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In the past couple of weeks the Saudis have bought $3.5 billion in gold. Iran’s President Mahmoud Ahmadinejad reported converting Iran’s financial reserves to gold and Chinese investors’ demand for gold hit 38.4 tonnes in the first nine months of this year against 24 tonnes for the whole of 2007. Putin suggests Russia, China ditch the dollar in trade deals and before the G-20 conference French President Nicolas Sarkozy called for an end to the dollar as the world reserve currency. Additionally, in late October, a Chinese state newspaper urged replacing the dollar as the world reserve currency.

Last month from the Toronto Resource Investment Conference, Dr. Jim Willie told Al Korelin, “I got word in the last 24 hours that the Europeans, Russians, Chinese and Arabs, have agreed to a new world currency. It’s going to be based on a basket and the dollar and British Pound are not included. Those currencies are going to be largely tethered to gold. There’s going to be a new Russian gold-backed Rubel and a new Arab-Gulf Dinar. You cannot have a global finance system with a world reserve currency based on a debt system or an indebted economy…you have to ask yourself who is calling the shots, who is forcing decisions? The answer is the Bank for International Settlements which has had enough of the United States.”

I think an immense shift in world economic power is about to take place that will effect the price of gold. If the Arabs anticipate a fall in the dollar, a gold-backed basket currency would in effect make the US, and the world for that matter, pay for oil in gold. I think intuitive investors are catching on as Superfund’s analyst Johann Santer suggests now is the right time to buy gold.

Tags: china, G-20, gold, Iran, Saudis, world reserve currency