From last week, a series of interviews at Bloomberg with government officials in and around the North Dakota oil boom region where the influx of out-of-state workers is stressing government services, infrastructure, housing, and other things.

We’re only about an eight hour drive from that area and, as a result, we hear quite a bit of the local news that doesn’t make it to the network news broadcasts including two separate instances of locals being murdered by men attracted to the area and, for whatever reason, choosing an alternative path than driving a truck for an oil company.

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India, Iran, Oil, and Gold

The Iran oil embargo and freeze of its central bank assets approved by Europe the other day has had an interesting unintended consequence – and not just another threat by Iran to block the Strait of Hormuz. According to this Debka report, India has agreed to pay for Iranian oil with gold instead of U.S. dollars and China is expected to follow suit.

So far, there has been no official confirmation of this story and, at the moment, I’d have to agree with this commentary at Commodity Online that it’s probably best viewed as a rumor, but, if both India and China do intend to pay for their $25 billion per year in oil purchases from Iran with the yellow metal, that could result in a lot of gold being mobilized.

Of course that wouldn’t necessarily mean that the gold price will rise. India could simply exchange their currency for gold, transfer ownership of the gold to Iran in exchange for oil, and then Iran could exchange that gold for whatever currency they desire, having no net effect on gold demand. But, it certainly won’t hurt the gold price and will surely further diminish the reserve currency status of the U.S. dollar.

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Though not quite at the same level of hysteria that was generated a few years ago when it was announced that Iran was in the process of setting up its own oil bourse and, as a result, severely impacting (or much worse) the reserve currency status of the U.S. dollar, word over the weekend that Iran’s trade with Russian will now be conducted using rubles rather than dollars, according to this story at Fars News Agency, is nonetheless interesting.

Iran and Russia have replaced US Dollar with their own currencies in their trade ties, a senior Iranian diplomat announced on Saturday.

Speaking to FNA, Tehran’s Ambassador to Moscow Seyed Reza Sajjadi said that the proposal for replacing US Dollar with Ruble and Rial was raised by Russian President Dmitry Medvedev in a meeting with his Iranian counterpart Mahmoud Ahmadinejad in Astana on the sidelines of the Shanghai Cooperation Organization (SCO) meeting.

“Since then, we have acted on this basis and a part of our interactions is done in Ruble now,” Sajjadi stated, adding that many Iranian traders are using Ruble for their trade deals.

“There is a similar interest in the Russian side,” the envoy stated, adding that that Moscow is against unilateral sanctions on Iran outside the UN Security Council, specially the recent sanctions against Iran’s Central Bank (CBI).

This follows a number of similar moves by Iran in recent months with other trading partners and China’s ongoing efforts to establish currency agreements with many other nations, most recently Japan, a reminder that currencies such as the U.S. dollar loser their “reserve” status very slowly, but, in this case, apparently very surely.

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Fear and the Gold Price

The Economist has a set of nine charts that depict what happened in financial markets in 2011 as part of their Daily Chart section today. Below are the last two in the series showing the S&P500 Volatility Index atop selected commodity prices.

Clearly, there’s a pretty good correlation between volatility in U.S. stocks and the gold price, but, as shown above, the former follows the latter – maybe not what you might think at first. Most of the other charts are related to the global economy, credit and currency markets where there are no doubt more relationships to explore, such as the coincident peaks in late-April for the euro and oil (and silver).

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A Mixed Year for Commodities

With only a few trading days left in the year, 2011 is shaping up to be a rather unusual year with about one-third winners and two-thirds losers, kind of a mirror opposite of 2006 when there were about one-third losers (including energy products) and two-thirds winners.

If not for resilient energy prices, this year would look a lot like 2008, however, after last week’s oil price surge, all but natural gas will likely end with double-digit gains. Of course, gold looks as though it will rack up its 11th straight year of gains, though, with sentiment in the gold market the way it currently is, few will notice.

It wasn’t until just a few months ago that I learned WalMart allows (perhaps encourages) overnight stays in their parking lots by RV owners and others traveling around the county. In the latest story in a series of reports from CNN/Money from the oil boom of town Williston, North Dakota, it seems that, due to the local housing shortage, some are taking up permanent residence there. Here’s a typical case:

Les Wilson
Home state: Florida

I’m from way down south and I’m up here in a blizzard part of North Dakota hunting for jobs with thousands of other people.

I’m 61 and still going strong — at least trying to, anyway. I only have a truck to sleep in, but I’m making out okay.

I’ve been overseas for the last four years working for the military, and I just got back from Afghanistan June 1. I spent a few months at home and I knew that jobs — good paying jobs — were available here in North Dakota in the oilfields. So I told my wife — I kissed her goodbye and said, `Honey, I gotta go find a good-paying job’. And here I am, and I’ve been here for the last month or so.

Good ol’ Walmart is being very hospitable about letting us stay in their parking lot.

Update: After spending three weeks looking for a job, Les in now getting paid $25 an hour (and lots of overtime) to haul water to the oil fields. He’s still sleeping in his truck, because the building his company uses to house all the truckers doesn’t have any extra room for him. But since it’s getting cold outside, he’s recently had to sleep inside the garage for a little more warmth. His wife, son and grandson are moving in with him in November — and he’s hoping to upgrade to a larger mobile home when they arrive.

The other individuals profiled are from Minnesota, Wisconsin, Michigan, and California. Apparently WalMart pays about double in Williston what they pay elsewhere because workers are in such high demand – that’s what a 3.5 percent unemployment rate will do (that’s for the state – it’s probably even lower in Williston).

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