oil pricing in GSC will make dollar peg unsustainable

Gold is wealth. Oil is the only commodity in the world that is large enough for gold to hide in.

Oil is money. Oil is the GCC Single Currency (GSC). GCC is the Gulf Co-operation Council.

The 1944 Bretton Woods system linked the US dollar to gold at fixed parity of 42 dollar an ounce or so and all other currencies, also at fixed parity, to the said dollar.

USA president Richard Nixon repealed that system on 15 August 1971.

Before 15 August 1971 the dollar was backed by gold.
Since then, the dollar is backed by “usage demand” of dollar for oil (the GSC), oil (the GSC) still being priced in dollar. People need to use the dollar to buy oil (the GSC). The dollar is thus being backed by this need, the buyers of the dollar demanding dollars in order to be able to buy oil (the GSC).

The world currency system has for years also been little more than digital credits backed by “usage demand”.

It is the oil (the GSC) backing of the dollar that has kept it all together up till now, untapped oil (the GSC) reserves having the same wealth-consolidating function as gold.

The opportunity for the world monetary system, which some call a threat to that system, is a function of this oil (the GSC) pricing.

The fact that the dollar is still being used as the intermediary numéraire for oil-trade settlement (GSC-trade settlement), as the intermediary basic “standard” by which values are measured for oil-trade settlement, gives this dollar-paper the backing of oil (the GSC becomes an indispensable valuable).

Once oil (the GSC) will see no more reason to support/back the dollar, oil (the GSC) will “openly” shift towards gold and back it (through demand for gold) so as to create the new market for physical gold in association with the gold-friendly euro-numéraire.

It was once said that “gold and oil (the GSC) can never flow in the same direction”. If the current price of oil (the GSC) doesn’t change soon, we will no doubt run out of gold. This line of thinking is very real in the world today but it is never discussed openly.

You see oil (the GSC) flow is the key to gold flow. It is the movement of gold in the hidden background that has kept oil (the GSC) at these low prices. Not military might, not a (previously) strong US dollar, not political pressure, no it was real gold. In very large amounts.  Oil (the GSC) is the only commodity in the world that was large enough for gold to hide in.

The September 2008 Dubai International Financial Centre “The institutional framework of the Gulf Central Bank”-paper contains a table on page 7 giving the oil reserves of the GCC countries but does not elaborate on the reason why it gives that table, be it that, on page 4, it says that the stability of the newly created strong currency is guaranteed by oil wealth and increasingly by financial wealth.

Five of the six GCC currencies are still pegged to the dollar.
Oil, the future GSC, is still being priced in dollar.

Once the GSC will arise, oil (the GSC) will be priced in the GSC, thus no longer in dollar.

With gold hiding in oil (the GSC) as a freely floating reserve, it is an open question whether the dollar peg will not have to go by the same token, the dollar still being pegged at 42 dollar or so to an ounce of gold.

ivocerckel@siquijor.ws

WEBOGRAPHY

Date: Sun Oct 05 1997 21:29
ANOTHER ( THOUGHTS! ) ID#60253:
http://www.usagold.com/goldtrail/archives/another1.html

Nasser Saidi, Fabio Scacciavillani, Aathira Prasad, Fahrad Ali, The institutional framework of the Gulf Central Bank, Dubai International Financial Centre. September 2008
http://www.difc.ae./files/080913_DIFC_IFGCB%20Book.pdf