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Ghana plans to buy oil with gold instead of dollars

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Re: Ghana plans to buy oil with gold instead of dollars

#41

Post by Ekaros »

pwm wrote: post #12

I know a lot of people dislike bitcoin here but I'm wondering (with the huge assumption that its value stabilises over time) would it not actually be a better solution? Not just from an obvious logistical but also from an environmental perspective? I'd imagine gold mining to be much more destructive (both to nature and to human life).

And why give all that wealth away to current holders? Nothing actually make bitcoin inherently valuable on nation-state level.

Gold is fine for now and maybe in future some new agreed upon commodity-current basket currency.

Re: Ghana plans to buy oil with gold instead of dollars

#42

Post by dragonelite »

ur-whale wrote: post #17
dragonelite wrote: post #11

Earlier quoted context omitted.

Wondering what will replace it, maybe the Brics coin a basket of currencies and commodities. A bit like Keynes Bancor concept if i'm not mistaken time will tell what sort of currencies the Russians and Chinese will introduce for BRICS, SCO and BRI nations.

The Chinese Renminbi (Yuan) is a good candidate to quickly get on par with the USD. If they manage it properly that is, as in: not print mountains of it, and not using it to enforce their political aims. They're currently actively busy making the Renminbi reserve and default trading currency in much of Asia. And, as a last resort, there's always Bitcoin and gold, although, as Ghana will discover (unless they make the…

Asia does seem to move more and more into the renminbi sphere. It would makes sense if China starts exporting more RMB over the next couple of years to facilitate trade in the region and get the USD financial hooks out of the region. For now i'm mostly waiting on South china sea code of conduct being finalised. Seems Vietnam is now willing to cooperate with China on their South China sea issues and resources/border disputes.

You also have Xi next month meeting Arab leaders in Saudi Arabia, a lot of people are expecting a PetroYuan announcement or at the very least the foundation of such an agreement. I think after those two events are handled and closed, China should be in an excellent position to become Asia's major energy hub. They can get Russian, Qatari, Central Asian stans and Saudi energy products without having to use Western financial institutions or services. I think the Russian and Arab leaders want a bigger share of the Chinese bonds and financial markets so they can grow their RMB reserves like they are already doing with their dollars.

Ghana going with gold for energy imports seems smart for now but yeah moving gold isn't easy, also verifying the gold is also not easy. That's why i think BRICS+, SCO and BRI nations will create a block chain with a digital currency(Central Banks digital Currency) backed by a basket of currencies and commodities to facilitate import and export and government to government financial transactions.

Re: Ghana plans to buy oil with gold instead of dollars

#43

Post by lvl102 »

Ekaros wrote: post #31
peter-m80 wrote: post #26

Honest question: Can someone explain me why using gold instead of dollars to buy oil isn't the same as sell gold for dollars and use those dollars to buy oil?

For two parties to transact in dollars they need either to physically hold large amounts of dollars. Or have access to some shared ledger that is accounting system where transactions can happen. Say A, B, C account. A sells gold and get dollars from account B to account A. And now they can buy oil from owner of account C. But who owns and runs these accounts or the transactions between them? One option is SWIFT syste…

No post body was provided.

Re: Ghana plans to buy oil with gold instead of dollars

#44

Post by kibwen »

rich_sasha wrote: post #27
kaladin_1 wrote: post #3

Interesting the pressure is increasing. More and more countries questioning why they need to base their foreign transaction on the US Dollar. Could this mounting unrest be as a result of the seeming inability of the US Federal bank in checking inflation of the US Dollar. Also, some of these Nations can no longer determine what benefit it is to them is using the US Dollar as their reserve currency and trading currency…

I think this take is somewhat over-reacting. I'm pretty sure you'll find that the price they agreed is really in USD, and only the medium of exchange is gold (even if the paperwork or agreement doesn't even reference USD). So really they are paying X USD's worth of gold - with both oil and gold price being fixed in USD somewhere abroad. USD is so incredibly ubiquitous, it won't easily go away. Reserves are a little d…

> Or will they sign a piece of paper saying "gold held by in a safe by someone else and owned by me is now owned by someone else" - in which case there is similar counterparty risk, except perhaps not against the US government.

The US holds a quarter of all the known gold reserves in the world, and has more gold than the next three countries combined, so there's a decent chance that Ghana's gold is already in the US.

Re: Ghana plans to buy oil with gold instead of dollars

#45

Post by Spooky23 »

kaladin_1 wrote: post #3

Interesting the pressure is increasing. More and more countries questioning why they need to base their foreign transaction on the US Dollar. Could this mounting unrest be as a result of the seeming inability of the US Federal bank in checking inflation of the US Dollar. Also, some of these Nations can no longer determine what benefit it is to them is using the US Dollar as their reserve currency and trading currency…

Unlikely. Ghana happens to be a gold producer; they may see this as a better deal for them, and may get some other benefit from a country like China for rattling the cage.

Re: Ghana plans to buy oil with gold instead of dollars

#46

Post by elzbardico »

peter-m80 wrote: post #26

Honest question: Can someone explain me why using gold instead of dollars to buy oil isn't the same as sell gold for dollars and use those dollars to buy oil?

Decoupling from the western financial system and having a higher level of resilience from sanctions. You never know if the US will decide tomorrow you're not behaving as expected under the internal rules-based order.

Re: Ghana plans to buy oil with gold instead of dollars

#47

Post by elzbardico »

pjc50 wrote: post #15
4pkjai wrote: post #8

Earlier quoted context omitted.

I think the reason they want to avoid the US dollar is so that they do not need to obey US sanctions. From what I understand, if you send US dollars around the world, they need to go through a US bank. All US banks must obey US government sanctions.

Ghana are not subject to sanctions?

They may want to buy things like fertilizers or wheat from a sanctioned entity, Russia coming to mind.

Re: Ghana plans to buy oil with gold instead of dollars

#48

Post by 3pt14159 »

GoOnThenDoTell wrote: post #5

Im curious about the mechanics of how this helps, could they not sell the gold for dollars to buy the oil?

All the mechanics in the world won't help you if the fundamentals are broken.

At some point, when push comes to shove, someone has to take delivery of something. This comes down to a matter of efficiency and faith. Who do you have more faith in? A random bank claiming to having a certain amount of gold on deposit? Your own central bank taking in tons of gold for delivery of a good?

This is silliness. If the USD is inflating too much (or if you perceive American sanctions as too onerous) then use a different currency like the Swiss Franc or the Euro.

None of this really matters. What matters is international settlements, agreements, and force. If you're on the wrong side of the WTO your economy is cooked anyway. Besides, if Ghana were some stalwart of anti-corruption then this may mean something, but it isn't. It's middle of the pack. Well behind Canada, Europe, Japan, and The United States; all countries or blocks that are perfectly fine selling and buying in USD.

Re: Ghana plans to buy oil with gold instead of dollars

#49

Post by hardlianotion »

speedylight wrote: post #36
Isinlor wrote: post #30

Earlier quoted context omitted.

Ghana GDP is 77.59 billion USD. That's almost 2 Twitters :) . Ghana is not triggering any chain reactions.

Lucky for them, otherwise the US would’ve sent some freedom and democracy their way.

Seems unlikely.
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