Rumours About Iranian Oil-for-Gold Program Persist

Despite official denials by the Indian government, rumours are spreading that India and China are planning to use gold to pay for future purchases of Iranian crude oil. According to unconfirmed speculation, the Indian government is planning a swap agreement with Iran which will assure future deliveries of Iranian crude oil to be paid in gold and Indian rupees.

At the end of 2011 the US imposed an embargo on Iran, which was endorsed by the European Union last week. India and China are two major Iranian crude oil importers. Both states purchase roughly 30% of yearly Iranian production, amounting to a total of US$30 billion. Should these persistent rumours be true, gold could experience a renaissance as a global currency. It would also undermine the sanctions imposed by the US and the European Union.
 
In recent years the government in Teheran has repeatedly stated that its nuclear program has the purely peaceful aims relating to domestic electricity generation, the US, Israel and EU accuse Iran of developing nuclear weapons. According to Israeli intelligence, Iran's nuclear missiles should be ready for use in approximately two years. But renowned experts believe that Israel will not wait that long before attempting to destroy Iran’s nuclear weapons facilities.

In the past Israel has repeatedly threatened Iran with military action – with many in Israel fearing that a nuclear Iran would pose an existential threat to the Jewish state. Benjamin Netanyahu's government in Israel has stated that this military intervention could even happen without America's support. Recently Iran has warned that additional sanctions by western powers would prompt the country to close the Strait of Hormuz, one of the main trade routes through which crude oil is shipped.

Analysts at the commodity markets fear that a deteriorating geopolitical situation in the Middle East could send oil prices to over $150 per barrel. Furthermore, the fragile state of the global economy and signs that central banks will engage in larger stimulus measures are also benefiting gold and silver prices. In its latest quarterly report, the World Bank states that Europe might have already fallen back into recession, with crippling rates of youth unemployment in Mediterranean countries posing serious problems for governments and societies.