Protecting the Petrochemical System
Oil and Gold and Iran……
A little history – back in 1973, Nixon made a pact with Saudi Arabia that the US would protect Saudi Arabia from the Russians or others, if the Saudi’s would sell oil using ONLY US Dollars. They agreed, and by 1975, all OPEC nations were using US Dollars. These nations took their Dollars, and invested them in US Treasuries – so these Dollars percolated back into the United States – along with all the money from other nations buying oil.
This provided a great coffer of money in the US Treasury, and allowed the US to somewhat control the price of oil, as the US controlled the value of the US Dollar.
As time went on, the price of oil increased, and the use of oil increased around the world. The money poured into the United States, as the oil producing nations bought US securities. All of this supported a strong US Dollar.
What’s happening now……
There are several bilateral deals being cut to price oil in other currencies – local currencies. Even more interesting is a “rumor” that India cut a deal with Iran to price its oil in “gold,” and the deal is being brokered (banked) through a Turkish bank.
If the Dollar is not used for oil purchases, the Dollar will weaken, and weaken quickly. The world won’t need those Dollars that are floating out there, and greasing the oil purchases today.
Did the US go to war in Iraq to protect its oil supply? That’s what people say, but perhaps the US goes to war to protect the “petrochemical system” that props up the Dollar. These go hand in hand. Isn’t it interesting that in 2000, France convinced Saddam Hussein to sell its oil to Europe for Euros? That was a blow to the Dollar, and that was the beginning of the end for the Dollar – but no one knew it at the time – at least not the public. The invasion of Iraq finished off that foolishness for the next decade.
But, the US Reserve Currency system is under attack again today.
Iran has lots of friends around the world who need the Iranian oil for various different reasons – Greece (because the Iranians will sell oil on credit), Venezuela (who have some joint projects with Iran – like a new bank creation), India, China, etc. Many of these countries are not “friends” of the US, and would like to see a weakened Dollar.
If this hypothesis is correct, then the chain rattling in the Straits of Hormuz has everything to do with the idea that nations want to NOT use the Dollar for oil purchases. That is thought provoking.
My conclusion…..
Gold continues to solve many of the problems facing your personal investment decision. Gold would only benefit from a devalued Dollar.
Thought you might like to think about this.
