Iran trading oil with gold, possible war?

[nowaydude]

http://www.zerohedge.com/news/iran-...nces-will-accept-payment-gold-instead-dollars

so obviously this increases the gold demand and makes it VERY likely there will be an iranian war. what would an american war mean on gold?

im guessing that theyd have to print money to fund it, making increasing the value of gold in USD terms?

discuss.

 

[SilverMark]

Your thread title suggests you misunderstand the content of the article.

The article contains quotes from Iranian officials stating that they are willing to accept gold in payment for oil. There is a huge difference between acceptance of gold as payment to only accepting gold as payment. It is not breaking news that they are willing to accept gold as payment!

Numerous bilateral trade agreements have been established with their closest trading partners and announced over the past month such as China, Russia and India.

Nobody is going to give up their gold in exchange for oil in the current climate unless they have absolutely no other options. China and Russia have been actively increasing their gold reserves over the past year and wouldn't trade it all away.

The US is getting it's oil from elsewhere so it doesn't affect them directly.

 

[thatguy]

Your thread title suggests you misunderstand the content of the article.

The article contains quotes from Iranian officials stating that they are willing to accept gold in payment for oil. There is a huge difference between acceptance of gold as payment to only accepting gold as payment. It is not breaking news that they are willing to accept gold as payment!

Numerous bilateral trade agreements have been established with their closest trading partners and announced over the past month such as China, Russia and India.

Nobody is going to give up their gold in exchange for oil in the current climate unless they have absolutely no other options. China and Russia have been actively increasing their gold reserves over the past year and wouldn't trade it all away.

The US is getting it's oil from elsewhere so it doesn't affect them directly.

Umm you might want to google petrodollar. Even if they never trade a single ounce for a few barrels the major news is something other then USD for oil. Look at the wars is Lybia and Syria and you will see a pattern of trying to go off the petrodollar and war

 

[nowaydude]

Your thread title suggests you misunderstand the content of the article.

The article contains quotes from Iranian officials stating that they are willing to accept gold in payment for oil. There is a huge difference between acceptance of gold as payment to only accepting gold as payment. It is not breaking news that they are willing to accept gold as payment!

Numerous bilateral trade agreements have been established with their closest trading partners and announced over the past month such as China, Russia and India.

Nobody is going to give up their gold in exchange for oil in the current climate unless they have absolutely no other options. China and Russia have been actively increasing their gold reserves over the past year and wouldn't trade it all away.

The US is getting it's oil from elsewhere so it doesn't affect them directly.

I think making an official statement is more significant then talks of trades with gold or local currencies or whatever.

it does affect the US as USD demand is reduced by oil-buyers

anyways, the thread is about america warring with iran - what does that mean for gold. what happened with iraq?

 

[nowaydude]

at the wars is Lybia and Syria and you will see a pattern of trying to go off the petrodollar and war

hmm, didnt know syria's issues had anything to do with gold/USD/petrol

with lybia - it was that they were gunna start a gold-backed currency yeah?

 

[Dave92029]

This may be China's opportunity to get their Yuan's toe in the door in place of US$ in exchange for Iran's oil.

The ever increasing US deficit, and unwillingness to take corrective steps to stop spending, has probably made many concerned about accepting US$ in exchange for Oil. Troubles in Europe have prevented using the Euro as an alternative Reserve Currency.
It's a bit premature for China's Yuan to take the place of the US$, but not too soon to make the first moves.

If the US looses the confidence of OPEC, and they begin to accept one or many other currencies in exchange for Oil, then the US is really "up the creek without a paddle".

Gold isn't the answer, but it will benefit as the US$ continues to loose confidence as the World Reserve Currency.

 

[SilverMark]

The US gets something like 1% of its oil from Libya, the EU however does get oil from Libya but most goes to Asia. Syria is a relatively small player producing about 0.4mbd and is sanctioned by the US and EU - they are not importing it. The US is not importing Iranian oil either, however the EU takes about 0.5mbd which is why they are shooting themselves in the foot by going along with the US and sanctioning Iran as they need to find that supply elsewhere - which will be at a higher cost (assuming Saudi Arabia can even make up for the shortfall as they claim).

