[GonzoGOP]

250 tons of gold per year for India alone, I am not believing this.

As of last year India has Holdings of 614.75 tons. So two and a half years and they are out. China has 1,161.9 tons so they could go a bit longer, but they also import more oil. Oddly enough the big winner would be the US. With the value of the dollar dropping and the demand for gold going psychotic the 8,965.6 tons sitting in US vaults (the most of any nation) might eventually be worth enough to back our currency.

[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.

[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.