Need a sign that the U.S. and European Union embargoes on Iranian oil are working?  The sanction-slapped country's central bank governor announced on Tuesday that it will now implement a barter system, accepting gold from its dwindling number of trading partners. "In its trade transactions with other countries, Iran does not limit itself to the U.S. dollar, and the country can pay using its own currency," central bank governor Mahmoud Bahmani told Iranian state news quoted by Reuters. "If a country should so choose, it can pay in gold and we would accept that without any reservation."

According to the BBC, Crude oil is predominantly traded in U.S. dollars which, along with existing sanctions and pressure from the United States and EU, have made it very difficult to find trading partners. Who can make good on this gold-for-oil trade? According to the IMF and the World Gold Council, the top four countries with the largest gold holdings (United States, Germany, Italy, and France) are not potential traders because of existing embargoes--but at number 16 on the gold list, Venezuela could be a partner, and not just because of the Chavez-Ahmadinejad bromance. The BBC adds that despite the embargoes, China, the biggest purchaser of Iranian oil, along with India have said they will continue to purchase oil.

Of course, we might conjecture here that the volatility in the oil market Iran could create by edging close to war is a way to drive up the price of the very gold its buying. As The Street reports, gold and oil are at three and nine-month highs, respectively, today. That's not a bad hedge should Iran have even more trouble selling its oil.