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A Very Different Take On The "Iran Barters Gold For Food" Story

Tyler Durden's picture





 

Much has been made of today's Reuters story how "Iran turns to barter for food as sanctions cripple imports" in which we learn that "Iran is turning to barter - offering gold bullion in overseas vaults or tankerloads of oil - in return for food", and whose purpose no doubt is to demonstrate just how crippled the Iranian economy is as a result of the ongoing US embargo. Incidentally this story is 100% the opposite of the Debka-spun groundless disinformation from a few weeks ago that India was preparing to pay for Iran's oil in gold (they got the asset right, but the flow of funds direction hopelessly wrong). While there is certainly truth to the fact that the US is actively seeking to destabilize the local government, we wonder why? After all as the opportunity cost for the existing regime to do something drastic gets ever lower as the popular resentment rises, leaving the local administration with few options but to engage either the US or Israel. Unless of course, this is the ultimate goal. Yet going back to the Reuters story, it would be quite dramatic, if only it was not the case that Iran has been laying the groundwork for a barter economy for many months now, something which various other analysts perceive as the basis for the destruction of the petrodollar system. Perhaps regular readers will recall that back in July, we wrote an article titled "China And Iran To Bypass Dollar, Plan Oil Barter System." Specifically, we wrote that "according to the FT, China has decided to commence a barter system in which Iranian oil is exchanged directly for Chinese exports. The net result: not only a slap for the US Dollar, but implicitly for all fiat intermediaries, as Iran and China are about to prove that when it comes to exchanging hard resources for critical Chinese goods and services, the world's so called reserve currency is completely irrelevant." Seen in this light the fact that Iran is actually proceeding with a barter system, something that had been in the works for quite a while, actually puts the Reuters story in a totally different light: instead of one predicting the imminent demise of the Iranian economy, the conclusion is inverted, and underscores the culmination of what may have been an extended barter preparation period, has finally gone from beta to (pardon the pun) gold, and Iran is now successfully engaging in global trade without the use of the historical reserve currency.

Here is how Reuters presents its findings:

Difficulty paying for urgent import needs has contributed to sharp rises in the prices of basic foodstuffs, causing hardship for Iranians with just weeks to go before an election seen as a referendum on President Mahmoud Ahmadinejad's economic policies.

 

New sanctions imposed by the United States and European Union to punish Iran for its nuclear program do not bar firms from selling Iran food but they make it difficult to carry out the international financial transactions needed to pay for it.

 

Reuters surveys of commodities traders around the globe show that since the start of the year, Iran has had trouble securing imports of basic staples like rice, cooking oil, animal feed and tea. Grain ships have been held at its ports, refusing to unload until payment can be received for cargo.

 

With Iran's rial currency tumbling, the prices of rice, bread and meat in Iranian bazaars have doubled or more in dollar terms in recent months.

 

Iranian grain importers have in the past side-stepped sanctions by booking business through the United Arab Emirates, traders said, but this option was cut off by the UAE government in response to sanctions.

 

Iran has been trading oil in currencies like Japanese yen, South Korean won and Indian rupees, but such deals make it difficult to repatriate profits.

 

Deals revealed Thursday appear to be among the first in which Iran has had to result to offering cashless barter to avoid sanctions, a sign of new urgency as it seeks to buy food and get around the financial restrictions.

The article's punchline:

Another trader said: "As the shipments of grain are so large, barter or gold payments are the quickest option."

 

Details of how the barter deals work are still unclear as the payments problem is so new, and traders did not disclose the exact size of such deals.

Perhaps a different spin on the news is that gold is "suddenly" just as equially accepted as a pseudo-reserve currency virtually everywhere in the world, as the dollar: a blasphemous concept to many legacy economists for sure. But the truth is that gold and barter appear to be working. Especially when one considers what the FT had to say on this topic back in July 2011:

Tehran and Beijing are in talks about using a barter system to exchange Iranian oil for Chinese goods and services, as US financial sanctions have blocked China from paying at least $20bn for oil imports.

 

The US sanctions against Iran, which make it extremely difficult to conduct dollar-denominated business, mean that China could owe the oil-rich nation as much as $30bn, according to people familiar with the problem.

 

They said the unpaid oil bills had built up over the past two years and the governments, which are in early-stage talks, were looking at how to “offset” the debt.

 

Some Iranian officials are growing increasingly angry about the inability of the country’s largest oil customers to pay cash, a problem that has contributed to a shortage of hard currency and has hindered the central bank from defending the Iranian rial, which has been sharply devalued over the past month.

 

China and India together buy about one-third of Iran’s oil, the country’s economic lifeblood. China’s oil imports from Iran have risen 49 per cent this year, according to Reuters.

And what prevents China, whose secretive gold stockpiling is the stuff of legends to migrate from a barter system to one of gold, whereby the two countries exchange goods not in the form of barter but using the yellow metal currency equivalent. Furthermore, how would the world react if the entire Asian continent was found to be transacting in gold, coupled with the discovery that China's gold holdings have soared, very much the same way it disclosed its shocking gold expansion back in April 2009 when overnight its gold holdings went from 600 tonnes to 1054 tonnes:

Shanghai/Beijing: China disclosed on Friday that it had secretly raised its gold reserves by three-quarters since 2003, increasing its holdings to 1,054 tonnes and confirming years of speculation it had been buying.

 

Hu Xiaolian, head of the State Administration of Foreign Exchange (SAFE), told Xinhua news agency in an interview that the country’s reserves had risen by 454 tonnes from 600 tonnes since 2003, when China last adjusted its state gold reserves figure.

 

The confirmation of its surreptitious stockpiling is likely to fuel market talk about Beijing’s ability to buy secretly and its ambitions for spending its nearly $2 trillion (around Rs100 trillion) pile of savings. And not just in gold: copper and other metals markets are booming thanks to China’s barely visible hand.

 

Speculation has gathered speed over the last year, since the tumbling dollar has threatened to weaken China’s buying power—and give it yet more reason to diversify into gold, oil and metals.

Not only that, but consider our post from September 2011: "Wikileaks Discloses The Reason(s) Behind China's Shadow Gold Buying Spree"

Wondering why gold at $1850 is cheap, or why gold at double that price will also be cheap, or frankly at any price? Because, as the following leaked cable explains, gold is, to China at least, nothing but the opportunity cost of destroying the dollar's reserve status. Putting that into dollar terms is, therefore, impractical at best, and illogical at worst. We have a suspicion that the following cable from the US embassy in China is about to go not viral but very much global, and prompt all those mutual fund managers who are on the golden sidelines to dip a toe in the 24 karat pool. The only thing that matters from China's perspective is that "suppressing the price of gold is very beneficial for the U.S. in maintaining the U.S. dollar's role as the international reserve currency. China's increased gold reserves will thus act as a model and lead other countries towards reserving more gold. Large gold reserves are also beneficial in promoting the internationalization of the RMB." Now, what would happen if mutual and pension funds finally comprehend they are massively underinvested in the one asset which China is without a trace of doubt massively accumulating behind the scenes is nothing short of a worldwide scramble, not so much for paper, but every last ounce of physical gold...

In other words, we humbly submit that instead of taking the Reuters article at face value, and one may certainly do that, what may instead be happening as Iran migrates to a non-dollar based international trade system is the testing of the waters of a non-USD regime, more impotantly, one quietly encourage by  China, who is a very complicit participant in the transition to a world in which the US Dollar suddenly finds itself irrelvant. Whether replaced by gold, or a currency backed by a basket of hard assets (the CNY?) we don't know. However, we know one thing: China needs Iran's crude, which at last check was among the world's top 5 oil producers, and had the world's third largest proven oil reserves after Saudi Arabia and Canada, and despite media reports that it is actively looking for crude import alternatives, we would allege that this is nothing but purposeful disinformation. After all why would China comply with US demands for an enhanced Iranian embargo? The whole point of China's foreign policy to date has been to counteract US pushes and provocations abroad without fail. Why should it make an exception now. Frankly, we don't buy it, especially when one considers last summer's FT piece.

 

Finally, we leave readers with this interesting take from Casey Research's Marin Katusa, who looks at recent development in a rather comparable light.

Will Iran Kill the Petrodollar? (source)

The official line from the United States and the European Union is that Tehran must be punished for continuing its efforts to develop a nuclear weapon. The punishment: sanctions on Iran's oil exports, which are meant to isolate Iran and depress the value of its currency to such a point that the country crumbles.

But that line doesn't make sense, and the sanctions will not achieve their goals. Iran is far from isolated and its friends – like India – will stand by the oil-producing nation until the US either backs down or acknowledges the real matter at hand. That matter is the American dollar and its role as the global reserve currency.

