EU Bypasses SWIFT To Trade With BRICS Nation

Key Concepts

• TIPS (Target Instant Payment System): The European Central Bank's instant payment system.
• UPI (Unified Payments Interface): India's instant payment network.
• SWIFT: A global financial messaging network used for international money transfers.
• BRICS: An acronym for Brazil, Russia, India, China, and South Africa, a group of emerging economies.
• Rupee-Euro Instant Payment Corridor: A direct payment link between the Euro and Indian Rupee, bypassing traditional systems.
• Multipolar Payment Architecture: A global financial system moving away from a single dominant player towards multiple interconnected national payment systems.
• COMEX: Commodity Exchange, a major futures exchange for trading commodities like gold.
• Open Interest Revisions: Changes in the number of outstanding futures contracts, which can indicate market stress or manipulation.
• Zero Hedge: A financial news website.
• Battalion Metals: A gold company founded by Tucker Carlson.
• Tenure Yields: Yields on government bonds, a key indicator of interest rates.
• S&P 500, NASDAQ: Major US stock market indices.
• VIX: The Cboe Volatility Index, often referred to as the "fear index."
• WTI (West Texas Intermediate): A benchmark for crude oil pricing.
• Bollinger Bands: A technical analysis tool used to measure market volatility.
• Head and Shoulders Pattern: A chart formation in technical analysis that can signal a trend reversal.
• Quantum Computing: A type of computing that uses quantum-mechanical phenomena.
• Dolly Varden Silver: A mining company.

EU and India Bypass SWIFT: A New Payment Corridor

The European Central Bank (ECB) has initiated a significant shift in global payment infrastructure by connecting its Target Instant Payment System (TIPS) with India's Unified Payments Interface (UPI). This marks the first direct integration of the EU's instant payment system with a BRICS nation. The collaboration between the EU (specifically the Euro area) and India is establishing the first-ever rupee-euro instant payment corridor, which entirely bypasses the SWIFT network and the US dollar. This development is seen as a crucial step towards a multipolar global payment architecture, moving away from a single dominant system to a network of interconnected sovereign payment rails.

Key Points:

• Direct Connection: TIPS is now directly linked with UPI, enabling instant payments between the Eurozone and India.
• Bypassing SWIFT and USD: This new corridor operates independently of SWIFT and does not require US dollar conversion, offering an alternative to the existing dollar-centric financial system.
• Retail Level Impact: The initiative is described as a "choice" at the retail level, allowing businesses and individuals to opt for this new payment method for transactions between Europe and India.
• Disintermediation of US Payment Rail: By creating a bilateral payment rail, the EU and India are reducing reliance on the US-dominated SWIFT infrastructure.
• Cultural Shift for Europe: This move represents a departure from Europe's traditional approach of waiting for US directives and signals a proactive hedging of US risk.
• Strategic Use of TIPS: The TIPS platform, previously used to integrate external European entities into the Euro system, is now being utilized for direct international connections, specifically with a BRICS nation.
• Market Structure Change: The long-term implication is a potential reshaping of market structure, with such interconnected sovereign rails becoming more prevalent over time.

Context and Analysis:

The speaker emphasizes that this is not an immediate replacement for SWIFT but rather the introduction of a viable alternative. Historically, international transfers from Europe to India would go through SWIFT, incurring extra fees and frictions, though offering liquidity and transaction assurance. The new EU-India corridor allows for direct, bilateral transactions, implying a level of trust between the two entities.

The speaker contrasts Western top-down decision-making with the bottom-up approach often seen in BRICS nations like India, which is characterized by its fragmented society and the need to build consensus. Europe's participation in this bottom-up initiative is highlighted as a significant cultural change.

