SDR's First – Then The Gold Standard

Special Drawing Rights (SDR’s)

The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries official reserves.

Its value is based on a basket of four key international currencies, and SDRs can be exchanged for freely usable currencies. With a general SDR allocation that took effect on August 28 and a special allocation on September 9, 2009, the amount of SDRs increased from SDR 21.4 billion to around SDR 204 billion (equivalent to about $310 billion, converted using the rate of August 20,2012).

So in other words – the U.S has a printing press, the ECB has a printing press, Japan’s of course, Great Britain’s got one and the freakin International Monetary Fund ( operated primarily by a small group of “financial elite) can rattle off “SDR’s” and distribute them (as freely tradeable currency) to its members – at will.

This will clearly be the next step in resolving the current global financial crisis as the printing continues.

With everyone devaluing their currencies at the same time ( and Central Banks suppressing the value of gold as a price spike would undermine the entire plan) it’s very likely that the next “crisis” event will simply be “papered over” with the issuance of “SDR’s” and the “can kicking” will continue down the “global road”.

Anyone expecting some “massive rise in the price of gold” overnight –  is likely in for a longer wait in that……the “paper game” has miles to go before your “$7000 oz” will be realized. As well – if you live in the U.S, I’d look forward to any large profits being made  subject to a “newly formed gold tax” – likely in the neighborhood of 80%.

Have you considered that “the power’s that be” already have this worked out?

The SDR Endgame: What Forex Traders Need to Know

Currency Basket Dynamics and Major Pair Implications

The SDR basket composition tells you everything about where global monetary policy is headed. Currently weighted at roughly 42% USD, 31% EUR, 11% CNY, 8% JPY, and 8% GBP, this isn’t some academic exercise – it’s the blueprint for coordinated devaluation. When the IMF reviews this basket every five years, they’re essentially redistributing global monetary power. Smart forex traders are watching these weightings like hawks because they signal which central banks will be printing hardest.

Here’s what most traders miss: when SDR allocations increase dramatically, it creates artificial demand for the basket currencies in specific proportions. This means USD/EUR moves become less about individual economic fundamentals and more about maintaining the SDR’s stability. The ECB and Fed aren’t fighting each other anymore – they’re tag-teaming to keep their combined 73% SDR weighting stable while everyone else gets steamrolled.

The Petrodollar-SDR Transition Nobody’s Talking About

Saudi Arabia’s recent moves aren’t coincidental. The petrodollar system that’s dominated since 1974 is getting quietly replaced by a petro-SDR framework. When oil producers start accepting SDRs for crude, the entire forex landscape shifts overnight. This isn’t some distant possibility – it’s happening now through back-channel agreements that won’t hit mainstream news until it’s too late to position.

Watch the USD/CNY pair closely. China’s yuan inclusion in the SDR wasn’t about recognition – it was about preparation. Beijing’s been accumulating massive gold reserves while simultaneously promoting SDR usage in bilateral trade deals. They’re playing both sides: supporting the SDR system publicly while positioning for its eventual collapse privately. The PBOC knows exactly what they’re doing, and their currency intervention patterns reflect this dual strategy.

Central Bank Coordination: The New Market Reality

The days of independent monetary policy are over. When you see synchronized rate decisions across major central banks, that’s not coincidence – that’s coordination designed to maintain SDR stability. The Fed, ECB, BOJ, and BOE are essentially operating as branches of a single monetary authority now. Their “independence” is theater for public consumption while they execute a coordinated devaluation strategy.

This coordination explains why traditional carry trade strategies have been failing. Interest rate differentials that should drive major movements in pairs like AUD/JPY or NZD/USD get mysteriously dampened by “intervention” that’s actually coordinated SDR management. The volatility you’re seeing isn’t market uncertainty – it’s the controlled demolition of individual currency sovereignty.

Trading the SDR Reality: Practical Implications

Forget everything you know about fundamental analysis in major pairs. When central banks coordinate to maintain SDR basket stability, traditional economic indicators become meaningless. GDP growth, inflation data, employment numbers – they’re all secondary to maintaining the predetermined currency relationships within the SDR framework.

The smart money is positioning for the next phase: SDR denominated international trade. When this happens, currencies outside the basket become peripheral – literally. The CAD, AUD, CHF, and especially emerging market currencies will see increased volatility as they’re forced to peg informally to SDR movements rather than individual basket currencies.

Here’s your trading edge: monitor SDR allocation announcements and basket rebalancing dates. These create predictable flows into specific currency ratios that most retail traders completely ignore. When the IMF announces new SDR issuances, you can front-run the institutional buying that must occur to maintain basket proportions. It’s not speculation – it’s mathematical certainty.

The endgame is obvious: a global digital currency backed by SDRs, with gold reserves held by central banks as the ultimate backstop. Your trading timeframes need to account for this reality. Short-term trades based on technical analysis still work, but medium to long-term positions must consider the coordinated monetary policy environment we’re operating in. The “free market” in forex is dead – it’s been replaced by managed exchange rates designed to facilitate the transition to a new monetary system. Trade accordingly.