The short version of the story is that a 1970s deal cemented the US dollar as the only currency to buy and sell crude oil, and from that monopoly on the all-important oil trade the US dollar slowly but surely became the reserve currency for global trades in most commodities and goods. Massive demand for US dollars ensued, pushing the dollar's value up, up, and away. In addition, countries stored their excess US dollars savings in US Treasuries, giving the US government a vast pool of credit from which to draw.

We know where that situation led – to a US government suffocating in debt while its citizens face stubbornly high unemployment (due in part to the high value of the dollar); a failed real estate market; record personal-debt burdens; a bloated banking system; and a teetering economy. That is not the picture of a world superpower worthy of the privileges gained from having its currency back global trade. Other countries are starting to see that and are slowly but surely moving away from US dollars in their transactions, starting with oil.

If the US dollar loses its position as the global reserve currency, the consequences for America are dire. A major portion of the dollar's valuation stems from its lock on the oil industry – if that monopoly fades, so too will the value of the dollar. Such a major transition in global fiat currency relationships will bode well for some currencies and not so well for others, and the outcomes will be challenging to predict. But there is one outcome that we foresee with certainty: Gold will rise. Uncertainty around paper money always bodes well for gold, and these are uncertain days indeed.

The Petrodollar System

To explain this situation properly, we have to start in 1973. That's when President Nixon asked King Faisal of Saudi Arabia to accept only US dollars as payment for oil and to invest any excess profits in US Treasury bonds, notes, and bills. In exchange, Nixon pledged to protect Saudi Arabian oil fields from the Soviet Union and other interested nations, such as Iran and Iraq. It was the start of something great for the US, even if the outcome was as artificial as the US real-estate bubble and yet constitutes the foundation for the valuation of the US dollar.

By 1975, all of the members of OPEC agreed to sell their oil only in US dollars. Every oil-importing nation in the world started saving its surplus in US dollars so as to be able to buy oil; with such high demand for dollars the currency strengthened. On top of that, many oil-exporting nations like Saudi Arabia spent their US dollar surpluses on Treasury securities, providing a new, deep pool of lenders to support US government spending.

The "petrodollar" system was a brilliant political and economic move. It forced the world's oil money to flow through the US Federal Reserve, creating ever-growing international demand for both US dollars and US debt, while essentially letting the US pretty much own the world's oil for free, since oil's value is denominated in a currency that America controls and prints. The petrodollar system spread beyond oil: the majority of international trade is done in US dollars. That means that from Russia to China, Brazil to South Korea, every country aims to maximize the US-dollar surplus garnered from its export trade to buy oil.

The US has reaped many rewards. As oil usage increased in the 1980s, demand for the US dollar rose with it, lifting the US economy to new heights. But even without economic success at home the US dollar would have soared, because the petrodollar system created consistent international demand for US dollars, which in turn gained in value. A strong US dollar allowed Americans to buy imported goods at a massive discount – the petrodollar system essentially creating a subsidy for US consumers at the expense of the rest of the world. Here, finally, the US hit on a downside: The availability of cheap imports hit the US manufacturing industry hard, and the disappearance of manufacturing jobs remains one of the biggest challenges in resurrecting the US economy today.

There is another downside, a potential threat now lurking in the shadows. The value of the US dollar is determined in large part by the fact that oil is sold in US dollars. If that trade shifts to a different currency, countries around the world won't need all their US money. The resulting sell-off of US dollars would weaken the currency dramatically.

So here's an interesting thought experiment. Everybody says the US goes to war to protect its oil supplies, but doesn't it really go to war to ensure the continuation of the petrodollar system?

The Iraq war provides a good example. Until November 2000, no OPEC country had dared to violate the US dollar-pricing rule, and while the US dollar remained the strongest currency in the world there was also little reason to challenge the system. But in late 2000, France and a few other EU members convinced Saddam Hussein to defy the petrodollar process and sell Iraq's oil for food in euros, not dollars. In the time between then and the March 2003 American invasion of Iraq, several other nations hinted at their interest in non-US dollar oil trading, including Russia, Iran, Indonesia, and even Venezuela. In April 2002, Iranian OPEC representative Javad Yarjani was invited to Spain by the EU to deliver a detailed analysis of how OPEC might at some point sell its oil to the EU for euros, not dollars.

This movement, founded in Iraq, was starting to threaten the dominance of the US dollar as the global reserve currency and petro currency. In March 2003, the US invaded Iraq, ending the oil-for-food program and its euro payment program.

There are many other historic examples of the US stepping in to halt a movement away from the petrodollar system, often in covert ways. In February 2011, Dominique Strauss-Kahn, managing director of the International Monetary Fund (IMF), called for a new world currency to challenge the dominance of the US dollar. Three months later a maid at the Sofitel New York Hotel alleged that Strauss-Kahn sexually assaulted her. Strauss-Kahn was forced out of his role at the IMF within weeks; he has since been cleared of any wrongdoing.

War and insidious interventions of this sort may be costly, but the costs of not protecting the petrodollar system would be far higher. If euros, yen, renminbi, rubles, or for that matter straight gold, were generally accepted for oil, the US dollar would quickly become irrelevant, rendering the currency almost worthless. As the rest of the world realizes that there are other options besides the US dollar for global transactions, the US is facing a very significant – and very messy – transition in the global oil machine.

The Iranian Dilemma

Iran may be isolated from the United States and Western Europe, but Tehran still has some pretty staunch allies. Iran and Venezuela are advancing $4 billion worth of joint projects, including a bank. India has pledged to continue buying Iranian oil because Tehran has been a great business partner for New Delhi, which struggles to make its payments. Greece opposed the EU sanctions because Iran was one of very few suppliers that had been letting the bankrupt Greeks buy oil on credit. South Korea and Japan are pleading for exemptions from the coming embargoes because they rely on Iranian oil. Economic ties between Russia and Iran are getting stronger every year.

Then there's China. Iran's energy resources are a matter of national security for China, as Iran already supplies no less than 15% of China's oil and natural gas. That makes Iran more important to China than Saudi Arabia is to the United States. Don't expect China to heed the US and EU sanctions much – China will find a way around the sanctions in order to protect two-way trade between the nations, which currently stands at $30 billion and is expected to hit $50 billion in 2015. In fact, China will probably gain from the US and EU sanctions on Iran, as it will be able to buy oil and gas from Iran at depressed prices.

So Iran will continue to have friends, and those friends will continue to buy its oil. More importantly, you can bet they won't be paying for that oil with US dollars. Rumors are swirling that India and Iran are at the negotiating table right now, hammering out a deal to trade oil for gold, supported by a few rupees and some yen. Iran is already dumping the dollar in its trade with Russia in favor of rials and rubles. India is already using the yuan with China; China and Russia have been trading in rubles and yuan for more than a year; Japan and China are moving towards transactions in yen and yuan.

And all those energy trades between Iran and China? That will be settled in gold, yuan, and rial. With the Europeans out of the mix, in short order none of Iran's 2.4 million barrels of oil a day will be traded in petrodollars.

With all this knowledge in hand, it starts to seem pretty reasonable that the real reason tensions are mounting in the Persian Gulf is because the United States is desperate to torpedo this movement away from petrodollars. The shift is being spearheaded by Iran and backed by India, China, and Russia. That is undoubtedly enough to make Washington anxious enough to seek out an excuse to topple the regime in Iran.

Speaking of that search for an excuse, this is interesting. A team of International Atomic Energy Agency (IAEA) inspectors just visited Iran. The IAEA is supervising all things nuclear in Iran, and it was an IAEA report in November warning that the country was progressing in its ability to make weapons that sparked this latest round of international condemnation against the supposedly near-nuclear state. But after their latest visit, the IAEA's inspectors reported no signs of bomb making. Oh, and if keeping the world safe from rogue states with nuclear capabilities were the sole motive, why have North Korea and Pakistan been given a pass?

There is another consideration to keep in mind, one that is very important when it comes to making some investment decisions based on this situation: Russia, India, and China – three members of the rising economic powerhouse group known as the BRICs (which also includes Brazil) – are allied with Iran and are major gold producers. If petrodollars go out of vogue and trading in other currencies gets too complicated, they will tap their gold storehouses to keep the crude flowing. Gold always has and always will be the fallback currency and, as mentioned before, when currency relationships start to change and valuations become hard to predict, trading in gold is a tried and true failsafe.

2012 might end up being most famous as the year in which the world defected from the US dollar as the global currency of choice. Imagine the rest of the world doing the math and, little by little, beginning to do business in their own currencies and investing ever less of their surpluses in US Treasuries. It constitutes nothing less than a slow but sure decimation of the dollar.

