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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

#81

Post by simple-thoughts »

thisiscorrect wrote: post #76
simple-thoughts wrote: post #67

For people saying that this is a sign of the dollar dominance ending consider this. Gold is valued in dollars. Oil is valued in dollars. Any gold for oil exchange will be decided by the going dollar rate of each. Counter parties and middlemen assisting this trade will be hedging their positions with dollar settled derivatives traded on deep and liquid dollar markets.

It's obviously possible to buy gold in non-USD currencies. So I think the gist of your comment applies to the dominance the US has over oil markets. So while the "petrodollar" era is still ongoing but its day seem numbered, e.g. by pushing Russia to seek other export markets besides the West, by the increasingly cool perception of the US by OPEC nations [1], etc. [1] https://www.forbes.com/sites/rrapier/2022/10/05/op…

Not just oil markets- usd dominates gold markets as well. Russia will be selling oil to other countries at a “discount” but to what? The price of oil in usd which is why some counterparties consider the trade. If usd was losing dominance, countries would be offering a premium to purchase oil for something other than usd.

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

#82

Post by fernandohur »

Small reminder: ghana's consumption of oil is 0.1% of the worlds total oil consumption (Source: https://www.worldometers.info/oil/ghana-oil/), essentially a rounding error. Take this into account before making any statements about the ending dominance of the dollar.

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

#83

Post by Rexxar »

tiahura wrote: post #59

To all opining about the ongoing demise of the dollar, please take a look at a 10 year DXY chart. Executive summary: It’s stronger than ever.

Higher price and higher usage are not the same thing, a less used dollar would not necessarily have lower value. The evolution of foreign exchange market turnover would be a better indicator to look at : https://en.wikipedia.org/wiki/Currency_pair#Base_currency // https://www.bis.org/statistics/rpfx22_fx.pdf

(it's also increasing in the 3 last years)

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

#84

Post by thaumasiotes »

themihai wrote: post #73
simple-thoughts wrote: post #67

For people saying that this is a sign of the dollar dominance ending consider this. Gold is valued in dollars. Oil is valued in dollars. Any gold for oil exchange will be decided by the going dollar rate of each. Counter parties and middlemen assisting this trade will be hedging their positions with dollar settled derivatives traded on deep and liquid dollar markets.

>> Gold is valued in dollars. Oil is valued in dollars. If a long term contract is signed it protects you from dollar's inflation/volatility as the contract used gold as currency. I think this is important as tomorrow Fed's decision is no longer that important for your energy costs. The more important part is that if enough contracts are signed in gold(highly unlikely given U.S's oil exports) then the dollar is no lo…

> I think this is important as tomorrow Fed's decision is no longer that important for your energy costs.

The Fed decision wasn't important to energy costs anyway, though. Oil is priced in dollars, but the price changes minute-to-minute. Whatever the Fed decides about the value of a dollar, the oil price will reflect that.

If you're involved in a long-term contract involving the exchange of oil for dollars, then the Fed's decision can have a big impact on you. But that's true of all long-term contracts involving dollars; there's nothing special about the other side of the contract being oil.

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

#85

Post by dmitriid »

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.

> What do you think led Vlad to invade?

Any combination of (in no particular order):

- paranoia

- phantom empire pains

- complete and utter failure to produce anything of note on ideological level except "we're a great empire that is surrounded strictly by enemies".

- waning economy with no means, desire, or knowledge to maintain or support it

> The US has been mounting a proxy war against Russia in Ukraine for the past 20 years

No on has done more to alienate Russia from its closest neighbours more than Russia itself.

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

#86

Post by UltraViolence »

We'll see the dominance of the USD erode in the next three decades is my prediction.

Look at how successful Putin was in demanding payment for Russian oil in Rubles. It has propped up the Ruble enormously and its predicted collapse hasn't occurred. In fact it has rallied.

I assure you that other nations have taken note and will take similar steps in the future. Other commodities may well be priced in local currencies of the producing nations. Think gold, diamond, gas, oil, timber, wheat.

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

#87

Post by 0x445442 »

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 it’s more an issue of other countries seeing that the U.S. can just confiscate their dollar reserves if the US doesn’t agree with their sovereign actions. Those countries are choosing to divest from the mono world order which is crumbling. For a long but instructive discussion on current economic events check out this interview.

https://youtu.be/cD_UcRtljDU

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

#88

Post by fuzzfactor »

4pkjai wrote: post #8
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?

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.

Right now dollars are skyrocketing in value compared to their own currency.

For them dollars earn much more being held rather than being invested in most other things within reach.

They can dig up more gold from their own mines which they're always doing anyway regardless of its prevailing price.

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

#89

Post by simple-thoughts »

themihai wrote: post #73
simple-thoughts wrote: post #67

For people saying that this is a sign of the dollar dominance ending consider this. Gold is valued in dollars. Oil is valued in dollars. Any gold for oil exchange will be decided by the going dollar rate of each. Counter parties and middlemen assisting this trade will be hedging their positions with dollar settled derivatives traded on deep and liquid dollar markets.

>> Gold is valued in dollars. Oil is valued in dollars. If a long term contract is signed it protects you from dollar's inflation/volatility as the contract used gold as currency. I think this is important as tomorrow Fed's decision is no longer that important for your energy costs. The more important part is that if enough contracts are signed in gold(highly unlikely given U.S's oil exports) then the dollar is no lo…

Most dollars are created by offshore banks and are not backed by deposits at the federal reserve. The federal reserve only indirectly affects the value of dollars through manipulating inflation expectations. If people think the fed is easing, they buy assets which pumps the collateral of offshore banks which then have larger balance sheet capacity to issue new dollars backed by that collateral.

So even if you are signing contracts in gold/oil pairs, effects of fed decisions can impact your trade in ways that you are protected from in usd/oil pairs as gold is usually viewed as a safety asset - so when animal spirits take off due to fed statements gold can go down while oil takes off. This has in fact happened several times over the last decades.

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

#90

Post by SQueeeeeL »

fernandohur wrote: post #82

Small reminder: ghana's consumption of oil is 0.1% of the worlds total oil consumption (Source: https://www.worldometers.info/oil/ghana-oil/ ), essentially a rounding error. Take this into account before making any statements about the ending dominance of the dollar.

Ahh yes, small changes never preclude larger shifts in large geopolitical entities.

But also if anyone tells you they know the future, they're probably trying to sell you something. If I were in charge of Ghana's finances, I'd be pretty cautious of standing in front of any windows for the next few years.

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