Khaleeji Will Be The Gulf’s Common Currency In 2010

The Market Oracle reports that New Gulf currency 'Khaleeji' poised to be Gold backed to remove 'Riba'.

(emphasis mine) [my comment]

New Gulf currency 'Khaleeji' poised to be Gold backed to remove 'Riba'
Feb 17, 2009 - 07:35 PM
By: Stefan_Pernar

Again, bad news about this week and even those of us who made all the right moves early on can not help but feel anxious about what seems to come next: act two of the global financial and thus economic meltdown. This is indeed not the time for a little 'I-told-you-so' victory dance. Yes, gold as well as silver are storming to new heights.

Yes, global trade collapses. Yes, Asian economies are in free fall as a result. Yes, Japan's economy is crashing into an economic depression. And yes again, global stock markets seem to inevitably march forward and over the edge of a precipice, while eastern European countries, the UK as well as Switzerland are following the nosedive of the Icelandic dodo falcon. Once the dust has settled we may have very well witnessed the worst recession in 100 years. On the background of this picture, news of GM considering to file for chapter 11 and China continuing to prep the world for a departure from US bonds comes almost as an afterthought. Everything points to something big happening real soon now and it smells like panic is taking over. Nothing new in the west nor the east - however watch the middle. The middle east to be specific.

There is something that is not only new, but something that for the most part has been overlooked by the majority of the news outlets that at least I use to frequent [He must not frequent my blog]. When GCC leaders concluded their 29th annual summit meeting in Muscat, Oman at the 31st of Dec 2008 with a final approval for the creation of a single currency for the six-nation economic bloc, I certainly did not hear about it. Meet the Khaleeji. It is the upcoming common currency of the Gulf Cooperation Council (GCC) scheduled to go live in 2010. In light of the worsening financial crisis earlier worries of a delay until 2015 have apparently been dispelled.

That I have not heard about the Khaleeji until about a week ago is surprising to me for two reasons. Firstly, the common currency for the GCC has apparently been mulled since at least 2002 by the IMF giving more than enough time for the word to spread. Secondly - and here is when it becomes interesting: speculation is about for the GCC currency to be backed by gold. And why shouldn't it? Not only has the introduction of a then still called ' Islamic Gold Dinar' as a global currency been suggested since early 2001. No, in addition a group of Saudi businessmen has purchased gold to the tune of $3.5 Billion in an off market transaction in November 2008. Add to that impressions of the world renowned Dubai Gold Souk and I would be very surprised if gold does not at least become a major component in the basket of goods lending punch to the new currency.

But there is more. The Arabic word 'khaleeji' (????? ) stands for 'of the gulf' which would explain the 'G' symbol with the by now customary central bar. I however favor another explanation: just as the '$' symbol once so aptly stood for 'unit of silver' why can't the Khaleeji be understood as a 'unit of gold'? The most convincing argument for such an interpretation is that having a gold/silver backed currency is considered the final leg to remove Riba (??? 'interest' or 'usury') from the financial system, which is forbidden arcording to Islamic economic jurisprudence.

My reaction: Although I already reported about the Khaleeji on January 2 in my entry *****Gulf Arab Nations Break Their Dollar Pegs*****, I felt it was worth mentioning again for those who might have missed the story. Here is a quick recap of the important points about the GCC's proposed common currency:

1) On December 31st 2008, GCC (Gulf Cooperation Council) leaders concluded their 29th annual summit meeting in Muscat, Oman with a final approval for the creation of a single currency for the six-nation economic bloc, still targeted for 2010.

2) The currency, named the Khaleeji (Arabic:
?????), will be sole legal tender in Saudi Arabia, Kuwait, Bahrain, Qatar, and the United Arab Emirates.

3) The term 'Khaleeji' is Arabic for "of the gulf".

4) The Khaleeji project is gathering pace, with Saudi Arabia's King Abdullah directing the GCC economic integration committees to speed up their work and complete the whole exercise by September 2009.

