IMF Requests Extension To Reset SDR Valuations - U.S. On Borrowed Time

EDITOR NOTE: The US dollar is on borrowed time. That was the plan, at least. The dollar had a set timeline, contingent on the IMF’s five-year plan to rebalance its Special Drawing Rights (SDR), but the original date of rebalancing, October 2020 , has now been postponed to September 30, 2021. What’s happening here? Judging from its latest maneuvers, it’s quite possible that the IMF is refusing to announce the new SDR rebalance as its lion’s shareholder--the US dollar--is the very component it is trying to shed or abolish altogether. On one hand, China will likely play a more dominant role in the SDR rebalance, pushing the dollar aside. On the other hand, it appears as if the Biden administration and the Dem-majority Congress are cooperatively playing right into the hands of the IMF and the dollar’s global devaluation. Either way, a lot can happen in ten months’ time, but none of the potential outcomes look positive for the US dollar. We've said this many times before: now is a critical moment to begin hedging the dollar’s impending demise by investing in non-CUSIP gold and silver. The dollar is on borrowed time. And ten months is very little time to act, as the premiums on gold and silver will likely rise soar toward the end of the timeline.

On March 5, 2021, the IMF’s Executive Board approved an extension of the current Special Drawing Right (SDR) valuation basket by ten months from September 30, 2021 to July 31, 2022. The IMF normally reviews the composition and valuation of the SDR basket every five years. The extension effectively resets the five-yearly cycle of SDR valuation reviews, with the next review to be completed by mid-2022 and the new basket becoming effective on August 1, 2022. The ten-month extension contributes to the Fund’s ongoing efforts to prioritize work during the COVID-19 crisis and allows for a more suitable effectiveness date of the new basket, which does not coincide with some major markets being closed. The approved extension, as well as effectiveness date of a new basket, is intended to facilitate the continued smooth functioning of SDR-related operations.

Originally posted on IMF