OUT: Paying with Dollars IN: Paying with PayPal, Gold

Internet RetailerHome Depot to roll out PayPal in stores nationwide:

Six weeks after The Home Depot Inc. began testing in-store PayPal acceptance, the national hardware chain has set a schedule to make the payment method an option in nearly all of its 2,000 stores, PayPal says.

Zero HedgeIran Moves Further To End Petrodollar, Announces Will Accept Payment In Gold Instead Of Dollars

Much has been spun in recent weeks to indicate that as a result of collapsing trade, Iran’s economy is in shambles and that the financial embargo hoisted upon the country by the insolvent, pardon, developed world is working. We had a totally different perspective on things “A Very Different Take On The “Iran Barters Gold For Food” Story” in which we essentially said that Iran, with the complicity of major trading partners like China, India and Russia is preparing to phase out the petrodollar: a move which would be impossible if key bilateral trade partners would not agree to it. Gradually it appears this is increasingly the case following a just released Reuters report that “Iran will take payment from its trading partners in gold instead of dollars, the Iranian state news agency IRNA quoted the central bank governor as saying on Tuesday.”

Here’s an interesting take on oil and gold, from The Golden Truth The Curious Case of Warren Buffett:

In 1971, right before Nixon closed the gold window and took the $35 fixing off of the price of gold, oil was roughly $3/barrel and an ounce of gold would buy 11 barrels of oil.  Today, with gold at $1750 and West Texas oil around $109, an ounce of gold will buy 16 barrels of oil.  If the world was on a currency exchange standard that was based just on oil and gold, does it look like the price of gold is in some kind of investment bubble, as Buffet would have you believe?  That example shows the remarkable stability of gold as a currency versus the remarkable depreciation of fiat dollars, as it takes slightly less gold in 2012 to buy a barrel of oil than it did in 1971 BUT it takes 36 times more fiat dollars to buy the same damn barrel.  Which would you rather hold in your pocket to use as a currency?

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