by Larry Johnson, Sonar21.com

Donald Trump’s attempt to rebuild the US industrial base by using tariffs is failing and is accelerating the development of the BRICS nations into an alternative financial infrastructure that is not dependent on the US dollar as a reserve currency. The price of gold and silver has exploded to historic levels during the past two weeks. But this move did not just start in 2026… Central banks globally bought record amounts of gold in 2025 (~1,000+ tons), with India and China leading the charge as they sell Treasuries. This diversification is explicit: Nations are replacing dollar assets with precious metals to mitigate risks from US debt levels ($38.5 trillion) and potential sanctions/tariffs. Silver, while less central to reserves, has seen increased sovereign interest amid its industrial demand surge (e.g., in solar/EVs). This trend signals concerns over the “end of US dollar dominance” and a pivot to commodities.

The surge in gold and silver prices to record nominal highs in January 2026—gold exceeding $5,000 per ounce and silver surpassing $110 per ounce—does not literally represent levels unseen in the past 300 years when adjusted for inflation. Historical data shows gold reached inflation-adjusted peaks around $3,000–$4,000 per ounce in the early 1980s (during geopolitical crises and high inflation), and silver hit real highs of over $150 per ounce in 1980. However, the current rally is driven by a confluence of factors making these metals exceptionally attractive:

Geopolitical Uncertainty and Safe-Haven Demand: Escalating global tensions (e.g., U.S. tariff threats on allies like Canada/Mexico/China, ongoing wars in Ukraine and the Middle East) have boosted gold as a hedge against instability. Central banks (especially in China, India, and Russia) accumulated record gold reserves in 2025–2026, with purchases exceeding 1,000 tons annually. Silver benefits similarly but also from its industrial role.

Industrial and Green Energy Demand: Silver’s use in solar panels, EVs, electronics, and semiconductors has driven consumption to record 680 million ounces in 2025, creating persistent supply deficits (mine output lags demand by 150–200 million ounces annually). Gold demand from ETFs and investors surged amid U.S. shutdown fears and tariffs.

Economic Factors: U.S. policy uncertainty (tariffs up to 100% threatened by Trump), global oversupply concerns, and a weakening dollar have fueled the rally. Analysts predict gold could hit $6,000 and silver $125–$300 by end-2026 if trends continue.

And then there is the BRICS-effect... There is substantial evidence that several nations—particularly emerging economies like China, India, and Brazil—have been selling off portions of their US Treasury bill holdings in recent years (including 2025–2026) and reallocating some of those funds into physical gold and silver reserves. This trend is driven by a combination of geopolitical risks (e.g., US tariffs and sanctions), a desire for diversification away from dollar-denominated assets, inflationary pressures, and the appeal of precious metals as safe-haven stores of value amid global uncertainty. While not all nations are doing this uniformly (e.g., some European investors increased Treasury holdings in 2025), the pattern is clear among key BRICS members and central banks, as detailed in recent reports and data.

China and India are Leading the Trend: In recent months (through late 2025 and early 2026), China and India have significantly reduced their US Treasury holdings. China, the second-largest foreign holder (after Japan), has sold off billions in Treasuries amid escalating US tariffs (up to 100% threatened by the Trump administration) and a push for de-dollarization. India has followed suit, trimming its holdings while ramping up gold purchases. This is part of a broader “global gold rush” where these nations are dumping Treasuries to hedge against US policy volatility.

Brazil has also reduced its Treasury exposure in the past three years, aligning with a coordinated BRICS strategy to lessen reliance on the US dollar. This includes selling Treasuries and increasing gold reserves as a buffer against potential US economic pressures. Other foreign investors also accelerated sales of US debt in 2025, contributing to gold’s surge past $4,800 per ounce. For instance, Denmark sold $100 million in Treasuries in a move signaling broader repatriation risks. Japan may follow with capital repatriation, potentially selling more Treasuries amid rising US yields. However, not all are selling—European buyers piled into Treasuries in 2025 (accounting for 80% of foreign inflows from April–November), showing a mixed global picture.

It is that last fact that is a head scratcher… Because the US Treasury is having more trouble finding foreign buyers for US debt, you would think that the US would want to avoid antagonizing European buyers. Well, you thought wrong. Trump’s imperial antics regarding Greenland have roiled US relations with Europe and with NATO. Do you think that the previous European buyers of T-bills are now motivated to buy more? Or has Donald Trump’s unpredictable, abrasive threats created incentives for those nations to sell their T-bills and buy gold and silver? We will see.

Now for a seemingly unrelated question… Will the volatility in the commodities markets for gold and silver affect Donald Trump’s decision to launch a new attack on Iran? If the US decides to attack Iran I think there is a high probability that Iran will shutdown the Strait of Hormuz, which would disrupt 45% of the world’s daily oil supply. That would trigger an immediate surge in the price of oil and would likely create major economic problems for those nations dependent on oil flowing out of the Persian Gulf.

The dampening effect on the economies of major importers of Persian Gulf oil could be mitigated by the amount of strategic reserves that the affected countries have. High-dependency countries (e.g., China, India, Japan, South Korea—importing 50–90%+ of oil from Gulf) could maintain supplies for 30–60 days using existing stockpiles and enacting emergency measures. A prolonged closure (beyond 60 days) would strain just-in-time inventories and cause severe shortages.

I did two podcasts today — the first with Marcello (i.e., Press of Mass Destruction) and Rasheed Mohammad (I.e., TheRedPill Diaries):