The US imports about 15% of its oil from the persian gulf and the big issue for them is if Iran cuts the strait of Hormuz it blocks most of the oil out of Iraq and Kuwait, Qatar, the UAE and Saudi Aradia. The EU has a greater reliance on persian oil and so by going along with the US war mongering they are making it even more difficult for themselves to come out of recession as oil prices increase under the treat of war.

That article is just more lip service from Iran - there is nothing new in it and I don't think them talking about being open to accepting gold as payment escalates the situation further. From my understanding it is not so much the fact that Iran is moving away from the USD but the threat of cutting supply through action in the straight that is the looming black swan. Granted there is a movement away from the USD to be used as a trade and reserve currency which whilst it might be negative to USD demand is probably a not a bad thing overall as the world slowly becomes less affected by their flawed fiscal policy.

 

[thatguy]

The US gets something like 1% of its oil from Libya, the EU however does get oil from Libya but most goes to Asia. Syria is a relatively small player producing about 0.4mbd and is sanctioned by the US and EU - they are not importing it. The US is not importing Iranian oil either, however the EU takes about 0.5mbd which is why they are shooting themselves in the foot by going along with the US and sanctioning Iran as they need to find that supply elsewhere - which will be at a higher cost (assuming Saudi Arabia can even make up for the shortfall as they claim).

The US imports about 15% of its oil from the persian gulf and the big issue for them is if Iran cuts the strait of Hormuz it blocks most of the oil out of Iraq and Kuwait, Qatar, the UAE and Saudi Aradia. The EU has a greater reliance on persian oil and so by going along with the US war mongering they are making it even more difficult for themselves to come out of recession as oil prices increase under the treat of war.

That article is just more lip service from Iran - there is nothing new in it and I don't think them talking about being open to accepting gold as payment escalates the situation further. From my understanding it is not so much the fact that Iran is moving away from the USD but the threat of cutting supply through action in the straight that is the looming black swan. Granted there is a movement away from the USD to be used as a trade and reserve currency which whilst it might be negative to USD demand is probably a not a bad thing overall as the world slowly becomes less affected by their flawed fiscal policy.

Who Iran, Iraq, Syria sells oil to is of little or no interest to the US. What they use as the medium of exchange is of the MOST important interest to the US. Also if the US lets the little minnows trade oil however they like it send a msg to the bigger fish to try and give it a go. Without a doubt the Petro dollar for the US is worth defending with WAR!

 

[SilverMark]

I think it is more complex than that. Who Iran sells their oil too is of little importance. The US' trade partners are certainly of interest though. Shale oil might be reducing US dependence from foreign oil, but only fractionally and does not have athe potential to replace it. They still require oil from the persian gulf and so does the EU so if that supply is cut, the price of oil increases in USD and Euros - stalling economic growth.

I agree that the petrodollar is important to the US, particularly with its direct trading partners so they can influence value of their dollar and the cost of the oil they buy. I don't think how Iran trades its oil would have as big an affect on the US right now as a reduction in their supply unless there is significant price decoupling that drives down the value of the USD. I also can't see gold being traded for oil at the moment - Russia, India and China want to increase gold holdings, not decrease. Instead they will trade in their own currencies. It could however influence other countries to abandon the dollar which would also be negative for the US as it is dumped as a reserve currency. Long term it would be negative for the US, but if they cannot get affordable oil in the short term they are done anyway.

I think Libya and Syria are strategic. Whilst the US is not importing much Libyan oil right now, to have them as a trade partner (in USD) would allow another option and reduce reliance on the straight of Hormuz. Interesting to note that the EU played a big part in the Libya action - they are reliant on their oil. The US might have similar ambition with Syria - aid in toppling the government and then start bringing in their oil. The more significant geographic advantage of having Syria onside is to allow pipelines to be built from Iraq to bring oil into the mediterranian.

