Gold has a new target floor of $2000/ounce but could easily drift into the $3000/ounce area based upon the US dollar equivalency of the SDR basket of currencies.

So here is how I approached the math in the model I developed, which generated the above chart.

If we add together the total IMF gold reserves (using $35/ounce) and cumulative allocated SDRs (using 1 SDR = 1 US dollar), for any particular year, we get a total US dollar value on those selected IMF reserves. Note that I do not include SDR reserves paid by nations, as per IMF SDR quota rules. Just the ones created "out of thin air" using the IMF quota rules — allocated SDRs.

I use this as my baseline for the model which many analysts might not agree with using, but go along with me on this because in the beginning 1 SDR was equal to 1 US dollar which was equal to 1/35 ounce of gold. My guess is that like good accountants the IMF probably keeps at least one set of books using original book values !

If we look at the cumulative growth of those IMF gold and allocated SDRs priced in US dollars from the original gold reserves, for any particular year, we get a __growth multiple__.

If we take that growth multiple for any year and multiply by the original $35/ounce gold we get what I term the __Book Price__ for Gold held by the IMF.

If we adjust that Book Price __by the floating SDR basket of currencies__ (the US Dollar equivalency), for that year, we get the __Float Price__ for Gold held by the IMF.

If we select some arbitrary factor such as 2.5 times the Book Price as the __Mania Price__ for Gold we can then plot all of these three against the __Actual Price__ of Gold.

Gold has a new floor of $2000/ounce but could easily drift into the $3000/ounce area based upon the US dollar equivalency of the SDR basket of currencies.

With an orderly 3 year accent, as happened from 1972-1975, we should be through $2000/ounce gold and on the way to $3000/ounce of gold by 2012.

**Disclosure:**I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.