What If Iran Bought Gold to Shield against Oil Sanctions?

Just a quick question: If I was running Iran I would be buying gold. It's easy to store and its price tends to be linked to oil. Admittedly it is at an all time high but then so to is oil (which is the main reason for the high gold price and is to do with slightly complicated economics).

Anyway if Iran faces sanctions the oil price will go up and so to will gold. But if it doesn't face sanctions oil will stay much the same, and it may loose some money on gold but not much.

So surely this is what the Iotallah Nuclear should be doing? Why isn't Iran doing this? Are they too stupid, too confident or do they have other investments or other things like peace and backing down in mind?

That said silver might be better as Gold prices could be artificially lowered by Western central bank-government selling. Copper isn't good because its prices depends upon global economic growth. Even so any news or thoughts about Iranian sanction busting investments?

well iran sells more than 2.5 million barrels a day and at $70 a barrel that would have to be alot of gold rising really fast to make up for that kind of money.

What good is gold going to do iran? How does gold stop an invasion? The US isn't going to be able to rally the world to support an embargo, especially considering that the US doesn't buy iranian oil.

Well Nygdan without the Iranians backing down just a little sanctions will have to become a reality. Without the support of Russia and China the best way to enforce these would be to bomb Iran's oil facilities on a regular basis. So this is where gold first becomes useful. In any case the absence of Iranian oil will send its price through the roof (so good investment).

If the U.S decides to attack Iran the first thing will be their nuclear facilities. However given that many of these are well protected underground i reckon that without a land invasion sooner or later they will be rebuilding them.

These leads us to a ground invasion in which case Iran's banks will be out of service espically to "terrorists". But gold is a great currency for any Iranian insurgency Iran decides to fund. Iran has already prepard these groups much like England did when we thought we would be invaded during WW2. Again the price of gold will go through the roof so its still a good investment.
Platenium might be better because unlike gold almost nobody stocks that in large amounts. And unlike gold its volume to value ratio is even smaller, so again its easyier to hide.

Thatoneguy I know to fund all of Irans economy it would take a lot of commodeties. All i'm saying is that the more of these the easyier life will be for whatever Iran decides to do.

Question: Does anyone know of any Iranian commodity buying?
P.S If your in the CIA I think this would be a question worth investigating.

Originally posted by Liberal1984
Well Nygdan without the Iranians backing down just a little sanctions will have to become a reality. Without the support of Russia and China the best way to enforce these would be to bomb Iran's oil facilities on a regular basis.

Thats a mighty big leap of faith in assuming that without the support of Russia and/or China, the best way to enforce would be to bomb Iran.

You are referring to support for sanctions against Iran?
My understanding is that if sanctions are sought against Iran, a vote of 'no' by Russia or China--basically any of the 'Big-5': France, UK, US, Russia, and China--will not kill a bid to have sanctions imposed against Iran. Those of the Big-5 that sought to impose sanctions against Iran can simply have the measure moved to the UN General Assembly, then the world members will vote whether to impose sanctions upon Iran or not, thus circumventing Russia and/or China.






seekerof

[edit on 19-4-2006 by Seekerof]

Why doesn't Iran buy gold with the oil money? Because they spend it all, and more. Iran runs a deficit. Nothing like Americas huge deficit, but they are not in the black.

Iran
PUBLIC FINANCE

I don't think there is that much gold in the world. There is only so much of it available. More may be in the ground but it has to be mined first.

In the world there are currently somewhere between 120,000 and 140,000 tonnes of gold ‘above ground’. To visualise this imagine a single solid gold cube with edges of about 19 metres (about three metres short of the length of a tennis court). That's all that has ever been produced.

Divided amongst the population of the world there are about 23 grams per person, about 1.2 cubic centimetres each. This equates to about $250 - $350 worth per person on Earth, depending on the current price.

link

If I were Iran and facing possible sanctions or possible military strike, I would be sticking gasoline in every crevice and container I could find, forget gold…gasoline is her Achilles heel.

Stopping the inflow of refined gasoline imports or a possible strike on her refineries further stressing her archaic commercial refining/production abilities will shut her economy down (not cripple) overnight and strategically inhibit any ability by her to wage any offensives or entertain prolonged counters to possible aggression.

Iran is extremely vulnerable.

Iran's total gasoline refining capacity is 40 million liters a day; its gasoline consumption is estimated to exceed 64.5 million liters a day. Thus, sanctions that bar Iran from importing refined oil products might lead the Iranian economy to a halt. This situation will have the potential to undermine the political standing of President Ahmadinejad.
Article

“On a net basis, Iran’s gasoline imports rank second in the world.”
Full Article (pdf)



mg

The math I did ( 2.5 mil barrels a day at $70 pb, and gold basically at $1300 / oz.) gave me this figure:

11,217.95 troy pounds into Iran's banks per day.

6 tons a day is a lot of gold. Even if all that gold existed, and they were buying it on NYMEX in New York city, they'd need 4 or 5 frieghters between new york and the gulf just to keep it coming.

That doesn't even take into account what that sort of demand would do to the OFFERED PRICE of gold.

NYMEX just reported doing record trade in gold this past month, 2 million (at 100 oz each) contracts. Assuming half of them being "sell" contracts is 277,777 troy lb per day. The contracts are there, but only for today, and speculators would come running if they saw that kind of market action. And that's only one bourse. There's also the Chicago Board of trade, London, Hong Kong, etc & etc.

How will Iran pay for that gold?

Their "2.5 mbp per day" is into a lot of supertankers with a myriad of global destinations. Many of those won't be paid on until they unload. Sending all that cash to banks in major gold marketing nations of Europe and the Americas will be a serious operation in its own.

Then there's guarding the freighters bound for the Gulf. Piracy in the red sea could easily divert to the indian ocean; and frankly, I'm not sure if the US & UK would invest a lot in suppression when it comes to Iranian victims.

Air frieght would be prohibitively expensive, just because of the security. Talk about a target . . . .

So, they'd be a lot better off if they just bought gold futures contracts without actually taking delivery. They could disguise it under shell companies in case the West freezes their assets. And they'd have the hedge without risking the actual asset.

But you know what, Iran is already doing exactly this.

And so is every nation on earth, including your own.

Go back to sleep, now.

.