 

[SilverMark]

with lybia - it was that they were gunna start a gold-backed currency yeah?

Read some articles about their intention to create a gold-backed trading currency in the region rather than trading in USD. Not sure how much of that was fact though - never saw anything real official. But as thatguy alluded to, if all the major oil producing nations refused the USD, the US would be in the sh#t big time.

Good points Dave, I think China are looking for ways to increase the influence of the Yuan.

I'm really enjoying this discussion guys

 

[thatguy]

I also can't see gold being traded for oil at the moment - Russia, India and China want to increase gold holdings, not decrease

People misunderstand how a country can trade for oil in gold and still not have their reserves effected. It is simple to hedge your trade... i.e make a trade for 100oz Au and then purchase a forward contract for 100oz Au and stand for delivery. Net gold loss 0, trade done in gold.

 

[nowaydude]

I dont understand china's want to increase the value of the yuan at present. The only thing going for them in that theyve got little kids working for 0.01 US cents per day which makes their products cheap. If the value of the yuan goes up, why would anyone purchase from them? It would slow their economy. They dont have a middle class to keep things going so the people will be super polarised.

add to that, arent they taxing, for example US car imports, to make their local made things a better buy for their citizens?

 

[SilverMark]

I also can't see gold being traded for oil at the moment - Russia, India and China want to increase gold holdings, not decrease

People misunderstand how a country can trade for oil in gold and still not have their reserves effected. It is simple to hedge your trade... i.e make a trade for 100oz Au and then purchase a forward contract for 100oz Au and stand for delivery. Net gold loss 0, trade done in gold.

Wouldn't the value of gold would sky rocket though as it would require significant revaluation which means huge devaluation in all fiat currencies?

 

[thatguy]

I also can't see gold being traded for oil at the moment - Russia, India and China want to increase gold holdings, not decrease

People misunderstand how a country can trade for oil in gold and still not have their reserves effected. It is simple to hedge your trade... i.e make a trade for 100oz Au and then purchase a forward contract for 100oz Au and stand for delivery. Net gold loss 0, trade done in gold.

Wouldn't the value of gold would sky rocket though as it would require significant revaluation which means huge devaluation in all fiat currencies?

and Bingo was his namo

 

[SilverMark]

If gold is $1700/oz and oil $100/barrel as an example, a trade of just 1 million barrels would require delivery of 60,000oz! there is not enough gold to allow for trade of oil in gold at current valuation.

Increasing price of gold of course means simply decrease in value of fiat dollars

It would have to signal the beginning of a world gold trading standard for all trade, not just oil otherwise all of the world's gold would quickly move to the oil rich nations only

I dont see it playing out

 

[thatguy]

If gold is $1700/oz and oil $100/barrel as an example, a trade of just 1 million barrels would require delivery of 60,000oz! there is not enough gold to allow for trade of oil in gold at current valuation.

Increasing price of gold of course means simply decrease in value of fiat dollars

It would have to signal the beginning of a world gold trading standard for all trade, not just oil otherwise all of the world's gold would quickly move to the oil rich nations only

I dont see it playing out

Something worth going to war to make sure it does not happen?

 

[lucky luke]

Gold isn't the answer, but it will benefit as the US$ continues to loose confidence as the World Reserve Currency.

Not sure about the
For me it is ........... ............. :lol: ............

 

[lucky luke]

Without a doubt the Petro dollar for the US is worth defending with WAR!

But so too is denying energy (aka oil and natural gas) to ones economic competitors (aka China).

 

[SilverMark]

They just won't trade in gold. If Iran demanded gold for oil from China et all, they would not buy the oil and the Iranian economy would collapse as it is entirely dependent oil production. Their customer's currencies aren't gold backed either so it would simply destroy them also, not just the US, if they paid in gold.

 

[lucky luke]

.............The only thing going for them in that theyve got little kids working for 0.01 US cents per day which makes their products cheap. .........

Sorry, but this gross generalisation and distortion of the Chinese situation does not do much for the credibility of the rest of your message/s.