That may not be a bad thing for the United States. The country's gargantuan debts can never be repaid as long as the dollar maintains anything close to its current valuation. Given the state of the country, all that's really left supporting the value in the dollar is its global reserve currency status. If that goes and the dollar slides, maybe the US will be able to repay its debts and start fresh. That new start would come without the privileges and ingrained subsidies to which Americans are so accustomed, but it's amazing that the petrodollar system has lasted this long. It was only a matter of time before something would break it down.

Finally, the big question: How can one profit from this evolving situation? Playing with currencies is always very risky and, with the global game set to shift to significantly, it would require a lot of analysis and a fair bit of luck. The much more reliable way to play the game is through gold. Gold is the only currency backed by a physical commodity; and it is always where investors hide from a currency storm. The basic conclusion is that a slow demise of the petrodollar system is bullish for gold and very bearish for the US dollar.

 


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Thu, 02/09/2012 - 22:34 | Link to Comment Xkwisetly Paneful
Xkwisetly Paneful's picture

I really hope you visit how easily you succombed to the unadulaterated ramblings of a bunch of lunatics.

If Iran could bring down the petro dollar don't you think they or someone else using them would have done that already?

Despite an ocean plus of reasons why the dollar should be significantly less relevant today vs 40yrs ago and yet it is largely as relevant as ever. Of course there has been no shortage of people orating the lunatic train of thought for as long as I can remember-first it was learn to speak German, than Japanese next it will be Chinese.

When the world loves the US is the time start worrying and when you find yourself nodding along with the lunatics it is time to start employing your brain again.

Thu, 02/09/2012 - 16:40 | Link to Comment Joebloinvestor
Joebloinvestor's picture

You need gold to make a fissionable nuke, so maybe they can disarm them this way.

Thu, 02/09/2012 - 16:43 | Link to Comment cossack55
cossack55's picture

Wait, wait. If suddenly Iran's CB is stuffed with gold, then the only thing standing behind their currency is a relic, as opposed to the "full faith and credit of the USSA".  Hmmmmm........

Thu, 02/09/2012 - 16:44 | Link to Comment RobotTrader
RobotTrader's picture

Who gives a flying rat's ass about Iran?

 

Obviously, the market is ignoring it.

They are dumping gold stocks once again and piling into consumer names like Whole Foods

Which is breaking out to new highs on gigantic volume today.

http://www.wallstreetbear.com/board/view.php?topic=94424&post=342710

Thu, 02/09/2012 - 16:50 | Link to Comment Treason Season
Treason Season's picture

Who gives a flying rat's ass about Rowbuttard?

Thu, 02/09/2012 - 17:09 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Robo I have been telling you about WFM since it was in the $20s and this is the first time I have ever heard you mention it!

Thu, 02/09/2012 - 21:21 | Link to Comment Don Birnam
Don Birnam's picture

I am coming to the belief that "RobotTrader" is quite the genuine article: an AI post generator, tasked to precipitate the highest number of choleric responses possible -- whilst neither answering nor refuting any questions put to it regarding its "trade ideas."

If a "Robo" does indeed exist in some physical form, it likely bears a strong resemblance to one of the plasticine automatons from Kraftwerk, entering keystrokes to the synthesised bars of "Trans-Europe Express."

http://29.media.tumblr.com/tumblr_limybhQS4J1qaxnp6o1_500.jpg

Thu, 02/09/2012 - 16:53 | Link to Comment drink or die
drink or die's picture

The only way to reply to a really good article is with a really good troll, right Robo?

Thu, 02/09/2012 - 17:00 | Link to Comment AC_Doctor
AC_Doctor's picture

RoboRoach, you should be investing in companies like Emergency Essentials because when the BIG crash comes in the next 6 months, sales of long term storage food and survival supplies will be BOOMING!

Thu, 02/09/2012 - 17:01 | Link to Comment brewing
brewing's picture

yes robo, the idiot of omaha said today that equities will outperform pm's and bonds over extended periods of time.  keep jumping on that bandwagon troll...

Thu, 02/09/2012 - 17:11 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

100% in stocks everybody!  Come on, follow the windbag douchebags!  Come on!!!!  There's a reason Uncle Warren is a billionaire and not you!  Come on!!!!

Thu, 02/09/2012 - 17:46 | Link to Comment cossack55
cossack55's picture

Is this the same Whole Foods who just bent over and dropped trou for Monsanto?  Organic my ass.

Thu, 02/09/2012 - 18:30 | Link to Comment Sean7k
Sean7k's picture

It will make it easier to identify those terrorists with their home grown food- having only two arms, eyes, legs, etc.

Thu, 02/09/2012 - 17:56 | Link to Comment SgtShaftoe
SgtShaftoe's picture

I used to like your posts when you put in the pretty girls.  Now it's just, well, sad.  We care about Iran, because our blind idiotic leaders happen to be very close to lighting off a chain of events that could lead to WWIII.  That's why we care about Iran.  Also, don't you give a shit about your fellow man, even if they happen to live in Iran?  There are beautiful people that live there, and many will suffer, women, children... over what?  Pakistan has dozens, Israel has over 100, you probably have one buried in your back yard.   

More pretty girls!

Thu, 02/09/2012 - 18:44 | Link to Comment CompassionateFascist
CompassionateFascist's picture

Along w GropeOn.

Thu, 02/09/2012 - 19:54 | Link to Comment luna_man
luna_man's picture

 

 

"RoboTrader", if you own "whole foods", or not, please, tell us you just purchased 250 shares.

Just think, the stock is "breaking out to new highs"!!

 

 LOOK AT ALL THAT VOLUME!

Thu, 02/09/2012 - 16:47 | Link to Comment pazmaker
pazmaker's picture

Wow very interesting read!   It really helps one to see all the pieces of the puzzle coming together.  Prepare accordingly, lots of instability on the horizon.  something has got to give.  I don't like Simon Black but I'm finding it harder to convince myself to stay in the USA.   Preparandome para salir de aqui en 2 anos vamanos!

Thu, 02/09/2012 - 16:49 | Link to Comment illyia
illyia's picture

I just have to say, TD, that is some hell of an analysis. Watch your back.

Amazing.

i.

Thu, 02/09/2012 - 16:51 | Link to Comment non_anon
non_anon's picture

of course gold, silver, et al and barter were successfully used by nations over the past 6,000 odd years before the dollar hegemony and other tp curriences.

Thu, 02/09/2012 - 16:56 | Link to Comment Global Hunter
Global Hunter's picture

Yes what it boils down to is our main "industry" in the west is financial intemediary, the militairy industrial complex serves to protect our main industry.  If people transact through any kind of commodity between themselves and by pass the western economic system we lose the ability to conduct the transaction and take a big spread for our troubles...and then what av ya got?

Thu, 02/09/2012 - 16:54 | Link to Comment Zero Govt
Zero Govt's picture

it's the beginning of the end of the US Dollar (and America)

Iran is a page note.. it's the pages on China-Japan, China-Russia, China-Brazil and China-Africa using their own currencies that are the foundations for the US flag sinking in international trade

Once it trickles, soon it pours

the US Govts fantastic foreign policies are bum-rushing the end of their tatty worthless paper ...Benny has lost it (all)

Thu, 02/09/2012 - 16:57 | Link to Comment Global Hunter
Global Hunter's picture

I thought it was easy to put the genie back inside the bottle

Thu, 02/09/2012 - 17:08 | Link to Comment Zero Govt
Zero Govt's picture

Benny never solves anything.. he plasters them over with whitewash

watch the mould come back on all he's 'fixed' : Wall Street, US Treasuries, Europe and ultimately the Dollar, his ultimate responsibility (that he flunked) 

Thu, 02/09/2012 - 17:13 | Link to Comment resurger
resurger's picture

Zgov! Karma is a bitch man!

In an interview with Barron’s financial magazine with Bunker Hunt (Hunt Brothers)

 ‘‘Just about anything you buy, rather than paper, is better,” 

“…If you don’t like gold, use silver, or diamonds or copper, but something. Any damn fool can run a printing press.”

