The UNIT

The BRICS nations (Brazil, Russia, India, China, and South Africa, plus expanded members) have been discussing a gold-backed settlement unit—often referred to as the “Unit”—for several years as a means to facilitate trade among members and reduce reliance on the US dollar. Despite recent headlines, it remains in the pilot and development phase, but it has important implications for the price of gold and bitcoin, as the main goal is to escape from the petrodollar system. How does it work and why is it important? The BRICS “Unit” is a proposed collateralized settlement instrument (not a full sovereign currency like the euro or dollar) designed to facilitate cross-border trade and payments among BRICS nations (Brazil, Russia, India, China, South Africa, and their expanded partners) while reducing dependence on the US dollar and systems like SWIFT. It draws inspiration from the IMF’s Special Drawing Rights (SDR) but incorporates gold as a core backing to enhance stability and trust. The Unit’s primary goal is to enable dollar-free commerce for commodities and services, lowering transaction costs by 1-2% per trade through reduced FX volatility and faster settlements. BRICS members’ collective gold reserves (over 5,000 tonnes) provide the tangible backing, with central banks like those in Brazil and Russia actively accumulating more. It is composed of (1) 40% Gold (by weight): Physical gold stored in diversified, secure vaults across member countries (e.g., Russia’s Central Bank vaults or China’s reserves). Each Unit is pegged to a fixed weight of gold (e.g., equivalent to 1 ounce per Unit), not a dollar price. As gold’s market value rises, the Unit’s worth increases proportionally, providing a hedge against currency devaluation. And (2) 60% BRICS Currency Basket: A weighted mix of member currencies (Brazilian real, Russian ruble, Indian rupee, Chinese yuan, South African rand), each capped at no more than 30% influence when measured in gold terms to prevent dominance. Allocations are roughly equal (about 12% each), adjusted dynamically via smart contracts to reflect trade volumes and economic shifts. A few simple implications are: (1) central banks from BRIC nations (including the extended members) will buy gold, which in fact is already happening. (2) They may not buy bitcoin, as they are building their own blockchain based currency that is not decentralized, and therefore governments remain in control. (3) there is no common fiscal policy among member countries, presenting the same weakness than the Euro. (4) member countries control a big portion of natural resources, and through world history, resources scarcity has been a cause of conflict since humans started to walk on two legs. (5) there is a growing number of countries that would like to see the US hegemony disappear, which, if successful, will imply a new world order, not only a monetary one. The timing and success of this initiative is uncertain. Paraphrasing Hemingway, it will happen two ways: gradually and then suddenly.

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