Market Overview and Other News

The morning markets report provides a snapshot of current financial conditions:

• Tenure yields: Unchanged.
• Dollar: Down 11.
• S&P 500: Down almost 8 points.
• NASDAQ: Down 52 points.
• VIX: Slightly softer.
• Gold: Down $9 at $41.25, showing a recent sell-off after a mixed overnight performance.
• Silver: Down 14 cents at $51.18.
• Copper: Up 5.5 cents at $5.04.
• WTI Crude Oil: Down approximately $1 at $57.58.
• Natural Gas: Down at $4.26.
• Bitcoin: Down $775.
• Ethereum: Down $30.
• Platinum: Mixed.
• Palladium: Down $14.
• Grains: Mildly mixed, with corn being the only one up.

Comparison of Metals and Energy:

A notable observation is the correlation between metals and energy markets. Yesterday, everything (gold, silver, stocks, oil) went up. Today, markets are giving back gains, with gold and silver softer, while WTI crude oil is down nearly 2%. The speaker notes that WTI lags when metals rally and vice versa during "everything rallies." This suggests an institutional bid under gold and an institutional offer in oil, a macro trading perspective.

Other News and Analysis:

• COMEX Gold Revisions and Data Spoofing: A premium post, picked up by the Jerusalem Post, discusses rising COMEX gold open interest revisions. These revisions are presented as exceeding normal clearing behavior, suggesting hidden risks, delayed reporting, and structural stress within the futures market.
• Tucker Carlson and the US Dollar: Coverage of Tucker Carlson's entry into the precious metals industry through Battalion Metals is highlighted. This move is linked to his warnings about the weakening US dollar and the potential instability of the post-war financial system.
• Deutsche Bank Sovereign Fiat to Buy Gold: An assertion based on a Deutsche Bank report suggests that sovereign entities are printing fiat currency to purchase gold.
• Founders AM: A morning newsletter that discussed reasons for yesterday's stock rally and other relevant financial insights.

Technical Analysis and Market Outlook

The speaker delves into technical analysis for gold, silver, and Bitcoin.

Gold:

• Wedge Pattern: While many traders identify a wedge pattern on the gold chart, the speaker personally focuses on levels above it.
• Trading Range: The key level for gold is identified as $4160, representing the edge of a trading range.
• Upswing Potential: A move above $4160 could transform the current range-bound structure into an upswing, breaking through previous selling resistance.

Silver:

• Bollinger Bands and Momentum: Referencing Michael Oliver's analysis, the speaker notes that silver's momentum is stable, and volatility is expanding.
• Weekly Outlook: A key indicator for silver is its settlement price on Friday. If silver closes above $51.49 on a weekly basis, it is not advisable to be short the metal.

Bitcoin vs. Gold:

• Head and Shoulders Pattern: The chart of Bitcoin divided by gold shows a head and shoulders pattern. If this pattern breaks, it would suggest that the market does not view Bitcoin as a substitute for gold as a store of value. The speaker expresses skepticism about the strength of this pattern.
• Liquidity Indicator: Referencing Lyn Alden, the speaker notes that Bitcoin has been a leading indicator of drying liquidity. The concern is that if the Fed cuts rates and Bitcoin does not rally, it could signal deeper systemic issues beyond cyclical liquidity concerns, potentially related to quantum computing or Bitcoin's long-term viability.

Sponsor Spotlight: Dolly Varden Silver

The segment features a sponsor, Dolly Varden Silver, and highlights recent drill results.

• Significant Gold Hit: Dolly Varden Silver reported a significant gold discovery of 26.74 grams per ton over 14.76 meters, which is not currently factored into their existing mineral resource estimate. This is described as a "world-class head" and a substantial find.

Conclusion and Takeaways

The primary takeaway from the video is the groundbreaking EU-India payment corridor, which signifies a tangible shift towards a multipolar global financial system. This initiative, by bypassing SWIFT and the US dollar, offers a new avenue for international transactions and reflects a growing desire among nations to diversify their financial dependencies. The market analysis provides a technical outlook on gold and silver, while the discussion on Bitcoin versus gold raises questions about its role as a store of value in the evolving financial landscape. The mention of Tucker Carlson's foray into the gold market and Deutsche Bank's report on sovereign gold purchases further underscore the current sentiment towards precious metals as a hedge against dollar weakness and financial instability.