Swapping dollars for gold - very sensible IMHO
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Interesting. Trading one commodity, whose value can only be realized by selling it for goods and services, for another, whose value can only be realized by selling it for goods and services.
An odd strategy. Some people would think that oil is an even better commodity to have than gold. Oil, at least, and in that geography, stores itself for free. Gold, on the other hand, has costs which must be paid year after year. Weird.
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Gold is not at the mercy of the USA like the USA $. Some don’t like all powerful masters or unreliable allies.
The Captain
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I really see this as outstanding news. Really.
Those dollars in Saudi hands are just sitting there and not getting spent. With the Swiss selling them some shiny rocks, the Swiss will now likely spend those dollars.
We are the second largest import country for the Swiss. Win!
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Doubtful logic. The dollars are not in spendable cash but securities, treasuries. Remember the motto “In Gold We Trust.”
The Captain
So Saudi swapped treasuries for gold? If so, I missed that in the link.
…
Just went back and checked. I could find nothing supporting that claim. Can you substantiate? I would agree with you if that can be substantiated. Thanks.
160 tons is a lot of gold, worth about (scribbles on napkin furiously) $12 billion or something.
On the other hand, Saudi Arabia accepts about 300 billion dollars for their oil every year. Until they start accepting gold for oil, I don’t think it is quite correct to say they are “ditching” the dollar.
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I can’t but cash does not earn interest while treasuries do. That’s the logic I used. It might be cash deposited in banks but think of the disruption removing such a large amount would do to fractional reserve banking.
The Captain
- There’s a Jayne Fonda movie about Saudi’s decision to stop accepting dollars. Disaster predicted.
US $13,273,311,897.xx
160 metric tonnes,
US $2580/per troy oz,
32,154 troy oz per metric tonne.
Who is more reliable than the USA?
Our record right now is back and forth because of crazy.
But which country is at all more reliable?
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I don’t know much about present day Saudi Arabia but I do know some history. I chanced on a uTube video about Mohammad bin Salman (MBS), Crown Prince and effective ruler of Saudi Arabia. Highly educational.
If you don’t have an hour to waste on your education, my synopsis is that MBS, as he is known, is a charming, brash, ruthless, pragmatic, and effective dictator bent on modernizing the Saudi kingdom much like the Young Turks, and Mohammad Reza Pahlavi, Shahanshah of Iran. The video talks about:
- A more secular state, reducing Wahhabi control
- Modernizing the economy
- Signing the Abraham Accords (peace with Israel)
- Removing troublesome people
It should not surprise that a man willing and able to take on Islam to introduce reforms, should to be willing to take on the world’s remaining superpower while not renouncing Islam or friendship with America.
Note that both Turkiye and Iran went (somewhat) retrograde.
Mohammad bin Salman: Prince With Two Faces
The Captain
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Depends on which side of the border you happen to be.
The Captain
US has weaponized its financial dominance. Countries around the world are waking up to it. Today it is Russia, tomorrow it can be anyone. The sanctions regime is going too far. Secondly, US is running record deficits and printing USD like there is no tomorrow. Now the baseline assumption is $1 T deficit and could get to easily $2 T under normal times, and in a crisis or in a recession we are looking at $3 T. We are trashing USD. Why countries around the world want to treat USD as a reserve currency? This is a legitimate question and concern from the countries around the world.
But, unfortunately there is no clear alternative(s) or answer. This is where Gold, Bitcoin, countries trying to settle trade in their local currency, etc are coming in.
Separately USD losing reserve currency status is a very big loss even catastrophic for US.
Nothing new under the sun department. In the early 1920s, Congress passed a law that said that any of our erstwhile allies who did not repay their war debts to the US would be punished by exclusion from the US financial system. That brought the allies to the table.
When the depression started, some former allies defaulted outright. The UK and Italy made partial payments as best they could. Congress passed another law that partial payments were the same as completely stop paying, punishable by exclusion from the US financial system. So the UK and Italy stopped paying entirely as well.
Steve
We are talking foreign affairs not domestic policies.
Which other country projects as much into foreign affairs reliably?
People on the other side of the border are “foreign affairs.”
The Captain
Then all of them regardless need less crap in leadership. Crap causes deaths. Time to grow up world.
Have you read or watched The Ugly American?
The Captain
Bull
Total unadulterated bull.
The tinpot dictators need that cover.
Are you still in VZ? Why not?
Are the Nazis still in power in Berlin?
Did the North Vietnamese win really help anyone?
Is Xi worth spitting on along the sidewalk?
What makes people so arrogant?
Why back up the trash because someone American has the right opinions on sheer garbage?