Much has been spun in recent weeks to indicate that as a result of collapsing trade, Iran's economy is in shambles and that the financial embargo hoisted upon the country by the insolvent, pardon, developed world is working. We had a totally different perspective on things "A Very Different Take On The "Iran Barters Gold For Food" Story [10]" in which we essentially said that Iran, with the complicity of major trading partners like China, India and Russia is preparing to phase out the petrodollar: a move which would be impossible if key bilateral trade partners [11] would not agree to it. Gradually it appears this is increasingly the case following a just released Reuters report that "Iran will take payment from its trading partners in gold instead of dollars, the Iranian state news agency IRNA quoted the central bank governor as saying on Tuesday."
Via Reuters [12]:
Iranian financial institutions have been hit by sanctions imposed by the United States and the European Union in an effort to force Tehran to halt its nuclear programme.
Significant difficulties in making dollar payments to Iranian banks have forced Iran's trading partners to look for alternative ways to settle transactions, including direct barter deals.
"In its trade transactions with other countries, Iran does not limit itself to the U.S. dollar, and the country can pay using its own currency," central bank governor Mahmoud Bahmani was quoted as saying. "If a country should so choose, it can pay in gold and we would accept that without any reservation."
The sanctions include a phased ban on importing oil from Iran, which EU member states are to implement by July.
China and India, two of the largest consumers of Iranian oil, have said they will continue imports, but Japan and Korea have announced cuts to quotas following pressure from the United States. As a result the value of Iran's rial has plummeted, pushing the price of goods sharply higher across the country.
And from the souce [13]:
Governor of the Central Bank of Iran Mahmoud Bahmani says the country can trade in currencies other than the American dollar in its foreign transactions.
“Iran does not just work with the dollar in trade transactions and every country can pay in its own currency,” said Mahmoud Bahmani on Tuesday.
Bahmani added that Tehran could receive gold in its transactions instead of currency transfers.
In case a country is willing to pay for the price of its imports from Iran in gold, there is no problem in this respect, he noted.
According to Bahmani, Iran imports commodities from China and India in exchange for the countries’ currencies. Tehran’s move is aimed at bypassing the upcoming freeze on CBI’s assets and the oil embargo, which the European Union's foreign ministers agreed to impose on the Islamic Republic.
Now this would be great news for Greece which as previously reported [14]had at times relied for more than 50% of its crude imports on Iran. There is just one problem: very soon the country will no longer have said gold in its possession, as part of the preapproved Greek bailout of Europe, the country's constitution would be changed to reflect that even its gold now is part of the bailout conditions [15], and European banks have a lien on it. Especially if said gold is located in the basement of the NY Fed [16]where it most likely resides.
As for other countries, such as China which we are confident has been quietly stockpiling gold in the last few years, and will make a surprise announcement any day now, as it did back in 2009 [17]... that's a different matter entirely.