India, Iran mull over gold-for-oil for now

[traelin0]

Looks like FOFOA was right.

SF, remember what we talked about a year ago? Nation-states not only want to rid themselves of the dollar, but also US bank (and banks with US interests) clearinghouses.

NEW DELHI: India is determined to ensure steady crude oil supplies from Iran and is even considering settling payments with gold in the short term before the two countries agree on a mutually accepted currency and a bank to clear the transactions.

"We have written a letter to NIOC ( National Iranian Oil Company )) asking it to suggest a bank where US sanctions are not applicable," a government official involved in the matter said requesting anonymity.

economictimes.indiatimes.com/news/news-by-industry/energy/oil--gas/india-iran-mull-over-gold-for-oil-for-now/articleshow/7238760.cms

[handyman2]

I see the concept of trading gold an unworkable situation. Many countries have little in the way of gold reserves. So how do they compete in a global market? It seems to me that it would just make the financial confusion worse. Who sets what the value of the gold would be?

[traelin0]

Jan 11, 2011 0:31:31 GMT -5 handyman2 said:

I see the concept of trading gold an unworkable situation. Many countries have little in the way of gold reserves. So how do they compete in a global market? It seems to me that it would just make the financial confusion worse. Who sets what the value of the gold would be?

Gold has been used as payment for oil for decades, sometimes officially, sometimes not. And the laws of quantity certainly wouldn't see the nation's CBs exchanging it for the current paper market price...it'd be much higher.

The BIS currently facilitates, or at least is aware of, those large transactions. I would prefer to see the free market set the price but that won't happen until the COMEX collapses.

[burnsattornincan]

Who sets what the value of the gold would be?

Well the old saying goes, an ounce of gold should buy you a new suit and a good pair of shoes. Nowadays with the price of an ounce of gold in USD you could buy a suit having near the quality of the suits I buy. The appreciation in the last 10 years has been staggering.

< Mistaking your beautiful colleague for your wife can be easy. Calling me before that "mistake" is made is even easier. >

canattorneyyou

[Savoir Faire-Demogague in NJ]

Yup, I recall it. Several oil producing countries in the Middle East were already off the dollar and on the Euro. Many European countries are also pushing hard to have the world reserve currency be the Euro.

[Politically_Incorrect12]

If you are looking at what has traditionally been a steady currency, why not go with the British currency?

[traelin0]

Jan 11, 2011 13:01:28 GMT -5 Politically_Incorrect12 said:

If you are looking at what has traditionally been a steady currency, why not go with the British currency?

The pound sterling is just as untrustworthy as the dollar IMHO, and the Brits have effectively defaulted on their obligations in the last 100 years as well. Remember, they went off the gold standard during WW1 and attempted to go back on it at the same exchange rate in 1925, which obviously was a disaster due to the rampant currency depreciation (overissuance of debt) from war. In other words, the pound was overvalued.

It would be wise for the East to avoid Western currencies if they want to establish a new monetary order. Note, though, that China is very interested in propping up the Euro; thus their recent investments in Greek and Eurozone bonds. Why? My speculation is twofold: 1) They are favorable toward the mark-to-market of Eurozone gold; 2) They are dumping dollars and dollar-denominated debt.

[decoy409]

Glad to see you put a mark on this one. I covered it in 'The NEWS' today and it will be interesting to see how others respond.