Gold is now the international currency.
BigE
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“Gold is also gathering interest as the international currency—the one that governments can’t print. Central banks continue to like it, and it’s a diversifying vehicle for them away from paper currencies.”
Was just thinking how billion dollar international transactions must be going down when settling on price, Purchasing a tanker load of oil from the Saudis might go something like this. The US "we will give you 91.00 a barrel. The Saudis "really, we can buy US dollar on the open market at a pretty substantial discount to market right now, we can deal much better if settlement is in gold".
Think this happens? Is the dollar or gold King?
----------------------BigE
Was just thinking how billion dollar international transactions must be going down when settling on price, Purchasing a tanker load of oil from the Saudis might go something like this. The US "we will give you 91.00 a barrel. The Saudis "really, we can buy US dollar on the open market at a pretty substantial discount to market right now, we can deal much better if settlement is in gold".
Think this happens? Is the dollar or gold King?
----------------------BigE I'm glad I am a Tree
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"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
And when the USA finally builds out its natural gas infrastructure, oil will be relugated to 3rd world use.
Knowledge is the enemy of fear
<< <i>Gold will not protect the Saudis from the Iranians, but the dollar will.
And when the USA finally builds out its natural gas infrastructure, oil will be relugated to 3rd world use. >>
What do you mean by "regulated to 3rd world use?"
I think we will soon have the technology to run all our motors on natural gas. Oil (gasoline) engines will still be used in the less developed countries. Of course oil will still be used in the manufacture of plastics, ect, but the use of oil for burning in our cars will decrease dramatically.
There is a reason why there have some major corporate mergers in the nat gas space in recent years.
Knowledge is the enemy of fear
<< <i>Anyone remember the propane fiasco in San Francisco where they required busses to use it and they were so heavy and underpowered they started to roll backwards
works good with fork lifts, but exhaust burns the eyes
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>A few dead middle eastern leaders had announced plans to trade oil for gold. The dollar might appear weak, but in reality it's a "killer." >>
derryb's point here represents a good way to get this thread back on track. It does seem to me that the we were making amends with Gaddafy not so long ago. Did he possibly violate terms of Hillarys payment for oil policies?, and in the end did they follow the gold to the stash and use it as "free"
The most interesting alternative to pure fiat is to embed gold threads into the fiat in sufficient quantity and quality to provide the proper asset value. Paper money is just something we are hardwired for using in trade exchanges for goods and services. It seems now that there are two economies: one for daily transactions where fiat is used between real people in face to face exchanges and one for investment practices where electrons are used, so called paper investments. The pure fiat is easy to accumulate, makes for an easy transaction that is universally understood, and provides for easy accounting. Paper investments are a little different as they are transmitted over the internet, kept on excel spread sheets and in account tabulations on different websites, and traded with ease with just a few key strokes. We have two different and diverging methods of using money.
With gold threads in fiat then the money is somewhat tied to currency rates and would be more removed from fluctuations in the gnp value of a country or the trustworthyness of a country as the gold would stabilize the currency against all other currencies because they would share a common value; the gold threads. The golden fiat would also be more liquid at international borders as they would have the value of the gold plus or minus the gnp or trust qualifiers of the country issuing the currency to set exchange rates. The golden currency would also support the continuation of the status quo of using paper money for transactions.
The down side of this for governments, and the reason this idea is most likely to be strongly resisted, is that the countries must have actual skin in the game, their currency has to actually be worth something other than full faith in something that is somewhat subjective...kind of like believing in spirits but it's not like that has never been done before. It is conceivable that some counties may not have the capability to actually back an asset based currency for the simple reason that they are living from tax income payment to tax income payment and they do not have enough capitalization to...well...capitalize their currency with assets. For many countries I suspect it would only be possible to issue spirit money because they do not have enough gold to adequately capitalize their currency. For the countries that could capitalize their fiat then they will also be able to put their currency on the most wanted list and they would, by default of the other countries, be the currency of first resort.
So, say China uses it's gold stash to capitalize their currency with gold threads. Which would you rather have for international use, a capitalized Yuan or spirit money? No brainer, so there is no need for the Chinese to destroy the dollar, they can simply issue real money.
GOT GOLD?
Box of 20
...and their money.
GOT OIL?
there is no need for the Chinese to destroy the dollar, they can simply issue real money
there is no need for the Chinese to destroy the dollar, they can simply issue real money
As for the Saudis, it's a simple matter of deciding whether they want the West, or the Chinese as "protectors". They've done alright by themselves using the West to upgrade their lifestyles all these years. I wonder what they think China is going to do for them.
I knew it would happen.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
<< <i>Cohodk, very interesting forward thinking. Natural gas...... I wonder how much natural gas is produced from one oil well? We just resigned a 2 yr contract (residential) for electric and natural gas in Texas. Rates are DOWN from 2 years ago!!! Tons of supply. >>
I dont know how much exactly, but I do know thta many of the shale wells in Pennsylvania have been described by industry insiders as "gushers".
One problem with a more rapid rollout of nat gat technology is exactly what you describe--low rates. If it isnt profitable, then it wont be built.
Knowledge is the enemy of fear
<< <i>"I also do not know if gold will become the standard, however, it has as good a chance as any other medium."
The most interesting alternative to pure fiat is to embed gold threads into the fiat in sufficient quantity and quality to provide the proper asset value. Paper money is just something we are hardwired for using in trade exchanges for goods and services. It seems now that there are two economies: one for daily transactions where fiat is used between real people in face to face exchanges and one for investment practices where electrons are used, so called paper investments. The pure fiat is easy to accumulate, makes for an easy transaction that is universally understood, and provides for easy accounting. Paper investments are a little different as they are transmitted over the internet, kept on excel spread sheets and in account tabulations on different websites, and traded with ease with just a few key strokes. We have two different and diverging methods of using money.
With gold threads in fiat then the money is somewhat tied to currency rates and would be more removed from fluctuations in the gnp value of a country or the trustworthyness of a country as the gold would stabilize the currency against all other currencies because they would share a common value; the gold threads. The golden fiat would also be more liquid at international borders as they would have the value of the gold plus or minus the gnp or trust qualifiers of the country issuing the currency to set exchange rates. The golden currency would also support the continuation of the status quo of using paper money for transactions.
The down side of this for governments, and the reason this idea is most likely to be strongly resisted, is that the countries must have actual skin in the game, their currency has to actually be worth something other than full faith in something that is somewhat subjective...kind of like believing in spirits but it's not like that has never been done before. It is conceivable that some counties may not have the capability to actually back an asset based currency for the simple reason that they are living from tax income payment to tax income payment and they do not have enough capitalization to...well...capitalize their currency with assets. For many countries I suspect it would only be possible to issue spirit money because they do not have enough gold to adequately capitalize their currency. For the countries that could capitalize their fiat then they will also be able to put their currency on the most wanted list and they would, by default of the other countries, be the currency of first resort.
So, say China uses it's gold stash to capitalize their currency with gold threads. Which would you rather have for international use, a capitalized Yuan or spirit money? No brainer, so there is no need for the Chinese to destroy the dollar, they can simply issue real money.
GOT GOLD? >>
Actually I believe is spirits more than I do the US Dollar
<< <i>Anyone remember the propane fiasco in San Francisco where they required busses to use it and they were so heavy and underpowered they started to roll backwards
Interesting. My son has a couple friends with 4x4 rock crawlers and they use propane exclusively. They don't seem to have any issues with power or being almost vertical.