The B.R.I.C.S Nations, the Birth of a Commodity Supercycle Boom, and Why Most Commodity Traders Lose Money

One of the themes which we’ve written about extensively is the changing world order of money. Since the Bretton Woods Agreement came into effect in 1944, the U.S. Dollar has been king of the hill and the world’s reserve currency. However, over the last decade Brazil, Russia, India, China, and South Africa have been organizing and forming a “BRICS” currency to challenge the U.S. dollars dominance in world trade.

The Bretton Woods agreement was a pivotal moment in global finance. It established the US dollar as the world’s reserve currency, which meant that other countries pegged their currencies to the dollar at a fixed exchange rate. The US dollar was also convertible to gold at a fixed rate of $35 per ounce, which gave it a stable value in terms of gold.

The Bretton Woods agreement helped stabilize the global economy by reducing currency fluctuations, which made international trade and investment more predictable. Forty-four nations attended the Bretton Woods conference. Historians often say the theme of the conference was a recognition and understanding that what most likely was the cause of World War Two was the currency hyperinflation which had occurred in Germany twenty years earlier, due to the heavy burden of war reparations which was placed on the country. Attendees at Bretton Woods recognized the threat of currency debasement placed on world peace and economic stability.

But as with any system, there were challenges for the United States starting in the 1960’s. The U.S. faced balance of payment deficits due to the cost of the Vietnam War and domestic inflation, leading to a run‑on U.S. gold reserves. In 1971, U.S. President Richard Nixon ended the convertibility of the U.S. dollar to gold, which marked the end of the Bretton Woods system and the beginning of fiat currency dominance.

Over the last 52 years, the U.S. has continued to use the US dollar as the global currency of choice, especially in the United Nations and other global finance bodies. However, as the dollar continues to be debased, people are looking for more real‑world assets.

However, all of that is ending as the BRICS nations form a commodity‑backed currency that challenges dollar dominance.

Consider the following 21 nation‑states who are all part of the BRICS nations alliance:

Afghanistan, Algeria, Argentina, Angola, Bahrain, Bangladesh, Belarus, Bolivia, Bosnia and Herzegovina, Brazil, Brunei, Cameroon, Chile, Croatia, Czech Republic, Denmark, Ecuador, Estonia, Eswatini, Fiji, France, Gabon, Germany, Greece, Guatemala, Honduras, Iceland, Ivo, Jamaica, Kenya, Kuwait, Laos, Latvia, Lebanon, Libya, Moldova, Mongolia, Morocco, Nepal, Nicaragua, Nigeria, Northern Ireland, Norway, Pakistan, Peru, Philippines, Poland, Portugal, Republic of Ireland, Romania, Russia, Saudi Arabia, Singapore, Slovakia, Slovenia, South Africa, South Korea, Spain, Sri Lanka, Sweden, Syria, Taiwan, Tajikistan, Thailand, Trinidad and Tobago, Tunisia, Turkey, Ukraine, Uganda, United Kingdom, United States, Uruguay, Venezuela, Vietnam, West Bank, Western Sahara, Yemen, Zambia, Zimbabwe These countries will comprise an entity that could influence the global currency system.

Also, it is noteworthy that countries are focusing on forming a more balanced global economy than the current dollar‑dominant system.

One of the reasons why the BRICS nations are exploring a new global currency is to diversify and gain more control.

Therefore, the BRICS nations are exploring a new global system with a different currency base.

BRICS is already planting the seeds for a new system based on real goods rather than paper assets.

If you were a nation state, you might want to stay competitive in changing market conditions.

What does this mean to you as a trader?

Commodities trade on all of the major world markets. They are not backed by any physical asset but are made up of paper contracts.

Commodities in and of themselves are no more volatile than other markets; they are still a high‑risk area because of the lack of liquidity and regulation.

Let me explain.

The mechanics of commodity trading and how it is an investment strategy that could be risky.

For example, when you trade stocks that pay dividends or other cash flows you can consider the underlying fundamentals such as price and volume data and the market conditions.

