

         Nalin Hailey, son of former UN Ambassador Nikki Hailey, while appearing on “Fox and Friends,” chastised the current crop of politicians for failing to address Gen Z’s problems with unemployment and unaffordability.  (Source:  https://www.foxnews.com/media/nikki-haleys-son-urges-gop-step-gen-z-reaches-breaking-point-jobs-housing)

         Hailey noted that not one of his friends who graduated from a top school has a job and that the average age of a first-time homebuyer is now 40. 

         The frustration is understandable, but the current economic conditions are the result of easy money policies.  Any student with any major and any skill set has been able to borrow money liberally to pay for any degree, even if that degree does not equip the student with marketable job skills.  The ease of access to student loans has created a college tuition price bubble, making it more difficult to get a return on investment. Easy student loan access has also led to the introduction of degrees that are simply not in demand.  Housing prices are the same story.  The current unaffordability of a home purchase for low and middle-income Americans is a direct result of artificially low interest rates that boosted prices.  Both tuition rates and home prices will predictably reset.

RLA Radio

         The RLA radio program this week features an interview that I did with the proprietor of market-ticker.org, Karl Denninger.  The program is available by clicking on the "Podcast" tab at the top of this page or from any podcast distribution source.

Quote of the Week

“I stopped believing in Santa when my mother took me to see him in a department store, and he asked for my autograph.”     -Shirley Temple