Gold based trade between Turkey and Iran: potential implications

One thing is pretty clear. If we ever return to a gold based monetary system it won't a negotiated top-down grand bargain à la Bretton Woods. The financial system is too vested to current for change to come from within. If a return to gold is to ever come, it seems it must come from forces outside the financial system, either from the grass-roots or from outside.

Grass-roots efforts to bring about honest money have for the most part crashed and burned for one reason or another but mostly because there is a heavy and deliberate legal bias against any sort of gold based money. Ron Paul's Free Competition in Currency Act of 2011 was designed to address these legal road blocks.

The other possible route for re-establishing the gold standard is from outside the system, from forces that have no stake in our current system. That's what makes the following story so fascinating:

http://gata.org/node/11958

It's almost (but not quite!) enough to make one wonder: which is Iran's greater threat to our system: its nuclear weapons program or their opting to accept payment in gold in order to get around the sanctions?

There are systems in place internationally that allow you to send and receive payment with foreign countries. One thinks of the systems that allow you to go to an ATM in Amsterdam, draw on your bank account in the United States and receive euros in your hand. It's an amazing thing. It's one of the marvels of our world.

But those systems do not work in Iran. The international sanctions have shut those systems down which prevents them from receiving payment in dollars or euros.

Apparently, Turkey gets much of the natural gas it uses from Iran. Normally, prior to sanctions, a retail purchaser of natural gas in Turkey would pay for it in Lira, Turkey's currency. The natural gas distributor in Turkey would then pay Iran, not in Lira, but in dollars, using the financial mechanisms set up to facilitate international trade. Iran's central bank would take those dollars and issue local currency to the seller of the natural gas. The seller of natural gas in Iran would use that local currency to pay his workers and local suppliers.

But this does not happen today, The banking link between Turkey and Iran is broken because of the sanctions.

So to evade the sanctions, Iran is now accepting payment in gold for the natural gas it sells to Turkey. So the distributors of natural gas in Turkey take the Lira they receive from their customers and buy gold with it and ship that gold to Iran. This system would be a bit cumbersome to to us who are used to electronic transactions. Plus there are the risks of shipping gold. Thieves, graft, high mountain passes, anything could happen.

So here is my point. Wouldn't it be easier if someone offered a service to hold onto the gold say in Ankara or wherever and credit the accounts of the different parties involved? This was how London got its start as a banking center back in the days of the gold standard. Rather than ship gold around, they offered the service of tracking of the transactions and who had rights to how much gold, reducing the amount of gold that actually got shipped around.

Necessity being the mother of invention, wouldn't it be interesting if these sanctions on Iran resulted in the creation of a new system of settling international transations but based on gold, a system that once established would continue even after the sanctions are lifted?