India to pay gold instead of dollars for Iranian oil. Oil and gold markets stunned

Debka File ^ | 1/23/2012 | DebkaFile

[JohnKinAK]

This assumes they use the price of gold in dollars, which is based on paper gold. There’s nothing stopping the parties from negotiating the ratio of gold to oil completely independent of the price in dollars. There’s also nothing stopping a nation from creating a gold certificates based on their gold reserves and trading those. Plus once a nation starts paying for something in gold, they may seek to receive payment in gold for their exports, thereby making their gold reserves fluid.

Everyone thinks the dollar will collapse overnight........the more likely scenario is nations one by one just stop utilizing US Federal Reserve Notes.

[cincinnati65]

RE: Indian gold supply. India uses the gold to buy oil. Iran exchanges gold freely for goods it needs (they WILL find a trading partner). India uses currency that would have gone to Iran to buy gold in the free market (where the Iranian gold has "recirculated").

This is just a way around the sanctions. "Money" laundering for the new age.

[GonzoGOP]

Plus once a nation starts paying for something in gold, they may seek to receive payment in gold for their exports, thereby making their gold reserves fluid.

However in both cases the amount of gold available to the trading partners would need to go up. If India demands payment in gold their trading partners will need to get gold from someplace in order to pay them. Simple supply and demand holds that if more gold is needed, and the amount of gold being mined is inelastic, the price of gold is going to go up. Heck if the price get high enough even the guys on Discovery channel might turn a profit.

[TheOldLady]

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[GourmetDan]

Yeah, there’s no way they are going to do this at the current gold price.

India (nor China) has enough gold to pay for their oil.

I doubt they would do it at much higher prices either.

I think it’s going to become very difficult to get anyone to part with real, physical gold very soon.

[GonzoGOP]

I think it’s going to become very difficult to get anyone to part with real, physical gold very soon.

One of the things I most fear is that the US, being the worlds largest debtor and also holding 26% of the worlds entire gold supply, may be forced to make payments in gold rather than dollars. We should never do it, but Obama has done a lot of things that never should have been done.

[GourmetDan]

The U.S. being the largest holder of gold is the kicker. Assuming that it’s really there, of course. But I don’t think anyone will be making payments in gold. I’d be surprised if we don’t give everyone US dollars for the gold we have stored for them in NYC. Perhaps at some astronomical price, but fiat nonetheless. It would hack everybody off, but sending gold out of the country is going to become unthinkable once the fiat depreciation really get going. I’m betting that the U.S. finds a way to steal it ‘fair and square’.

[BfloGuy]

Sounds like nonsense.

Countries settling accounts in gold would still work through the banking system. In other words, they would exchange titles to gold; not load trucks up with the stuff and run it over.

[BfloGuy]

not load trucks up with the stuff and run it over

On further thought, I suppose that if they were desperate enough they could. But could you imagine the news coverage of that convoy?

[DeaconBenjamin]

NRIs are very politically influential in the US. Sanctions against India are a nonstarter.