Just for fun, I thought I'd push this idea of gold for oil to it's logical extreme.

Using these numbers as my guide:

http://news.goldseek.com/GoldSeek/1326384060.php

I estimate that all the gold in the world could buy 24,418 T1 class tanker cargos.

How does that stack up against world oil consumption, which for 2010 was about 85M bbl/day?

OK, 85M / 3.16M (T1 capacity) = 26.89, or roughly 27 cargos per day.

So, in one year you'd need 27 X 365 = 9,855 T1 cargos to supply the world, and you have enough gold (theoretically) to buy 24,418.

So, if you used all the world's existing gold to buy oil, you'd get just under 2 1/2 years worth at current rates of consumption.

Hmmmm..... Zurich? We have a problem!

I know.... it's kind of ridiculous, but it does help put things in perspective. One implication of gold for oil is that nations would have to balance their trade. If you can't earn enough in exports to pay for the oil you use, you are in big trouble. One hidden, and perhaps beneficial outcome would be more local production, which would still be paid for in fiat. OTOH, if gold for oil puts a crimp in international trade, it will be that much harder to obtain the gold you need to buy your oil.

I don't know if this gold for oil idea is really serious, or just a political shot across the bow, but you can be fairly certain that if the financial collapse some are predicting comes to pass, then gold will be the preferred method of international settlement. Barter would work also I suppose, but only if you have something to barter with. Under that rubric, such things as wheat, corn, soymeal, copper, iron, you get the idea, would have a gold-equivalent price, which implies a much higher price in fiat, since any producer selling dometically would want to realize the same profit as he would selling overseas.

I realize it's too early to make any kind of serious predictions on this topic, but just thinking about what *might* happen at least helps us prepare for what actually does happen.

Interesting times.

ebear