Thu, 02/09/2012 - 16:54 | Link to Comment xcehn
xcehn's picture

Will economic strangulation lead to capitulation?  Or will the mullahs rather die and go to heaven (holy war) than surrender their HEU programme?  Hmmmm 

Thu, 02/09/2012 - 17:00 | Link to Comment Zero Govt
Zero Govt's picture

this is only Round 1

the American-Jew thugs are ramping up their global bully-boy tactics (always a winner that) and throwing their toys outta pram when they don't get their petulent way like at the UN (such skilled 'diplomacy')

Round 2 will probably go to the AJ thugs too

Rounds 3, 4 and 5, the Arab Spring springing even higher into gear across the Middle East at the sight of an Arab neighbour being bullied by the usual retards is where the real fireworks begin 

if Saudi falls watch out

 

Thu, 02/09/2012 - 17:17 | Link to Comment xcehn
xcehn's picture

I like the ZH take on this story, but I'm afraid that the sheeple face-value interpretation is the way I went.

Thu, 02/09/2012 - 20:35 | Link to Comment Likstane
Likstane's picture

I like the ZH take on this story, but I'm afraid that the sheeple face-value interpretation is the way I will continue to believe/want it. 

fixed it

Thu, 02/09/2012 - 16:57 | Link to Comment tony bonn
tony bonn's picture

"...leaving the local administration with few options but to engage either the US or Israel. Unless of course, this is the ultimate goal..."

well, buckwheat, i think that's the plan....and the iranians knew it which is why they made preparations...but you did find the raw nerve - that chutzpah - nay terrorism - of iran giving the usd the middle finger....that is iran's real sin - the nuclear malarky is just so much horsecrap that the rockefeller-mic-yale-cia terrorists have used to obfuscate the real issue.....hence 3 carrier groups are required to subdue iran....

Thu, 02/09/2012 - 19:20 | Link to Comment roadhazard
roadhazard's picture

Iran has nothing that anyone would call an air force. 

Thu, 02/09/2012 - 16:57 | Link to Comment Pancho Villa
Pancho Villa's picture

As long as they have gold or "black gold", I doubt the Iranians will go hungry.

Whereas people betting on the dollar holding its purchasing power might not be so lucky.

Thu, 02/09/2012 - 16:58 | Link to Comment fonzannoon
fonzannoon's picture

how about that vix eh? Eh!

Thu, 02/09/2012 - 17:16 | Link to Comment Hippocratic Oaf
Hippocratic Oaf's picture

Yes, bought a bundle of TVIX on Tuesday at 14.

A rockin' market as Robo says and the VIX is up too.

Even the retail motherfuckers are getting scared.

Thu, 02/09/2012 - 17:01 | Link to Comment Frastric
Frastric's picture

Hmm Iran threatening the petrodollar system means the USA declaring war on Iran for some twisted purpose (perhaps to support some anti government resistance group) in the next year or two years time. I mean Libya tried to threaten the petrodollar system sometime ago and look what happened...

Thu, 02/09/2012 - 17:06 | Link to Comment krispkritter
krispkritter's picture

Rickards on Iran: http://www.youtube.com/watch?feature=player_embedded&v=C6HKu8guMl8

(and a reference to ZH at 6:25!)

Thu, 02/09/2012 - 17:09 | Link to Comment Taint Boil
Taint Boil's picture

 

 

Good post....

Remember there are women and children in Iran.

Bombing for peace is like fucking for virginity.

Thu, 02/09/2012 - 23:10 | Link to Comment Cathartes Aura
Cathartes Aura's picture

as there are in Afghanistan, and Iraq, and. . . all the other countries on these bloody hands.

Thu, 02/09/2012 - 17:11 | Link to Comment bigdumbnugly
bigdumbnugly's picture

Yet going back to the Reuters story, it would be quite dramatic, if only it was not the case that Iran has been laying the groundwork for a barter economy for many months now, something which various other analysts perceive as the basis for the destruction of the petrodollar system. Perhaps regular readers will recall that back in July, we wrote an article titled "China And Iran To Bypass Dollar, Plan Oil Barter System." Specifically, we wrote that "according to the FT, China has decided to commence a barter system in which Iranian oil is exchanged directly for Chinese exports. The net result: not only a slap for the US Dollar, but implicitly for all fiat intermediaries, as Iran and China are about to prove that when it comes to exchanging hard resources for critical Chinese goods and services, the world's so called reserve currency is completely irrelevant."

that's why ranting andy and others have been saying it won't be the money value of your pm's that will matter - but the number of ounces you have.

Thu, 02/09/2012 - 17:14 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

It's also the main reason the DXY has increased in "value".  It's volacity is down, and it tightened its perceived worth.

There will be a minute when the volacity increases, and in that minute, the dollar will be....gone.

Thu, 02/09/2012 - 17:16 | Link to Comment marcusfenix
marcusfenix's picture

but here's the kicker, if the Western PTB's go to war over the petro dollar, that gives China, Russia, India and the rest the opportunity to turn Iran into a trap much the same that the Soviets fell into, the "Afgan trap" back in the eighties. they don't even have to get directly involved, just supply Iran and there allies with enough weapons, training, support and resources to resist, and they can slowly bleed NATO and further drain the western Treasuries driving their public sectors further into debt and economies further into depression.  without a quick decisive victory, public support and morale would quickly erode and once the flag draped coffins start adding up, who knows, people may even start to take more direct methods of displaying their displeasure. 

if the east plays their cards right, the west could lose either way...

 

Thu, 02/09/2012 - 18:09 | Link to Comment Eisenhorn
Eisenhorn's picture

Good plan.  China wants to bankrupt the US, thus rendering the US incapable of buying all their cheap crap, thus bankrupting China who also holds trillions in US Debt.

They could call it Operation China-cide.

Next plan.....

Thu, 02/09/2012 - 20:26 | Link to Comment Citxmech
Citxmech's picture

First off, we're already bankrupt.  Which we both know means that gig where we trade Benny's Clown Bux for real, value-added goods is winding down anyway.

Thu, 02/09/2012 - 22:14 | Link to Comment deflator
deflator's picture

 China buying US debt so that US "consumers" could buy Chinese goods is the old plan. The new plan is for the US "consumer" to decline because the global pie isn't big enough for Chinese consumption to grow alongside US consumption. If the global pie of resources isn't growing fast enough for growth in Chinese consumption then it has to come from somewhere?

Thu, 02/09/2012 - 17:18 | Link to Comment Hannibal
Hannibal's picture

Hm,...looks like all the balls are in strange lands, far away from the USofA.

Thu, 02/09/2012 - 17:22 | Link to Comment djudy003
djudy003's picture

One of the most amazing articles I have read, it shows how the US has forced the entire world to share its wealth with it.

Thu, 02/09/2012 - 17:23 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

First, there hasn't been much trade done this way or else we would have already seen a large spike in demand.  Unlike the Greece bailout, it isn't priced in.

Second, this is pretty badass.  We knew Asia had already moved away from the dollar, but this answers how they did.

So, if this is at all correct, we should begin to see more volacity come into all markets as the dollars and USTs are dumped for gold and commodities.

Thu, 02/09/2012 - 17:29 | Link to Comment InconvenientCou...
InconvenientCounterParty's picture

Iran is a determined mortal threat to the U.S., all secular western civilization and non-Muslims wherever they may be.

Time is on their side and it's readily apparent.

So yes, the end of WW3 (started in 1971) is near and WW4 is nearing its commencement. The Earth is a (shrinking) closed system so there is virtually no other possible outcome. There's not going to be peace on this rock any time soon.

 

Thu, 02/09/2012 - 17:40 | Link to Comment ChacoFunFact
ChacoFunFact's picture

 


Dwindling time, rising tension make Iran top fear

http://tinyurl.com/6rxdpgl

Thu, 02/09/2012 - 17:45 | Link to Comment Dermasolarapate...
Dermasolarapaterraphatrima's picture

Rickards' book, Currency Wars, implies many countries will move away from the dollar as an exchange medium into their local currencies (as China and Russia and Brazil and India have already done) and may turn to bartering commodities, like Iran seems to be doing now.

It's a good book worth a read espcially if you are new to the entire currency/IMF/gold/dollar debate thing.

Thu, 02/09/2012 - 17:46 | Link to Comment zerotohero
zerotohero's picture

I RAN -  U RAN - WE ALL RAN FROM FIAT PAPER DOLLARS

Thu, 02/09/2012 - 17:47 | Link to Comment Waterfallsparkles
Waterfallsparkles's picture

If Iran is trading Gold and Oil for Food.  Why in the world are we paying so much for Oil?  If America is the Bread Basket of the World we should be either getting more for our food or lower Oil prices.

Thu, 02/09/2012 - 17:54 | Link to Comment Randall Cabot
Randall Cabot's picture

We don't get our oil from Iran.

Thu, 02/09/2012 - 18:10 | Link to Comment Eisenhorn
Eisenhorn's picture

....yet.

