Moral Outrage
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Iran bartering Gold for Food directed at US Reserve Currency

Much has been made of 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.

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. Specifically, 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 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 puts the Reuters story in a totally different light: instead of one predicting the imminent demise of the Iranian economy, the conclusion is inverted. Iran is now successfully engaging in global trade without the use of the historical reserve currency.

And the truth is that the gold barter appears 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.

“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.

[Excerpts from ZeroHedge article]

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