In this week’s video clip, former stock broker and journalist Max Keiser looks at the latest indication that gold is emerging as the world’s reserve currency—whether Western nations like it or not.

Earlier this week, the European Union announced it would implement a ban on Iranian oil imports in response to Iran’s refusal to put the brakes on its nuclear energy program. The United States, EU nations, and other developed nations fear Iran’s growing nuclear industry will allow it to develop nuclear weapons that would certainly heighten tensions in an already volatile region of the world.

The EU announced Monday a ban on any new oil contracts with Iran and said it would shut down any existing oil deals by July 1. “But Iran is apparently finding ways to keep the business pumping,” Keiser says.

The dilemma for Western nations is that the EU only accounts for about 20% of Iranian oil exports, and some of its other big customers are unwilling to play along with the sanctions.

One of those customers, India, already has bought Iranian oil using gold to make the purchase rather than the world’s reserve currency, U.S. dollars.

India previously has used U.S. dollars in purchasing $12 billion worth of Iranian oil annually. Now another huge oil consumer, China, is threatening to join with India in trading gold for Iranian oil. Together, India and China account for some 40% of total Iranian oil imports, dwarfing the EU’s 20%.

China has previously lobbied for development of a new world currency as an alternative to the dollar, as discussed in the WealthCycles.com articles Will the Yuan Be New World Reserve Currency? and End of the World As We Know It.

The impact on foreign relations is two-fold: by refusing to comply with the U.S./EU Iranian oil embargo, India, China and other nations including Russia threaten the effectiveness of the embargo, which is intended to force Iran back to the negotiating table over its nuclear program. The second impact is the blow to the U.S. dollar, as the growing use of gold as a medium of international exchange threatens the dollar’s status as the world’s reserve currency.