[shanec]

I would not discount this possibility too readily just because it's coming here from one former Prime Minister of Malaysia. Talk amongst OPEC members considering Euro's over shrinking dollars has been going on for quite awhile, including from Chavez in Venezuela. Others have suggested it was another reason we are in Iraq today.

Bottom Line: Whether or not OPEC eventually does switch to Euro's or gold, over dollars, for their oil, just the increasing talk about it will likely weaken the dollar and further support gold and oil price increases.

As consumers here, the dynamics could be fascinating, to say the least. The price of an ounce of gold today ($406), would buy about 270 gallons of gasoline at $1.50/gallon. In the future, if/when gas has doubled in price, that same ounce of gold would probably still get you a whole lot closer to that original 270 gallons, once again, rather than only half that, or 135 gallons @ $3.00/gallon that that same $406 would only then buy.

-Shane

[waterstraat]

With the massive deficits bush has in our balance of trade and in our federal budget deficit, the dollar is headed much lower. Gold is what you want to have , not dollars, until we can bring back surpluses into our federal budget and our balance of trade. Simple economics.

[montag813]

Former Malaysian Prime Minister Mahathir Mohamad said on Sunday that Saudi Arabia should sell oil for gold, not dollars, to avoid being "short-changed" by a decline in the U.S. currency.

Good advice, despite the wacko source. Gold may see a nice boost Monday.

[Young Rhino]

With the EU suing its members (France and Germany) for failing to meet economic requirements, long-term prospects for the euro don't look that good. The U.S. is coming out of a recession while the economic powerhouses of Europe are sinking into depression. As for Chavez, the prime minister of Malaysia, and other tinpot whack jobs, let them declare economic war on the U.S. Chavez's days are numbered. Although his beliefs are like Castro, he won't be able to maintain his hold on power. I'd give him less then two years before (a) he flees to Cuba for exile or (b) he is assassinated by his own people.

[razorback-bert]

ping

[baltodog]

TRADE WHEAT FOR OIL, BALTODOG TELLS FREEREPUBLIC

[GregoryFul]

Saudi princes - voila Iraq!

[marron]

I'm sorry, but this guy is no genius. The oil will sell for whatever the market will bring it, whether in Eruos, or dollars or anything else. Selling your oil for a declining dollar just masks the fact that the price of oil fell more than you noticed. It still would have fallen had you sold for euros, or pork bellies, or anything else.

And nothing stops him from spending all his dollar reserves to buy gold now. Why doesn't he do it?

[RightWhale]

Former Malaysian Prime Minister Mahathir Mohamad

Right, he's my financial adviser too. NOT

[glock rocks]

ping

[antaresequity]

You can bet you bottom dollar...Or is that bottom gold brick? that the Saudis are heavy long gold, either as tangible or contract.

The timing of this in light of the Golds pull back and dollars bounce is too fishy to even think they are heavy heavy long.

In fact I would even venture that this has been part of their strategy all along, only hastened along by the pullback in the yellow stuff.

[SteelTrap]

Veddy veddy interesting.

But we've seen this before. From The Gold Polaris

In the four Carter years, the gold price quadrupled again, spending much of 1980 above $600 as interest rates climbed to their highest levels in U.S. history. It made not the slightest difference that Carter presented a "balanced budget" in January 1980. By the time Paul Volcker had arrived as Chairman of the Federal Reserve Board in July 1979, the price of gold was being totally disregarded as a monetary signal and was already up to $237. Without the Polaris, Volcker and the Carter Treasury began pushing buttons and pulling levers, hoping something would work. They tried credit controls, a switch of monetary targets, "jawboning" or "moral suasion," and raising the federal funds rate which the Fed controls. It did everything but drain surplus liquidity from the market -- the one thing that would have worked. Indeed, in the fall of 1979, Volcker advised Congress that because the economy would grow faster in 1980 than had earlier been anticipated, it would need more liquidity! The price of gold jumped to $850 at its peak on February 1, 1980.

The rampant inflation underway was blamed on everything else but the central bank's dismissal of gold as a signal of surplus liquidity. The Arab nations were blamed the most for raising the price of oil. The Organization of Petroleum Exporting Countries (OPEC), though, specifically blamed the quadrupling of the gold price as their reason for wanting four times as many paper dollars for a barrel of oil. American economists also blamed American companies for raising prices, blamed management of American companies for raising executive compensation, and blamed American workers for excessive rising expectations. In the absence of a federal budget deficit to blame in early 1980, they blamed the U.S. trade deficit with Japan. When soaring interest rates then drove up the cost of debt service, and with it the federal budget deficit, the economists who had pushed Nixon into the devaluation blamed the "twin deficits," budget and trade.

[B4Ranch]

ping

[Beck_isright]

{{{{{{{{{{ PING }}}}}}}}}}}}}

If anyone dreams that the Saudis are our allies, you're on crack. Look for this move to occur quietly.

[The Westerner]

Two questions were raised on this thread that you might know the answer to. 1) Is it illegal for the little coin shop on the corner to sell you gold without telling the government your name and address? 2) Is it feasible in this day and age to store one's numismatics at home where government police can use high tech machines to find it? And my question 3) Is there enough gold left in Ft. Knox to support returning to a gold standard or is the United States basically bankrupt?

[junta]

I think in 1980 gold did its 800$ spike when OPEC hinted about gold as payment.