Thu, 02/09/2012 - 20:57 | Link to Comment Money 4 Nothing
Money 4 Nothing's picture

We get our oil from OPEC, now, who runs OPEC? Iran, and who the fuck is this guy?  Iran OPEC Governor Mohammad Ali Khatibi.

or this guy?

Mr. M.A. Khatibi Tabatabai. Iran

Governor for OPEC

or how 'bout this guy?

HE Eng. Rostam Ghasemi. Iran

Minister of Petroleum

Head of Delegation

It is simply their turn to run it, Iran runs OPEC now. We get our oil through OPEC which has been contributed from OPEC Nations.

Iran's chairmanship over the biggest oil exporting organization

Iran has taken charge of the organization at the time of its peak power. The achievement was outcome of effective energy diplomacy adopted by Iran. This is also important because of rising demand and increasing prices which call for better management of international oil market by an organization which is currently playing a more effective role in managing that market.

Iran and other member countries maintain that OPEC has been a great success in the past 50 years. It is also great to be at the helm of the organization which can produce more than 30 million barrels of oil per day.

Experts have shown different reactions to Iran's chairmanship of OPEC.

G L Group Institute has reported that Iran, as chair of OPEC, can greatly influence the oil market.

It has noted that Iran can also make structural changes to OPEC. G L Group maintains that chairmanship of OPEC will also increase Iran's political clout at international level. The institute announced that OPEC, under chairmanship of Iran, was supposed to raise its share of international oil production from 40 percent to 46 percent in 2011.

Some American officials have got ready to start negotiations with OPEC to see the results of Iran's chairmanship over the organization.

Deutsche Welle announced that all important sessions of OPEC in 2011, especially its important annual meeting with the European Union will be presided over by Iran.

Deutsche Welle has judged that Iran's chairmanship over OPEC is generally positive.

Other Western countries maintain that Iran's chairmanship of OPEC will raise global oil prices to 100 barrels per day in 2011.

Now, with that said, do you now see why they need liberating? Nuclear weapons my ass, they refused the Petro Dollar. They can have a strangle hold on the world's oil imports if they wanted too.

From what I understand, to deal with them you have to enter their bourse with a basket of currencies.

The Iranian oil bourse is intended as an oil exchange for petroleum, petrochemicals and gas in various currencies other than the U.S. dollar, primarily the euro and Iranian rial and a basket of other major (non-U.S.) currencies.

Western analysts said that at a time when the U.S. dollar is as vulnerable as it has ever been, Iran is piling on the pressure with their oil exchange. The thing that will kill the U.S. dollar as the world’s reserve currency faster than the U.S. debt default is if oil producers and consumers trade oil in other currencies.

Moreover..


Thu, 02/09/2012 - 21:34 | Link to Comment Money 4 Nothing
Money 4 Nothing's picture

Iran’s Oil Bourse: A Threat to the U.S. Economy?

While Iran’s nuclear program has become a major focus of the international media, there are many who strongly believe that the program is only a cover for the U.S. government’s true motive in a possible attack against Iran.

What some analysts posit is the real concern for the United States is Iran’s plan to open its own oil exchange — the Iranian Oil Bourse (IOB) — with the alleged goal of becoming the dominant center of the Middle East’s oil trade.

What makes the IOB the subject of such interest by the American government? According to rumors, which first vaulted the issue into the spotlight, the financial exchange in the aforementioned bourse will trade for oil in euros instead of the U.S. dollar. The dollar has long been the dominant currency for international oil trade. [...]

Of course, the effectiveness of the IOB will depend on whether the big international oil trading companies decide to accept deals in euros or not. However, the potential financial impact on the U.S. economy remains more than just idle speculation.

Iran's offshore oil Bourse: http://www.offshorenet.com/2011/07/iran-opens-oil-bourse---harbinger-of-trouble-for-new-york-and-london.php

“The weapon of oil in the hands of Iran’s regime is more dangerous than any other weapon,” said a recently published article in Italy’s Panorama newsmagazine. [...]

There is speculation that the IOB represents Iran’s plan to escape any possible future economic sanctions spearheaded by the U.S. However, some postulate that the plan could also endanger the continued existence of Iran’s regime. William Clark, an American security expert, predicted that if Iran threatened the hegemony of the U.S. dollar in the international oil market, the White House would immediately order a military attack against it…

Old Bloomberg article foreshadowing Irans role today.

http://www.businessweek.com/news/2011-05-16/ahmadinejad-to-run-iran-oil-ministry-as-minister-dismissed.html

 

Thu, 02/09/2012 - 17:48 | Link to Comment working class dog
working class dog's picture

Have no fear when Syria succumbs to the Arab Spring, than will follow Iranian govt, and a pro democratic govt will take over, six month later after this happens and the short term spike in crude, risk premium comes off 30-40 dollars per barrel and than the US economy boooms like no tommorrow, hence if this happens before the election rest assure that even Romney will vote for Obama, ohhh yeah!!

Thu, 02/09/2012 - 19:25 | Link to Comment roadhazard
roadhazard's picture

Amazing how the Arab Spring turns into the Muslim Brotherhood.

Thu, 02/09/2012 - 17:53 | Link to Comment jimmyjames
jimmyjames's picture

By 1975, all of the members of OPEC agreed to sell their oil only in US dollars.

************

A bullshit story that's gone viral-

They agreed to "price" oil in USD's weighted to WTI grade oil-for a world bench mark price-

If oil could only be bought in USD's-what would stop Iran or Saudi or anyone who didn't want it-from immediately swapping those dollars for whatever currency and so--what would happen to those USD's?

What good then is an agreement-which oil can only be sold in USD's when a simple click of the sell button to the trading floors negates the USD trade?

Would someone else take those dollars and buy oil again and then what?

They trade oil "mostly" in USD's because it is the most abundant liquid currency on the market-

The US runs a trade deficit with almost every country in the world-they buy the most oil in the world and so the USD is the most liquid traded widely held in reserves currency-there can be no other choice based on trade and until the US starts to run trade surpluses-the dollar will mostly stay out of the US-except for dollar equivalents such as UST's and if those countries decide to dump their UST's they will have to sell them at auction for USD's-so dollar demand will increase and there is no guarantee that UST's will deliver face value-

At some point sometime-the dollar will return to the US but not until the trade balance shifts positive for the US-

Here are the requirements for reserve currency status-

Ample liquidity

Central bank credibility

Flexible domestic financial markets

Minimal government or political intervention

Deep and open domestic bond markets

I know the US is doing its best to destroy those qualifications-but-does China fit those requirements better or for that matter-any other country?

If China wants to be the world reserve currency-they will have to unpeg from the dollar first-I'm not sure they want to-not because the Yaun will go higher-but because it just might crash as it gets sold off-


Thu, 02/09/2012 - 18:18 | Link to Comment slavador
slavador's picture

JJ

"I know the US is doing its best to destroy those qualifications-but"

First In Libya, now in Iran and soon in Syria the reserve currency has overtly been used as a weapon against those that the USA  apparently irrationally desires to be destroyed. I am not sure that any sensible nation will be moving in the direction of higher exposure to the USD. Turning a couple of rough but functional nations into Somalia type hell holes seems like a pretty small prize in exchange for the lucrative position of being the world's trusted banker. Any major country that can forsee actually competing with the USA for resources in the future (China, Russia,India,Brazil, Germany) will develop a survival plan for when the US has another hormone imbalance and in a fit of rage attempts to pull the plug on them.

Thu, 02/09/2012 - 18:33 | Link to Comment jimmyjames
jimmyjames's picture

Slav-i agree that they likely don't want more USD exposure but as a matter of current world trading settlements -they can't get away from it-unless they stop selling products to the US-

At some point the USD and all the rest of them will go the way of all paper currencies of the past-which is why we hedge with gold-

I'm waiting for that last breakout resistance to back test and then I'll pick up some more languishing mid-tier miners-

 

Thu, 02/09/2012 - 19:00 | Link to Comment CompassionateFascist
CompassionateFascist's picture

"here are the requirements"....you forgot the main one: 11 Carrier Battle Groups.

Thu, 02/09/2012 - 20:52 | Link to Comment Dr. Gonzo
Dr. Gonzo's picture

What do you think would happen if Iran took 10 billion or so of their U.S. petrol dollars and tried to redeem gold from our NYMEX at the "market price"? Nothing would happen... except us maybe dropping a nuke on them for breaking our fake exchange. As a matter of fact we imposed sanctions on them from doing stuff like this because we want them to be one of the big bag holders of the irredemible dollar. If China divested just a fraction of their FX reserves to buy gold in the open market they'd break the system so they use their money to mine it themselves. Better to get something than nothing I guess.

