(2009-10-07) End Dollar Oil Deals

Robert Fisk says that Gulf Arabs are planning - along with China, Russia, Japan and France - to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar... Iran announced late last month that its foreign currency reserves would henceforth be held in euros rather than dollars. Bankers remember, of course, what happened to the last Middle East oil producer to sell its oil in euros rather than dollars. A few months after Saddam Hussein trumpeted his decision, the Americans and British invaded Iraq.

Some think that gold traders leaked the info to drive up the price of gold.

Duncan Davidson thinks it's too early to worry, identifying all the challenges a new reserve currency has to meet. (He also gives some background on the RealBills doctrine.) But I have a bet that by 2020 the US Dollar will be replaced or supplemented by some form of gold-backed reserve. It would take a much more serious DollarCrisis to get there than anything going on right now, but if you look at the long term chart of the US Debt (see chart from CBO) you will see it is complete fantasy that the US can continue with the current policies.

Mish Shedlock does his own debunking.

Other Asian currencies are supporting the dollar to protect their exports.

Duncan Davidson also notes The real secret cabal may be US leadership (Obama, Geithner, Bernanke) planning to continue to allow a slow fall of the Dollar in order to finance horrific deficits while lessening the burden of ever paying back the creditors.