India Buying Oil From Iran With Gold

It might depend upon whether or not this is a 1-time deal or a continuing process. An article I read a few days ago stated that India and Iran would be conducting trade deals in their own currencies rather than converting to dollars to settle the trades. The amount of gold mentioned in this article was 7.2M ounces or nearly 250 tons. That seems like a lot of gold. Gold is valuable stuff, so is often held in vaults and allocated to various owners who use it for trading or "leasing" purposes. Its ownership changes but the location of the gold does not unless a country requests that it be shipped to them. In most cases, it isn't and only its book entry changes to reflect who owns it at the moment. They don't often risk its loss due to airplane crashes or sinking ships.

Gold is considered by many to be an alternative currency rather than a commodity. This is why banks that handle gold usually let their currency desk handle all gold-related issues rather than their commodity desk. I am sure that Uncle Ben knows this, in spite of his assertion that "gold is not money".

If countries that have significant gold reserves start using it commonly in trade then that should cause gold to be more widely used and more gold would be needed. As that demand rises, the price should as well unless the gold miners can produce enough gold to satisfy the demand. If they can't, then gold prices could rise and perhaps considerably.

They might not have the same grip on the PM markets as they once had but I do not think that they have given up on the idea. Remember, it is the paper silver and gold futures markets that set the prices and they are leveraged anywhere from about 40:1 to 100:1 and maybe even higher than that. If, for example, there were 1 billion ounces of silver in the world, there could be 40-100 billion ounces of paper silver trading on the various exchanges. Additionally, anyone manipulating this market has VERY deep pockets and can buy and sell in large enough quantities to affect the market pricing mechanism. Someone like Eric Sprott is the worst nightmare of these PM paper pushers because he deals in REAL PMs that must be delivered and not in paper that can be created out of thin air and that can disappear the same way. POOF! Gone. The folks who invested in PM futures contracts with MF Global know all about this, unfortunately.

It might be. There is some disagreement on the actual formation mechanism for petroleum. Check out Dr. Thomas Gold sometime. His theory was that micro-organisms in the Earth's crust were responsible for creating a tar-like material that heat and pressure then convert into what we call petroleum. This theory has not been proved but Gold did find petroleum in a basalt rock formation where the dead-dino theory says there should not be any petroleum. If Gold is correct, then petroleum is not a finite resource. Even if this is true, though, it might not matter because we could be pumping it out MUCH faster than it can replicate.