Thu, 02/09/2012 - 22:09 | Link to Comment jimmyjames
jimmyjames's picture

What do you think would happen if Iran took 10 billion or so of their U.S. petrol dollars and tried to redeem gold from our NYMEX at the "market price"?

*************

Why would they have to buy gold from the NYMEX?

They could buy gold from Hong Cong or London which are much larger gold pools than NYMEX-

What's to stop them?

Do you actually believe they're cowering in fear?

All they need to do to buy 10 billion in gold is find a seller-a willing seller at whatever price to make the trade and there is sweet fk all the US can do about it and further more the trade could happen without the US even knowing about it and besides-didn't your Fed head just say a few months back that gold isn't money-so why would the US even care?

Fri, 02/10/2012 - 00:26 | Link to Comment Dr. Gonzo
Dr. Gonzo's picture

JimmyJames...Ask Eric Sprott how difficult it would be to source 10 billion in physical gold that is "for sale" in the free world without causing a panic. How long did it take Chavez to get Venezuela's gold back and that gold was already their's and spoken for. Now try to do the same thing after the U.S. imposes financial sanctions on your country and it's not only impossible but probably an act of war. It's just not going to happen. 

Fri, 02/10/2012 - 01:31 | Link to Comment jimmyjames
jimmyjames's picture

Ask Eric Sprott how difficult it would be to source 10 billion in physical gold that is "for sale" in the free world without causing a panic.

*******************

Come on-there's 165,000 tons of gold for sale at "a price"

The LMBA alone trades 600-700 tons of gold "daily"

New mining brought on 2,752 tons last year-

The jewelry market bought up 1700 tons last year-

Do you really think 183 tons ($10 billion) is actually going to cause a panic?

*****************

How long did it take Chavez to get Venezuela's gold back and that gold was already their's and spoken for.

*************

How long did it take?

Not all that long that i can remember-but i do remember gold being taken down a few hundred dollars while it was happening-so where was the panic?

Iran obviously holds all different kinds of currency and i'm sure they could make purchases through Hong Cong or London or damn near anywhere through a broker-

Didn't we just find out that China has been buying UST's through London under a Cayman island company-

I'm sure Iran or any other country can buy what it wants-when it wants-

 

 

 

 

Thu, 02/09/2012 - 18:05 | Link to Comment djudy003
djudy003's picture

What are people's take on commodity backed currencies such as the Canadian Dollar? Or is it the same deal/mess as the USD, while the obvious answer is Gold, what currency should one be in if Gold is not an option? Any information or perspectives on the Bank of Canada's Balance Sheet?

Thu, 02/09/2012 - 18:21 | Link to Comment jimmyjames
jimmyjames's picture

What are people's take on commodity backed currencies such as the Canadian Dollar?

Any information or perspectives on the Bank of Canada's Balance Sheet?

************

First of all Canada has no gold reserves-

Oil has no gaurantee that the price wont drop in a severe economic downturn-

Canada has yet to pop its housing bubble and who knows what that will do to the CAD-

Canada is a bit sneakier than most at hiding the CB balance sheet-

They have gone through CMHC a sort of FNM type of government entity and have guaranteed (printed) almost a trillion dollars that sits on balance-waiting for the defaults to roll in and the banks can simply hand the default over to CMHC and receive the HELOC inflated value courteous of Canadian taxpayers-

$1 trillion with a population of just over 30 million compared with the US per capita 300 million population = $10 trillion  equivalent-

I like gold as a choice-

Thu, 02/09/2012 - 18:28 | Link to Comment slavador
slavador's picture

A bankrupt friend in Salmon Arm B.C. turned over 35 rental houses and 2 major subdivisions to the bank last fall. Bank is keeping the houses as rentals with none for sale yet. Prices have stopped going down in Shuswap and will remain that way untill supply stops being so carefully controlled. Sales are actually picking up a little...

Thu, 02/09/2012 - 21:56 | Link to Comment X86BSD
X86BSD's picture

None. No currency afaik is backed by a commodity. That is part of the "privilege" of being a member in the IMF you have to sever your currency from any backing by gold or silver. And that is how they turned the entire world into a printing press of slavery. I have to give credit where credit is due I mean the Reality Distortion Field(tm) powers of the IMF have got to be on a level that Steve Jobs only fantasized about in his most erotic fantasies. Seriously, how the fuck do you convince every country on earth that paper currency backed by nothing is worth severing their currency backed by gold or silver to join the IMF??!! That is some major fucking mojo power!

 

 

Thu, 02/09/2012 - 18:08 | Link to Comment n2dark
n2dark's picture

Today, as well as nearly 80 years ago (The Economic Boycott of 1933), we can thank the zionists for setting us up for what's quite likely going to degenerate into a World War.

Thu, 02/09/2012 - 18:16 | Link to Comment loveyajimbo
loveyajimbo's picture

Debka story was bullshit?  Great Scott, imagine!!  I thought Jews never lied!!??!!  I am taking down my Lloyd Blankfein poster that is in a place of honor over my toilet bowl...  Anybody have a Himmler to trade?

Thu, 02/09/2012 - 18:51 | Link to Comment EnglishMajor
EnglishMajor's picture

Our bull in a china shop, pissing on the broken pieces approach to foreign policy has worked wonders.  It's a shame.  Dick Cheney's Energy Task Force tried so hard.

Thu, 02/09/2012 - 20:02 | Link to Comment Ag1761
Ag1761's picture

My martial arts trainer in the 80's was Iranian, very nice chap. He did abandon me after 3 years to go back and defend his country at the time of a big Iraqi push east. Got to admire that.

Thu, 02/09/2012 - 20:08 | Link to Comment W10321303
W10321303's picture

The Empire is DEAD! Someone tell Mit, let Newt 'the HOOT' have the job. He is much better at demagoguery.

Thu, 02/09/2012 - 20:09 | Link to Comment Yen Cross
Yen Cross's picture

 Sprinkle those gold flakes on your on your rotten cabbage, and like it!

Thu, 02/09/2012 - 20:16 | Link to Comment Money 4 Nothing
Money 4 Nothing's picture

Soo, instead of guns for drugs, it's gold for food?

Thu, 02/09/2012 - 20:17 | Link to Comment groundedkiwi
groundedkiwi's picture

20th of March  is when the Iranian Kisg Bourse  starts selling  its oil outside the US dolar . This has been planned for several years  now, but never reported in MSM. Kish bourse just google it.

Thu, 02/09/2012 - 23:53 | Link to Comment Bringin It
Bringin It's picture

Beware the ides of March.

Let's see ... New moon 22 March.

Fri, 02/10/2012 - 02:03 | Link to Comment Tompooz
Tompooz's picture

Nowrouz... Persian New Year

Thu, 02/09/2012 - 20:26 | Link to Comment Yen Cross
Yen Cross's picture

O/T but It's commodity based. The aud/usd had a pretty solid Daily inside close. The bottom is 1.0739 ish. Friday risk off could be fun.

Thu, 02/09/2012 - 20:35 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

so this is really bullish for the euro, huh?

first the SNB caves in to the ECB, and now this!

L0L!!!

what's an analyst to dooo? 

but tyler, haven't you been claiming that the ECB & EU-related printing will be so,0004 big that the poor FED will hafta go QE-printing like crazy, just to keep the dollar from going to the moon? 

maybe this sabre-rattling in hormuz will take the dollar to the shitter just from what has already been "issued" as "petro/euro" 'dollars' aka gas coupons?

the more the US can support iran and it's new trade nexus and method, the better!  now we don't hafta print to stay competitive in the race to...the bottom!

but, we've got to act like they're doing something horrible, even tho we can't figure a logical reason between us why the US would try to "destabiliZe" iran

after all, they're terrorists!  

like us!  L0L!!!

the "very different" take?

you mean b/c this isn't  about keeping shipping lanes "open" and iran's long-range plans to turn israel into an ash tray, and maybe somebody's been trying to play mind-fuk w/ the entire television-watching.wide.World?

really?  0MGosh!  0MGolly!  what a perfect scandal!

Thu, 02/09/2012 - 20:44 | Link to Comment Yen Cross
Yen Cross's picture

Good post Slewie! +1

Thu, 02/09/2012 - 20:35 | Link to Comment navy62802
navy62802's picture

I can see the headlines forming right now. If you own gold, you are supporting terrorist states. As i've said before on ZH, confiscation is coming.

Thu, 02/09/2012 - 20:39 | Link to Comment Likstane
Likstane's picture

I can see the headlines forming right now.  If you own gold, you are supporting terrorist states.  As I've said before on ZH, attempted confiscation is coming. 

Fixed it.

