Oil for Gold: Iran Finds Buyer in India, Avoids Petro-Dollar

Through an unconfirmed report, it has been alleged that Iran recently found a buyer of its oil in the form of India. While the story itself is intriguing, given the current embargos placed on Iran, the key item in this story worth following is the currency used in which the trade was facilitated. Both parties bypassed the US dollar, and opted for gold; a move that brings challenges and an element of danger.

Historically, oil is priced in US dollars… period. Deviations from this norm have been met by strict retribution, in a fashion that causes many conspiracy theorists to flood the internet with fear and rage. Two of the most recent examples eerily coincided with the death of a leader that followed armed conflicts with the West.

In 2000, Iraq began to sell oil in euros, citing its hesitance to use the currency of its enemy. Buyers didn’t have a very large window of opportunity to trade oil for euros, as the expensive invasion of Iraq in search of WMDs began in 2003.  Saddam Hussein was captured, tried and hanged. There’s no doubting the fact that he was a war criminal, but the timing of his being targeted is suspect, given his previous relations with the United States against Iran.

Last year, Muammar Gaddafi was deposed of power, and subsequently assassinated. According to more than a few observers, Gaddafi’s plan prior to the Libyan uprising was to sell Libyan oil in exchange for a new unilateral African currency called the gold dinar. Now again, this is mere speculation, but the timing is a wacky coincidence.

Flashing forward to the present, and the drumbeat towards war with Iran is getting louder. The official reasoning being used is the threat of Iran developing a nuclear weapon, but this news regarding India and Iran sidestepping the US dollar is a little unsettling.

Since the EU finally decided upon an oil embargo on Iran, the fact that drastic measures are being made out of Tehran is not surprising. What is surprising is that India is a willing partner in the deal. And the fact that India is already a nuclear power, it can be assumed that their punishment will not be as harsh.

The two banks involved in this transaction are India’s state-owned UCO Bank and Turkey’s state-owned Halkbank. Neither are currently in business with the US, thus are less susceptible to sanctions.  With the trade being rumored to entail the equivalence of $12 billion, in total approximately 7.2 million ounces of gold will change hands.

Not to be overlooked is the fact that Russia, too, is still dealing with Iran. Instead of gold or US dollars, Russia is trading with Iran in each of their own domestic currencies. As well, if Iran begins accepting gold or local currencies for its oil, there is a strong possibility that China could also enter the mix and utilize a gold for oil exchange.

Should this become the norm, expect the price of gold to rise in congruence with its new trading ability. That is, until the drumbeat of war drowns out the calls coming from potential buyers.

G. Joel Chury
Editor in Chief
VantageWire.com