6) Speculation is that the Khaleeji will be backed by gold.

7) In November 2008, a group of Saudi businessmen allegedly bought $3.5 billion worth of gold, believed to be the largest ever single transaction for the precious metal.

8) Gulf countries are keen to break away from the link with the US dollar because it ties them to inappropriate monetary policies that exaggerate the boom-to-bust cycle in their economies.

Conclusion: I feel the same way about the Khaleeji today as I did back in January:

My reaction: Wow, Arab countries have announced that in 2010 they will stop selling oil for U S dollars. Even more interesting is the possibility of the Khaleeji being backed by gold. Could this foreshadow a move a move back to the gold standard?

In any case, this development, together with China making the Yuan an international currency, effectively end the dollar's role as the world's reserve currency. Soon, the US will be buying its oil in gold/Khaleeji and its consumer goods in yuan. The US dollar is now living on borrowed time.

Think about it:
If you can't buy consumer goods or oil with the dollar, what good is it as a reserve currency?

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5 Responses to Khaleeji Will Be The Gulf’s Common Currency In 2010

  1. Anonymous says:

    BINGO!!! Thats the point Eric. Its the manufacturers meeting the commodity producers, someone, somehow, someway needs to introduce these parties to each other!!! Bind them with a common currency backed by commodities, currencies and of course gold, and it is a DONE DEAL!!

    Peter Schiff was in the middle east telling the sheiks to buy the gold miners, if they take his advice your going to see the sparks fly.

    This is going to happen! And it is going to happen SOON!!

    When our central bank monetizes the debt and starts buying treasuries look for all HELL TO BREAK LOOSE!

    The Chinese are silently backing out of treasuries buying a stake in Rio Tinto,getting a foot into Afica, they can see the writing on the wall. The long suffering Japanese are going to have to deal with a phony economy built to service a phony economy (ours). They will be mirred in stagnation/deflation untill someone leads them by the nose, kicking and screaming into the new world order. But once they get the hint that they need to change with the times, they will. The Japanese are industrious, smart and frugal, these are good points to base an economy on.

    This is gonna get done folks, OPEC coupling up with the far east will equal a GLOBAL decoupling. Trade surplus countries will unite into a mutually beneficial trading block devoid of the G7 albatross.

    Look for a dollar crisis THIS YEAR. If you need durable goods get em now. Take a look at Canadian oil trusts to lock in your hedge against higher oil prices. Stock up on grains, canned meats, imported goods etc. Take advantage of the current liquidation phase of the economy everything is getting close to as cheap as its EVER gonna be again.

    This is gonna get messy and it's probably gonna catch everyone flat footed. Buy gold to lock in future purchasing power that you aren't able to spend on grains, oil and firearms DONT WORRY if gold goes down in price at this point, EVERYTHING else will follow (except for oil which is at a historically high ratio to gold.)

    Batten down the hatches, if these dolts (OPEC, eastern Asia) ever get their collective act together, your going to see an absolutely HUGE global transference of power, wealth and prestige in a VERY short period of time at OUR expense.

    Good luck.

    PS:Eric you buying grains yet? Gold is at a grand, better hurry.

  2. Yohay says:

    It's going to be exciting to see another major currency enter the forex market.
    But currently, with the deteriorating price of oil, this new currency isn't going to be so strong...

  3. Mark Herpel says:

    The new currency is very exciting and I was reading it may be out as soon as Sept of this year. However, I have not seen anything but rumors which say it will be backed by gold. I approve and would love it, but to date I've only seen a basket of currency including the dollar and euro. If you can point to a URL where it has that info it would be great.
    Mark Herpel
    Editor - DGC Magazine

  4. tanygeo says:

    This action proof to be a win, win situation. This is a true art work, which will be a success story. The above statement is seen to be contradictory. The situation is very critical and need an experience complainer to resolve it. This conversation is going no where. It’s lacking the place of a good leader to head the things to come out on conclusion.
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  5. This is going to be very interesting to see another major currency enter the forex market.

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