Thu, 02/09/2012 - 20:41 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

not only that, but even more certain:  you are going to die!

L0L!!!  predicting is sooo... eZ! 

now, let me quess which you hope will happen first...

Thu, 02/09/2012 - 20:53 | Link to Comment Yen Cross
Yen Cross's picture

 Slewie remember your early days? You, and 4 room mates, with a whimsical Landlord?  You wanted to speak your true thoughts, but refrained. You feared being kicked to the curb for telling the truth. The douche bag friends of room mates, and the late night booty calls whilst you were studing Your thesis?  Welcome to diplomacy my friend!

Thu, 02/09/2012 - 21:54 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

remember...remember...remem.............
...I was in another lifetime one of toil and blood
When blackness was a virtue and the road was full of mud
I came in from the wilderness a creature void of form
"Come in" she said
"I'll give you shelter from the storm".

...I was burned out from exhaustion buried in the hail
Poisoned in the bushes and blown out on the trail
Hunted like a crocodile ravaged in the corn
"Come in" she said
"I'll give you shelter from the storm".

...Well I'm living in a foreign country but I'm bound to cross the line
Beauty walks a razor's edge someday I'll make it mine
If I could only turn back the clock to when God and her were born
"Come in" she said
"I'll give you shelter from the storm"...............remember...remem...

Thu, 02/09/2012 - 22:09 | Link to Comment Yen Cross
Yen Cross's picture

 I mean this in good Faith Slewie. Remember this commercial Slewie? It wasn't that long ago.?  LEVIS

Thu, 02/09/2012 - 20:44 | Link to Comment Likstane
Likstane's picture

I'll probably die right before they confiscate my empty gold trove; still lamenting the canoe accident but will protect the illusion.(kinda like Ft. Knox)

Fri, 02/10/2012 - 03:56 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

beats the hell outs hijacking an airplane and parachuting out with a backpack full0'greenStamps, never to be seen or heard from again...

as far out as that shithead was, i thought he had acted out the near-perfect metaphor for divorce...

Thu, 02/09/2012 - 20:49 | Link to Comment LookingWithAmazement
LookingWithAmazement's picture

The dollar survives. No dollarcrash. Boring world we live in.

Thu, 02/09/2012 - 21:20 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

The dollar holds no intrinsic value yet everyone goes about their day, some even understand that it has no value but continue using it because it doesn't matter that it has no value, all that matters is that we pretend it does!  Many many people have said that to me.  Now that is exciting!!!!

Thu, 02/09/2012 - 21:33 | Link to Comment Yen Cross
Yen Cross's picture

I enjoy your posts. You undoubtedly have have a fantastic grasp of finance. I think you are looking for reaffirmation of the question you asked. You are correct, coming from the ( LESSOR), side of the block. <>

Thu, 02/09/2012 - 21:14 | Link to Comment mmanvil74
mmanvil74's picture

Question for all you very bright ZHers out there:  Apart from investing in gold, wouldn't one also want to borrow as many US Dollars as possible at low fixed rates to purchase cash flowing assets capable of covering those loan payments?  If the US Dollar loses value as the article implies, US Dollar denominated debt also loses value relative to hard assets... shall we assume that just as the 30 year Treasury at 3% is the worst investment possible at the moment, would not the inverse (borrowing US Dollars at 4% fixed for 30 years via a mortgage on US rental property) be one of the best plays of the decade?  $100k borrowed today at 4% p.a. fixed for 30 years may seem like pennies by the time the 30th year arrives.  In which case U.S. real estate leveraged at today's rates looks very attractive indeed?

Thu, 02/09/2012 - 22:41 | Link to Comment deflator
deflator's picture

 Residential real estate, particularly a 100k rental property can suffer quite alot of damage/entropy in a short period of time. The cost of maintainance, renter wear and tear, building materials, etc. can eat up any potential "profits" from inflation/depreciation of the dollar.

Thu, 02/09/2012 - 23:53 | Link to Comment supermaxedout
supermaxedout's picture

One year ago I came to the firm conclusion, that the Dollar is doomed in a not so very far away future. Took me a year of research and thinking. But how long is it lasting till the collapse? And what does this mean to me that the Dollar is terminal wounded?  How can I protect myself and make the best out of this catastrophic event looming at the horizon?  I said to my self if this is really happening the results for the US and its currency are going to be more or less similar to the situation Germany experiencend a few years after WW1. Currency finally completely worthless due to the economic consequences of the lost war. All savings gone, only hard assets counted once the reality of the lost war kicked-in in full. As I see it, the US are going to loose this war not militarily but economically, while the results are the same.

The years after WW1 in Germany were the times were the average citizen lost all his savings in combination with extreme high unemployment. The once glorious and mighty Prussian military shrinked appx by two thirds in manpower thereby a huge number of professional soldiers and officers lost their job and income too, without any compensation from the state for these losses. Simply due to the fact that Germany was bankrupt as a whole leaving the governement only with very little resources.  (This whole mess laid the ground for the later rise of Hitler) However, clearly one of the worst periods since generations. But what was also a fact, exactly during this time a lot of fortunes were made in Germany. Simply by borrowing in Reichsmark as long as it still had value within Germany, which was the case till  appx, 1922 or 1924 (dont know exactly, but roughly six years after the end of WW1 hyperinflation started).  The clever guys who saw the end of the Reichsmark coming, borrowed long at acceptable rates and were buying on the cheap (at crisis prices)  valuable real estate. At the beginning preferablly tenements with shops in the ground floor within the inner city circles. Later everything of value what was left and available for purchase. Purchased with minimum own capital while the bulk was borrowed as longterm mortgage. Payments for the interests were generated by the incoming rental fees.  After a few years the Reichsmark became worthless with the result that these high value real estaes did cost only a fraction of their value for the new owners.

These practices came to the full light during the late 1920s/early 1930s and were instrumentalized by the antisemitic propaganda of the Nazi movement in Germany. Since  as one can imagine also a huge number of Jewish business men participated extremely succesful in this scheme.  The antisemitic hate propaganda made use of this fact by comparing the situation of the average German who lost more or less everything and enormous riches which were accumulated within a short time during these hunger years in Germany.  However many Germans which knew what was coming took advantage of the chaotic situation after WW1,  but the blame for this "unfair transfer of riches" was soley loaded upon the Jewish population, thus preparing in the brains of the German masses the ground for the horrors to come.

So there is of course a huge opportunity to make a fortune given the case one has already some capital.  This opportunity exists in principle in all countries on this planet due to the fact of the Dollars role as the money of the world. In many countries it is easy to borrow cheap in Dollar currency mortgage loans for 10 years on a fixed rate to purchase real estate which is generating a regular cash flow. But one should not forget, that were there is an opportunity there is also a risk. And in this case the risk is, that its all based on assumptions which may materialze or not, while clearly the chance is high that the Dollar is collapsing within the next ten years, or at least is loosing a huge part of its value.  As it is common knowledge it is even the goal of the US administration to lower the external value of the Dollar but of course they do not like a collapse and are doing everything in their power to avoid this.

Thu, 02/09/2012 - 21:16 | Link to Comment Yen Cross
Thu, 02/09/2012 - 21:21 | Link to Comment DaylightWastingTime
DaylightWastingTime's picture

there is always the amero,  washington will look good wearing a sombrero.

Thu, 02/09/2012 - 21:45 | Link to Comment rsnoble
rsnoble's picture

So asides from other outcomes: ww3, etc, if the dollar crashes what happens to personal debt in the US??? House loans, credit cards etc?  Will all the big lenders reset to a different currency and reset your bills as such but the people will only have worthless dollars and get wiped out and still owe just as much as before?  I don't  possibly see how this could end on a good note.

So I guess this article pretty much sums up the reasons for 9-11.  Does anyone really think Russia and China would come to the rescue of Iran? Surely they know it would be the end of the world, would it be worth that to them?  It would start out with ordinary warfare, eventually someone would start losing and then bring out the big guns. 

The US is like the bully on the playground. It seems as if much of the rest of the world is tired of our shit and I can't really blame them.  As far as the illumnati stuff I am not convinced they have complete control over the nations as much as I am they have great influence instead and are trying to guide them towards what they want.  Because of their manipulation shit is flying apart at the seems faster than they can make accomodations for and could easily end up getting us all killed over their greed. Just my take.

Thu, 02/09/2012 - 21:52 | Link to Comment Atomizer
Atomizer's picture

Islamic Republic of Iran: Selected Issues Paper; IMF Country Report 11/242; July 6, 2011

 

Q4: Can I apply for a licence from HMT exempting me from this Direction?

