SDR and Inflation

Special Drawing Rights (SDR), from the International Monetary Fund (IMF) are defined as a basket of major currencies: U.S. dollar, Euro, Japanese yen, pound sterling and the Chinese renminbi. See the SDR Factsheet and SDR Valuation pages for more information.

In 1969, one SDR was defined as $1, which at the time was the price of .888671g of gold. However, at the time of writing this, the spot price of gold is $1,823.20, so .888671g, or today's equivalent SDR value in gold, is worth .888671g*.032150747 troy oz/g $1823.20/troy oz = $52.09. The percent change, therefore, is $52.09/$1-1 = 5109.14%. Using this as an inflation adjustment, we get a gold valuation of $1,823.20*(1+5109.14%) = $94,973.12 / troy oz.

Adjusting silver the same way using the silver spot price at time of writing of $27.16, we obtain a silver valuation of $27.16*(1+5109.14%) = $1,414.80 / troy oz. Another way of obtaining a silver valuation is to apply a gold to silver ratio of 12 (i.e. G/S = 12 or S = G/12) to the valuation of gold, to obtain a valuation for silver of $94,973.12/12 = $7,914.43 / troy oz.

We can do the same inflation adjustment by using the value of one SDR now as a basket of currencies (i.e. not as .888671g of gold). The value of one SDR at the time of writing is $1.43325. The percent change, therefore, is $1.43325/$1-1 = 43.33%. Using this as an inflation adjustment, we get a gold valuation of $1,823.20*(1+43.44%) = $2,613.10 / troy oz.

Adjusting silver the same way using the silver spot price at time of writing of $27.16, we obtain a silver valuation of $27.16*(1+43.44%) = $38.93 / troy oz. And again, another way of obtaining a silver valuation is to use apply a gold to silver ratio of 12 (i.e. G/S = 12 or S = G/12) to the valuation of gold, to obtain a valuation for silver of $2,613.10/12 = $217.76 / troy oz.

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