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?

3 Responses

  1. kygold61 March 2, 2013 / 10:01 am

    Kong, with these SDR’s it seems that this Ponzi game can basically go on forever. Do you have any ideas as to what will force the central banks to stop printing. Afterall, they basically answer only to themselves.

    • Forex Kong March 2, 2013 / 10:27 am

      Yes it appears that the IMF will likely just serve as the “planet’s central bank” and the printing will continue for sometime.

      As far as CB’s stopping – I can’t say…but at least its “all of them” as opposed to just USD getting hit etc….

      I’m of the mindset that until global growth is back on the up n up with some kind of “new technology break through or industry” (spurring massive employment much as the Internet did) we will see this go til “end game” – being a complete and total global financial meltdown and restart. Some think alternative energy might do it, others biotech, I for one am in the “space tourism/advances in astro “everything” camp – but likely a little ways out.

      These longer term ideas are near impossible – as near term we’ve got the usual suspects (war, climate change etc) to contend with. The world could turn on a dime. I have fun with “the future” – but as it pertains to my trading, I’ve got to stick to the mid / shorter term in order to stay safe and roll with the punches….as each day brings “something new” to deal with.

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