Earlier this year in January I noted in a post that India was planning to avoid both the pesky US petrodollar as well as upcoming Iranian sanctions by reverting to the purchase oil with the world's oldest currency (and soon to be the most prominent reserve currency) gold.
Today we learn that Turkey has joined them:
Turkey has exchanged nearly 60 tons of gold for several million tons of Iranian crude oil, despite its promises to uphold Western sanctions on Iran’s energy sector, according to recent Turkish reports.
By using gold instead of money, Turkey is able to skirt Western sanctions on Iran’s oil trade, particularly those pertaining to SWIFT, the global money transfer service that until recently assisted the Central Bank of Iran and other Iranian financial institutions.
Over the past several months, Turkey has given Iran 60 tons of gold, or more than $3 billion, according to a July 8 report on the Turkish news site Vatan Online. The report was translated by the Open Source Center, a translation service used by the CIA.If central banks are storing gold as a reserve currency and using it to make purchases essentials, why shouldn't we?
And one final thought on oil priced in gold. Take a look at this graph. Though the two fluctuate quite a bit in terms of US Dollars, the relationship is much more stable when priced against each other. Notice how the yellow line (oil priced in gold) is relatively stable while the blue line (oil in dollars) is declining. Note that this graph is logarithmic so the difference is actually much bigger than it appears. The blue line goes from an index at 100 to near zero showing that the USD has lost nearly 98% of its oil purchasing power while gold has remained constant. You can read more on the dollar decline here.
Makes you wonder why airlines don't do the same as India & Turkey.