Using gold to buy crude oil?...you betcha

Numismaticassets

It seems India has purchased Iranian oil from Iran using gold, circumventing unilateral U.S. and EU sanctions placed on the Iranian oil industry and financial institutions. (The sanctions placed on Iran ban any bank involved in oil trade with Iran from dealing with American and European financial institutions.) And now, China, another top purchaser of Iranian oil may follow suit in future oil transactions. India and China, the two major buyers of Iranian oil together account for 40% of all exports of oil from Iran while the EU accounts for 20% of Iranian oil.

India and China do not support and refuse to join the sanctions. Russia, already announced in a bilateral meeting they would implement bilateral trade using their domestic national  currencies instead of the dollar. Russia already uses their rouble for trade with China

Now this would severely hurt what the U.S. and EU sanctions and oil embargo are trying to do. Just this past Monday, the EU announced an oil embargo against Iran. Oil is priced in US dollars, and bypassing the greenback will pose challenges for both parties. This will certainly push the price of gold high, especially as large sums of gold are involved in such oil transactions, and that would hurt the value of the dollar especially at a time like this.

RT News (24 Jan 2012): India pays gold for Iranian Oil:

RT News: Priya Sridhar (24 Jan 2012)

Source: Sanctions dodge: India to pay gold for Iran oil, China may follow (RT News), 24 Jan 2012