A4: Any person affected by the Direction can apply for a licence from HM Treasury (contact details below) exempting a transaction or business relationship from the requirements. Exporters as well as relevant persons can make a licence application.

 

It should be noted, however, that the Direction has been given because of the risks posed to the UK’s national interests by activities in Iran and the support given to those activities by the Iranian banking sector. Given the importance of an effective response to those risks, it is unlikely that the Treasury will issue licences for business with Iranian banks on an ongoing basis under new contracts. 8.  For further details about the financial restrictions provided in this Notice and to apply for a licence, please contact:

 

HMT Asset Freezing Unit

HM Treasury

1 Horse Guards Road

London, SW1A 2HQ

Email: AFU@hmtreasury.gsi.gov.uk

 

Charges against US Government for Money Laundering? Say it’s not so..

http://www.cbi.ir/default_en.aspx

 

http://www.bis.org/country/ir.htm

 

The Lengthening List of Iran Sanctions

http://www.cfr.org/iran/lengthening-list-iran-sanctions/p20258

 

 

Those terrorist are going to build a nuclear bomb in 5 days and they won’t give us our remote controlled spy plane back. We need to attack immediately.

 

Using the same Google search and substituting Israel and Iran. [List of United Nations resolutions concerning] (Country)

http://en.wikipedia.org/wiki/List_of_United_Nations_resolutions_concerning_Israel

 

http://en.wikipedia.org/wiki/Sanctions_against_Iran

 

Did you know we are going to build new nuclear plants in the US? What a wonderful way to bundle the whole contract with new/safe Iran nuclear sites as well.

 

LOL--

Thu, 02/09/2012 - 22:05 | Link to Comment Atomizer
Atomizer's picture

The defence secretary’s role at ABB during the late 1990s has become a bone of contention in Washington.

The ABB contract was a consequence of a 1994 deal between the US and Pyongyang to allow construction of two reactors in exchange for a freeze on the North’s nuclear weapons programme.

http://www.swissinfo.ch/eng/Home/Archive/Rumsfeld_was_on_ABB_board_during_deal_with_North_Korea.html?cid=3176922

We all know the ending of that movie. Washington DC thought a 2012 movie recreation would go unnoticed.

Thu, 02/09/2012 - 22:10 | Link to Comment Rastadamus
Rastadamus's picture

It war with no guarantees.

Thu, 02/09/2012 - 22:13 | Link to Comment Just Observing
Just Observing's picture

 BARTER ?

 

JP Morgan (c.1912)  "Gold is money.....everything else is credit"

 

 

 

Thu, 02/09/2012 - 22:17 | Link to Comment dwdollar
dwdollar's picture

Any inflationary event on this scale is not going to be orderly. What's going to happen when all those Boomers see their savings go up in smoke? They're going to come unhinged.

Thu, 02/09/2012 - 22:19 | Link to Comment Yen Cross
Yen Cross's picture

" SQuirt...

Thu, 02/09/2012 - 22:31 | Link to Comment SDRII
SDRII's picture

In the context of the barter it's worth highlighting the deputy gov of he boj suggesting china and Japan should eliminate the dollar in Asia trade.

http://www.guardian.co.uk/business/feedarticle/10082247

Thu, 02/09/2012 - 22:35 | Link to Comment Yen Cross
Yen Cross's picture

Are we discussing the MoF to Premier of Japan? The post - facto MoF? Stealth intervention?

Thu, 02/09/2012 - 22:31 | Link to Comment SDRII
SDRII's picture

In the context of the barter it's worth highlighting the deputy gov of he boj suggesting china and Japan should eliminate the dollar in Asia trade.

http://www.guardian.co.uk/business/feedarticle/10082247

Thu, 02/09/2012 - 22:41 | Link to Comment Yen Cross
Yen Cross's picture

 Easy there. Please.< I spent the last year in Singapore. The Yen could be an answer. [ show me some productivity] ... I'll invest in the lost (2) decades. Eddie Murphy flicks rule!

Thu, 02/09/2012 - 22:43 | Link to Comment ISEEIT
ISEEIT's picture

I've posted this story before and apologize to anyone confronted by it a second time.

I'm the Father of three son's;

My eldest is named Axel "father of peace in German".

My second son is named Elliott.

They were born two + years apart ( you get the months thing right?).

I vividly recall my eldest son terrorizing my younger son with a concept named by my eldest son as "the club".

I generally stayed out of this dynamic as so long as I did not witness any physical abuse. I'm a Libertarian. I didn't 'feel' the right to impose myself into their sibling relationship absent any legitimate emergency.

One day my son Elliott was (at about age 5, maybe 6) clearly distraught and approached his Mother and myself in tears:

He was so upset because his brother Axel had informed him that unless he obeyed his 'request', he (Elliott) would no longer be allowed to be in his (Axel's) "club".

As parents we calmly explained that the "club" was a fiction and that Elliott would be perfectly fine absent the imaginary club.

If I were able to give a gift to all of humanity,  I would give the gift of just helping each of us/them realize that the "club" is bogus.

There is no "club". It is a lie and an artificial construct employed against us as individuals.

It is a club for sociopathic narcissist and evil pigmen.

We would be just fine without it.

In fact, It is what we can do absent their nasty desire to control US that scares the shit out of these criminals.

I hear a knocking at the door,

 

Thu, 02/09/2012 - 22:50 | Link to Comment MountainHawk
Thu, 02/09/2012 - 22:56 | Link to Comment Yen Cross
Yen Cross's picture

 I missed your posts Gentle Men. Keep up the great work as the Yen rises to " 85". I'll buy the dips! Funny yen...

Fri, 02/10/2012 - 00:00 | Link to Comment Guns N Metals
Guns N Metals's picture

Last!

Fri, 02/10/2012 - 00:25 | Link to Comment supermaxedout
supermaxedout's picture

Tyler, this article is your masterpiece. You connected many dots and made the whole picture of this extreme critical situation visible. Great work. As a consequence Obama should give back his Nobel Peace Prize and Zerohedge is my favorite for the next Nobel Prize for Economics.

Fri, 02/10/2012 - 00:34 | Link to Comment earleflorida
earleflorida's picture

excellent post!

Ps. never mentioned Pakistan [large pop. shiite] as an ally - this is very important for IPI

http://en.wikipedia.org/wiki/Iran-Pakistan-India_gas_pipeline

and flowing into China ___ Note [1]: Turkmenistan has questionably the largest "BlueGold" reserves in the world [~300 yrs supply TAPI] with Iran the world's 2nd largest reserves @~ 250 yrs supply *this we know of in Iran*

the Indian's are fed up with the British and US - as are the Pakistani's, with both countries having mutual respect and cross-border trading relationships with China ___ Note [2]: the IPI route is very direct and the most feasible with little resistance coming from the Afghan's ie. they're all, 'Islam Countries' other than China,... which by the way has a large Muslim Population [china has no religion/ atheist, and not quite sure if Russia is the same - which by the way has a huge Muslim Population]

thanks again tyler for an enlightening read

Fri, 02/10/2012 - 03:54 | Link to Comment laosuwan
laosuwan's picture

Here in Asia the big supemarkets, like Carrefour, all have dried fruit and nut kiosks of exported food from...iran. doesnt look like a food shortage exists in iran, to me

Fri, 02/10/2012 - 04:42 | Link to Comment AnAnonymous
AnAnonymous's picture

On what ground?

US citizen economics include free markets.

Free market implies that the whole production is put on the market by the producer to be later rebought.

It means that the food producer who does not get enough from the sales of the food can not buy back enough to feed oneself.

US citizen economics.

A country can be starving when producing more food than needed to feed itself, the food being exported.

Fri, 02/10/2012 - 06:34 | Link to Comment akak
akak's picture

A trapezoid has three danishes bounded in floating lavender irony.

However, orbital raincoats and malignant seamstresses profess the sly procurement of canned pancake anguish, not rampant curly copper revisionism.

Without enraged fruitflies to decorate the drill now, sixteen vandalized abyssal toucans spaciously contemplate partisan gonads, and all sagacious aspects of cardboard militarism are squelched on molten diplomatic springs.

Thus does Chinese citizenism blob up in the mind.

Fri, 02/10/2012 - 08:47 | Link to Comment palmereldritch
palmereldritch's picture

Don’t worry AnAnonymous.  First they ignore you, then they laugh at you, then they fight you and then a positive tissue match means you are involuntarily donating a kidney to a corrupt politburo member so he can sell it on the black market and then you win.

Fri, 02/10/2012 - 09:30 | Link to Comment laosuwan
laosuwan's picture

only an economist would claim that a country would be exporting food while at the same time bartering its gold and oil for food because its people are starving.

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