Reply #32: A Walk Down Currency Lane (Willie)

[54anickel]

http://www.321gold.com/editorials/willie/willie032106.html

IRANIAN OIL EXCHANGE IS "ON HOLD"
To begin with, an "I TOLD YOU SO" is warranted, as the Iranian Oil Exchange is delayed by several months, maybe a year. My impassioned "Mosques, Civil War, Oil & Gold" article, dated March 2nd, forewarned on the delay and its side-tracked launch. See postings #1, #2, #3, which some editors found to be too controversial or portions off topic politically to post. The true motives behind the delayed launch are to remain debated. Perhaps a motive was to remove from the landscape yet another bomb target, a very easy target to hit and destroy. However, such delay will not put a stop to the USDollar decline. My source is quoted by the author of the Globe & Mail article, dated 14 March 2006 and cited below, by way of a reliable well-informed personal friend. In that article, John Partridge from the INVESTMENT REPORTER writes:

As the nuclear standoff pitting Iran against the West continues, some conspiracy theorists are more focused on another plan that the Middle Eastern nation is pursuing. But they are jumping the gun if they still figure Iran is within days of launching a new international oil exchange that would sell its own and other Middle Eastern oil producers' black gold in euros rather than U.S. dollars, and which, the theory goes, could ultimately torpedo the greenback and the U.S. economy. Despite repeated reports over the past 18 months or so that the planned bourse would finally open for business on March 20, 2006 -- and go head to head with the New York Mercantile Exchange and the ICE Futures Exchange in London -- the start date has been postponed by at least several months and maybe more than a year.

"In the middle of 2006, we are able to start the bourse," Mohammad Asemipur, special adviser on the project to Iran's Oil Minister, said when reached in Tehran. The plan is to trade petrochemical products first, with a crude oil contract coming last, a rollout that likely will take three years, he said. "Oh, crikey, it's at a much earlier stage than people would think," said British consultant Chris Cook, who claims credit for coming up with the idea for the exchange in the first place and is a member of the consortium headed by the Tehran Stock Exchange that is charged with bringing the project to life. "You can rest assured, there will not be a crude oil contract, Gulf-based, in my opinion, within a year -- and that would be really pushing it," Mr. Cook, a former director of ICE's predecessor, the International Petroleum Exchange, said when reached in Scotland. The electronic exchange is to be located on Kish Island in the Persian Gulf, an Iranian duty- and tax-free zone.

The euro will benefit from Persian Gulf oil sales, with or without an official oil exchange. The important factors are where key OPEC nations store their surplus money and in what instruments, whom they sell oil to, and how they finance significant capital investments. Future energy sales will be encapsulated in grand contracts. Lately OPEC nations have been pouring money into the Middle East stock markets, but those markets have endured serious selloffs in recent weeks. They have also gone bonkers with a construction boom, complete with the giant amusement park Dubai World and golf courses. As investors exit the Middle Eastern stock markets, young and fragile to be sure, much of their money will find its way to a more stable gold bullion, whose destination has a long reliable history.

GOLD MIGHT HAVE FINISHED ITS "REST"
With little argument from anybody, gold has made a huge run since last autumn. Typically, in a strong bull market, most of the gains will be retained. Often a retracement of 3/8-ths of the gain from the breakout occurs into clear ground. In our case here, the gold upward path was painted by too many geopolitical brushes. Gold benefited from the monetary response to the natural hurricane disasters which persist. Gold was pushed by too many participants fed up with the bloated world currency, the most mismanaged currency in modern history, the USDollar, which fights the good fight in battling the inefficiencies of debt overhang and the threat of asset bubble dissipation.

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