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The director of Fideicomiso de Fomento Minero (“The
Trust for Encouraging Mining”) Norberto Roque
Díaz de León, told “El Financiero” newspaper on August 20 that it would be
a good idea to use silver in Mexican coinage, in order to stimulate demand
for that metal, and thus aid Mexican silver mining, which is having a hard time
due to the low price of silver.
We think it’s great that someone is thinking about using silver
for minting coins. It certainly is the best way to help the Mexican silver
mining industry.
However, not just any way of using silver in minting coins is as good
as any other. We must foster minting of silver coins, yes, but in the most
convenient way.
The simplest way to use silver, is as a
“decoration”; in other words, just use a little bit of silver in
each coin. Since Mexicans love silver, they will immediately put away any
coin that contains the slightest bit of it, just because it is shiny silver.
Minting that kind of coins would require a great deal of silver, and
it would certainly please the miners. However, this “decorative”
use of silver is not what the people of Mexico really need. Here are some
of the reasons:
1.
These coins do not offer
any protection against inflation. A decorative silver type of coin, with a
legal tender value engraved upon it, would not rise in price – it would
not “float” like the dollar does every day
– as the rate of exchange fluctuates. If the coin says “$100
pesos” for example, it will be worth no more than $100 pesos even if
the value of the peso plummets. The coins would be saved because of their
attractive looks, but they would provide no protection for savers.
2.
For the miners, minting
these coins provides only temporary relief. As soon as the price of silver rises enough, these coins will all head for the refinery
and their silver will be sold on the market. Thus, that silver would return
to depress the price of silver. So, what was all the effort for, after all?
3.
A coin minted with a little
bit of silver is pretty, but it is still junk coinage, since the silver would
only be for appearances’ sake, and would give the coin no real value.
The right way to use silver, in order to give some relief to silver
miners today and tomorrow, is to mint coins like the silver one ounce
“Libertad”, which is already being minted and which is a
beautiful coin. This coin has no legal tender value, only intrinsic value.
1. This coin
will never go to the refinery. What the public saves,
will remain with the public. The refinery is not its fate, because its value
fluctuates with the value of the peso, and with the value of silver itself.
Its silver will not return, melted down, to depress the price of silver, to
the detriment of the miners.
2. Since this coin bears no engraved legal tender value, its price moves, just like the dollar’s
price moves every day. All the saver has to do is watch T.V. to find out
every day just what his silver savings are worth in pesos. It’s a great
vehicle for savings. Silver goes up and down, like all things, but for the time
being it is at historically very low prices. It can’t go down too much
more, and on the other hand it may rise in price in the future, to the
savers’ benefit. And, unlike paper money, silver will always be worth something.
3. This lovely coin, the
“Libertad” ounce, only costs $55 pesos! ($6.04 US at Elektra
stores, as of this date) Why, a haircut costs more! Silver is incredibly
cheap. This is a good time to put silver within the reach of every Mexican,
in the shape of a coin of eternal value.
We’re very pleased that there is interest in using silver in our
coinage. But, let us promote silver use in coinage, in the way that is most
advantageous to Mexico.
We have to hurry up and offer Mexicans a money that
is of better quality than the dollar, in order to hold back dollarization. We already have that higher quality money, it’s the silver ounce “Libertad”
coin. We must promote its minting, so that our Mexican Mint can spread this
coin all over Mexico.
That is the most noble patriotic effort imaginable.
The Mexican Congress, the Bank of Mexico, the President of Mexico and
his Cabinet, and all the organizations of private enterprise should work to
convince the Mexican people to buy this coin, which does offer protection
from inflation. They must see to it that the Mint has sufficient silver coin
on hand. They must push the sale of this coin, so that the Bank of Mexico
will have to purchase large amounts of silver from our miners, and give them
a much needed and well-deserved break. With silver used in minting the
“Libertad”, we are all winners.
That’s the right way to use silver in coinage, for the benefit
of Mexico.
By :
Hugo Salinas Price
President, Mexican Civic
Association Pro Silver
www.plata.com.mx/plata/
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