The Iranian Oil Bourse: A Bourse with No Basis 6 comments
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At long last, the proposed Iranian Oil Bourse, housed on the Persian Gulf Island of Kish, has become a reality. The Iranian Bourse idea has been a fertile political dumping ground for those who long for the United States dollar's "inevitable" demise. The invasion(s) of Iraq, "bellicose" U.S. Mideast policies...even the persistent presence of Carrier battle groups in and near the Persian Guld and Indian Ocean have all been interpreted as desperate attempts to forestall the Bourse doomsday. So what does the Iranian Bourse (launched yesterday) mean for oil/petrochemical investors? And as for the fate of the U.S. dollar? Almost nothing.
Consider the following...
1. Oil Bourses are developed organically, like the great stock exchanges. The three existing oil Bourses - WTI, Brent and Dubai - are all represented and built upon world class financial structures, transparency and first rate organizational and transactional regimes. Critical characteristics difficult to replicate on command, especially by a state that has no world class financial institutions or capabilities.
2. The supposed shot across the bow of the U.S. dollar is irrelevant. It's hard to imagine the line of dealers and trading clamoring for the Russian ruble or Iranian rial will be very long. The euro is one of the big two currencies and already is a factor in trading of every sort.
3. Currency hegemony can't be imposed for long by force. The U.S. dollar has investment value. Bonds can be bought and sold. Companies and projects can be invested in - and the places the dollar has buying power exceed just the United States.
4. Many oil deals in the Middle East (and elsewhere) are Bourse free. They are state to state and resemble high stakes bartering rather than exchange mediated trades.
What is the investibilty bottom line? The same as it was before this non-event. Look domestically and to Canada. The Canadian oil trusts (Penn West (PWE), Enerplus Resources (ERF)), driller Precision Drilling (PDS), U.S. partnerships like Enterprise Products (EPD), Linn Energy (LINE) and others represent real value and safe have status. At the end of the day, many of the Middle East producing states will become investors in them because the dollar, love it or hate, still carries heft.
Disclosure: Author holds positions in some of the above-mentioned securities
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This article has 6 comments:
Is there any gold left in Fort Knox?
Contrast this to the euro for example, whose manager, the European Central Bank, marks its gold reserves to market on a quarterly basis.
Ivo Cerckel
blogs.siliconindia.com...
By Don Lee, Los Angeles Times Staff Writer
February 19, 2008
www.latimes.com/busine...
SNIP
He Bin, manager of Zhejiang Hexin Toy Co., an export company based in Zhejiang province, collects about $1 million in U.S. dollars every month from his overseas customers. As recently as 2006 -- when the yuan appreciated just 3.25% over the entire year against the dollar -- he didn't worry about quickly converting that money to yuan. His finance department usually went to the foreign currency section once a month. He figured any extra dollars in hand could be used to buy imported materials.
"But nowadays, if we get the money in the morning, we go to the bank and convert it in the afternoon," he said, adding that he faced an even bigger headache when it came to negotiating orders.
"Just a couple days ago, one Japanese client ordered 280,000 wooden toys from us, over $500,000 in U.S. dollars or about 4 million renminbi. . . . But the products aren't due until June and July this year. And they want us to sign the contract in U.S. dollars," he said. "It's very likely that we won't be able to make any money."
"I wish I could only be paid in renminbi and get rid of my U.S. dollars as soon as possible."
Indeed, we do not know in which currency oil is being traded on the Bourse.
Some sources say it’s the Iranian rial.
Others say it’s the Russian ruble.
What if it was gold (which is no longer available in Fort Knox)?
The dollar did therefore not suffer on Monday nor Tuesday morning in Sydney. (1)
As Iran and Russia can however rid the world of the dollar's slavery (2),
the Los Angeles Times said on Tuesday that the dollar is suffering in China (3)
"The dollar rally on Monday turned out to be a one-day wonder, as currency markets shifted their focus back to the risks of the U.S. economy," wrote Boris Schlossberg, senior strategist at DailyFX. (4)
Gold left for da moom!
We watch this new gold market together, yes?
Thank You
Another
6/29/98 ANOTHER (THOUGHTS!) (5)
Ivo Cerckel
blogs.siliconindia.com.../
ENDNOTES
(1)
Forex - US dollar higher on short-covering
www.hemscott.com/news/...)
(2)
Sunday, February 17, 2008
www.iranmania.com/News... irs
LONDON, February 17 (IranMania) - Iran's Ambassador to Moscow said Iran and Russia, as major energy suppliers, can rid the world of US dollar's slavery by promoting oil and gas deals using different currencies, IRNA reported.)
(3)
A sinking feeling for the dollar in China
By Don Lee, Los Angeles Times Staff Writer
February 19, 2008
www.latimes.com/busine...)
(4)
Dollar pressured by U.S. economy fears
Last update: 5:03 p.m. EST Feb. 19, 2008
www.marketwatch.com/ne...
(5)
www.usagold.com/goldtr...
Iran and Russia can't rid the world of anything..a true bourse is based on reliability and a long standing legal system that supports contracts and obligations..since when hs either of those two countries had either?
Coincidentally, we've had all your favorite stocks for quite a while, those trusts are effectively an investment in Canadian dollars (the strongest currency), invested in a cash stream from the most bullish commodity (oil).
We put all our dividends into GLD shares (the safest savings).
Three strikes, the dollar's out !!!!