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Ghana plans to buy oil with gold instead of dollars

aljazeera.com

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

#51

Post by dismantlethesun »

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?

Transactions in Ghana cannot directly be in dollars, so when a USD price is quoted for a foreign sale behind the scenes what happens is cedis are brought in, converted to dollars, then given to the foreign party.

This creates a demand for dollars in Ghana, that puts downward pressure on the cedis.

So this avoids that, hopefully reduces inflation.

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

#52

Post by hardlianotion »

ur-whale wrote: post #18
pjc50 wrote: post #16

Earlier quoted context omitted.

Russia's sanctions were as a result of their invasion of Ukraine and they'd still be a part of the normal financial system otherwise. It's nothing to do with petrodollars.

Apologies, but your reading of the situation is shallow. What do you think led Vlad to invade? The US has been mounting a proxy war against Russia in Ukraine for the past 20 years, one they're ready - barring political upheaval in the US - to fight down to the last European.

Much more knowledgeable people than I am suggest that the reasons include nostalgia for empire, and the acute fear that near-Russia is not defensible if states like Ukraine are not controlled up to the nearest natural defensible barrier. Modern Russia appears to have a mortal fear of being invaded that is a little perplexing to the modern European.

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

#53

Post by tcbawo »

ben_w wrote: post #20
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'm only at the level of guessing for topics like this, but my guess is that a chain reaction is more likely to see a switch from USD to Renminbi than a switch to gold (or Euros). China because of the potential assuming similar GDP/capita as the current USA. Not soon because I expect as a prerequisite for change being the new winner's GDP to be dominant rather than just joint top 3 in a ranking system that changes th…

Do you think GDP is the critical factor for determining a global reserve currency? IMO, respect for property ownership rights, legal/judicial recourse, ubiquity of US banks, and political stability are large contributing factors that few other countries can compete with. China has a pretty checkered past regarding ownership rights for citizens who are critical of its leadership.

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

#54

Post by ethbr0 »

ben_w wrote: post #20
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'm only at the level of guessing for topics like this, but my guess is that a chain reaction is more likely to see a switch from USD to Renminbi than a switch to gold (or Euros). China because of the potential assuming similar GDP/capita as the current USA. Not soon because I expect as a prerequisite for change being the new winner's GDP to be dominant rather than just joint top 3 in a ranking system that changes th…

China might be able to force a switch to the Renminbi simply by virtue of their GDP. First as a medium of exchange (which they're doing), then as a reserve currency.

But having people willingly adopt it?

If people are unsatisfied with the USD in specific ways, how would those specific ways be better using the RMB?

It'd be pretty shortsighted to complain about US financial manipulation or use of currency to further political goals... and then jump in mainland China's pool!

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

#55

Post by nequo »

Isinlor wrote: post #30
qikInNdOutReply wrote: post #4

Earlier quoted context omitted.

Could this lead to a chain reactions, were countries abandon the dollar and the dollar looses in value, in return leading to more countries abandon it? A world were the most stabilizing region and its currency become temporary hegemon?

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

Ghana's GDP is flow while Twitter's valuation is stock.[1] Given that Twitter's EBITDA was $211mn, it is more accurate to say that Ghana's GDP is 368 Twitters.

(Which also sounds crazy nevertheless.)

[1] https://en.wikipedia.org/wiki/Stock_and_flow

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

#56

Post by tremarley »

fendy3002 wrote: post #23
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).

I wonder if they can use it? As a noob I see that crypto value is very volatile and don't have intrinsic value, unlike gold that somehow is accepted universally as valuable.

It has intrinsic value as it requires work to mine it. It is impossible to generate more whenever you want.

You can spend bitcoin in every country, it's valuable everywhere.

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

#57

Post by thisiscorrect »

edwnj wrote: post #29
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…

As for what happens next: de-globalisation I predict we'll see blocks forming up again, something like: - West (US+EU) - East (China+Russia) - India (India, Sri Lanka, Himalayan States, South China states) - Middle (Middle East+North Africa) - Latam (Central + South American States) One wild card IMO would be the rise of the Indian sphere of influence. I'll leave some room for India's remarkable ability to snatch def…

I agree with the general premise of your comment, that this is a small sign of the deglobalization which is _already_ under way.

But, what are the UUUGE tailwinds benefiting India? India, even more so than China, seems likely to "get old before it gets rich." Its TFR is already below replacement and falling rapidly.

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

#60

Post by simple-thoughts »

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?

Only half of the story is quoted here. The other half is Ghana is forcing gold refiners to sell 20% to the Ghanan central bank in “cedis at spot prices with no discounts”[1]. So they are minting cedis to buy gold, then trade that gold for oil instead of dollars. If the trade was instead to sell for dollars, it’s more politically obvious that the policy is a tax on gold miners and refiners.

[1] https://www.reuters.com/markets/commodities/ghana-orders-min...

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