However, in the world of commodities the key point is that the market’s volatility can be controlled in a way that is consistent with fundamentals. THIS IS WHAT CREATES THE RISK.  For example:

Corn trades on the Chicago Board of Trade and is a 5000‑bushel contract. The price is $2.10 per bushel. The price increase in the last three months is a major change in the price.

So, to control $32,750, the market is regulated and the risks are controlled.

The reason why most commodity traders lose money is primarily that they step into a trade early and hold a long‑term position with high capital at risk.

Look at any blue‑chip stock, they typically have high liquidity and a strong track record that a trader can easily predict the performance.

Commodity traders often use leverage and risk. They might consider a margin, an option to trade futures, a risk of loss and a need to be comfortable with the market.

The solution is:  don’t trade on minimum margin and reduce your leverage.

Here is a chart of Corn over the last 52 weeks. The chart appears to be a long‑term indicator, which means that it is a high risk area. The trend is that over a longer period the market is volatile and this is a high risk area.

Notice how on the chart above these moves seem consistent with the market trend. The chart shows a high volatility and shows that the trend is consistent with the risk factor.

The top popular commodities include:

Crude oil

Gold

Silver

Natural gas

Oil

Aluminum

Copper

Coal

Lead

Nickel

Platinum

Palladium

Timber

Wheat

Oil

Natural gas

Platinum

Timber

Nickel

Carbon

Lead

Gold

Wheat

Oil

Silver

Oil

Timber

Lead

Carbon

Nickel

Salt

Let’s look at this another way. Below is a listing of 19 of the top commodity traders in the world. These traders have made billions of dollars. I share them to illustrate the commodity supercycle that may arise from the BRICS nation forming a commodity‑backed currency.

Richard Dennis – Founder of Centaurus Energy,  — 

Eric Sprott – Founder of Sprott Inc. (1990s-present). 

… (continued lists of traders omitted for brevity)

I share these top commodity traders with you because I see a major commodity supercycle occurring based upon the formation of the BRICS nations and their forming of a commodity backed currency.  As the U.S. dollar continues to be debased people are going to want real goods and not paper assets.

The ultimate goal is always financial success, regardless of public opinion, or what is going on in the world. For traders, this means staying competitive in constantly changing market conditions and beating inflation to generate more revenue by aligning with the right trends at the right times.

While I have shared my opinion on the current economic environment, I do not let it influence my trading decisions. Instead, I rely on artificial intelligence, neural networks, and machine learning to guide me.

Here is a chart of GOLD over the last 6 months.

Here is chart of Silver.

When these charts disagree with the thesis, I’ll move to the sidelines.

Every trader has experienced losses, but winners learn from them and use the knowledge to their advantage. Artificial intelligence is powerful because it learns from mistakes and continually searches for a better solution, making it a game‑changer for traders.

Don’t wait for the Fed to pivot – take control of your trading decisions with the power of machine learning.

Since artificial intelligence has beaten humans in Poker, Chess, Jeopardy and Go! do you really think trading is any different?

Knowledge. Useful knowledge. And its application is what A.I. delivers.

It’s not magic.  It’s machine learning.

Make it count.

THERE IS A SUBSTANTIAL RISK OF LOSS ASSOCIATED WITH TRADING. ONLY RISK CAPITAL SHOULD BE USED TO TRADE. TRADING STOCKS, FUTURES, OPTIONS, FOREX, AND ETS IS NOT SUITABLE FOR EVERYONE.IMPORTANT NOTICE!

DISCLAIMER: STOCKS, FUTURES, OPTIONS, ETFs AND CURRENCY TRADING ALL HAVE LARGE POTENTIAL REWARDS, BUT THEY ALSO HAVE LARGE POTENTIAL RISK. YOU MUST BE AWARE OF THE RISKS AND BE WILLING TO ACCEPT THEM IN ORDER TO INVEST IN THESE MARKETS. DON’T TRADE WITH MONEY YOU CAN’T AFFORD TO LOSE. THIS ARTICLE AND WEBSITE IS NEITHER A SOLICITATION NOR AN OFFER TO BUY/SELL FUTURES, OPTIONS, ST.