Hugo Salinas Price pushing Mexico to monetize silver

Welcome to the Precious Metals Bug Forums

Welcome to the PMBug forums - a watering hole for folks interested in gold, silver, precious metals, sound money, investing, market and economic news, central bank monetary policies, politics and more.

Why not register an account and join the discussions? When you register an account and log in, you may enjoy additional benefits including no Google ads, market data/charts, access to trade/barter with the community and much more. Registering an account is free - you have nothing to lose!

pmbug

pmbug

Your Host
Administrator
Benefactor
Messages
16,445
Reaction score
5,756
Points
268
Location
Texas
United-States
I didn't mention it in the total perspective vortex thread, but Mexican billionaire Hugo Salinas Price has been lobbying the Mexican government for a while now to re-monetize silver. Last I had heard, he was optimistic that it was going to happen.

Background

Mexico's central bank purchased almost 100 metric tons of gold in February and March, another signal that emerging markets are likely to steadily raise their gold reserve holdings, industry participants say.

The purchase--reported in the International Monetary Fund's statistics on international reserves--follows a shift in the gold market to net central bank buying, following years of official sector sales, and should be welcomed as a positive boost for the yellow metal, said Jonathan Spall, Director of Commodities Distribution at Barclays Capital.
...
Click to expand...

http://online.wsj.com/article/BT-CO-20110504-722917.html

...
Hugo Salinas Price continues:

“I think our central bank has done something prudent. It signals a difference of opinion with the Fed, and that is strange for our central bank that has always been in great cooperation with the US central bank. Most of our reserves, which are at the highest level they have ever been, are in dollars.

Some have commented, ‘Well where is the gold? Is it in a central bank receipt or is it in a central bank vault?’ It should be in the central bank vault. Is it a paper certificate or is it actual physical gold and if so where is it?

I wrote a letter and told him (Mexican central bank Governor Carstens) that I thought it was a good move in view of the chaos presently prevailing in the United States fiscal situation. I told him also that perhaps the central bank would take another look to monetize a silver ounce as a means of preserving popular savings from devaluation...That is what we are trying to do is to try to have the Mexican people have a lifeboat available in case of a severe crisis. It looks like it will happen.”

When asked about how this central bank purchase might influence his proposal to monetize silver Mr. Price remarked, “I think that maybe the central bank would not look upon our proposal with such a jaundiced eye. I mean if they bought gold maybe it would not be unreasonable to hope that they would see the monetization of a silver ounce as a good thing for the country.

I can’t help telling you that we have very strong support in the Congress for the monetization of silver, very strong support. Congress is not in session now and will not be back in session until September, but I have high hopes that when both the upper and the lower Houses reconvene in September that we will see something very good happen.”
...
Click to expand...

http://kingworldnews.com/kingworldn..._QE_in_US_Will_Lead_to_Utter_Destruction.html

Hugo gave a presentation at GATA's conference in August laying out arguments for and against re-monetization of silver in the USA as a competing currency with FRNs:
Why not re-monetize the silver dollar? Re-monetization could put the silver dollar and its subsidiary silver coinage into circulation in parallel with FRNs – “Federal Reserve Notes”.

There are several reasons that make this action possible, and only one that might be considered as an unimportant material obstacle.
...
Click to expand...

http://www.plata.com.mx/mplata/articulos/articlesFilt.asp?fiidarticulo=171

Current News

... Hugo Salinas Price stated, “By and large all of the Congressman are in favor of monetizing silver in Mexico. The dirty work is how to get around the blocking that is presented by three or four important party leaders who are bought off by the central bank or intimated by the central bank. The are afraid to go against the central banks desires.”
...
Click to expand...

More: http://kingworldnews.com/kingworldn...inas_-_Gaddafi_Killed_Over_Gold_Currency.html
 
Hugo was interviewed by Hera Research:
...
HRN: What is the current status of the Mexican legal tender legislation?

Hugo Salinas-Price: In México we have a Congress that is quite well aware of the importance of this legislation and it has broad support both in the Senate and in the Chamber of Deputies, which is like the House of Representatives in the U.S. The idea is well understood and approved, but there is a problem.

HRN: What is the obstacle?

Hugo Salinas-Price: Under our party system, members of Congress rely on the guidance of the party leaders. If they fall into disfavor with their party leader, they will be denied the benefits that the party leader is authorized by law to distribute. The three most important party leaders are under great pressure from the central bank, Banco de México, to prevent party members from voting in favor of this measure.
...

HRN: Banco de México is blocking the legislation?

Hugo Salinas-Price: If it wasn’t for the central bank, this measure would have passed a long time ago. The party leaders are afraid to jeopardize their careers by becoming enemies of the central bank.

HRN: What do you think might change the situation?

Hugo Salinas-Price: The Congressional Finance Committee will hold a hearing this month, before the Congress goes into recess, to hear the objections of the central bank. It is possible they may decide that the objections are not materially important and they may approve the bill. In that case, the bill will be sent to the house for a vote. The party leaders will be able to vote for the bill if the Committee approves the law.
...
Click to expand...

More: http://news.silverseek.com/SilverSeek/1323272915.php
 
That would be a fascinating experiment were Mexico to go on a silver standard.

-- Would it cause a sharp rise in the peso such that they would no longer be competitive in export markets?

-- Would investors seek out investments in Mexico because of a presumbaly stable currency?

-- Would that encourage other governments to do something similar?

-- How high might the price of silver then go?

-- Could the Mexicans really pull that off?

:silver: :silver: :silver: :silver:
 
I don't know whether or not they can pull it off, but it would certainly take a shitload of silver off of the market.
 
DoChenRollingBearing said:
That would be a fascinating experiment were Mexico to go on a silver standard.

-- Would it cause a sharp rise in the peso such that they would no longer be competitive in export markets?

-- Would investors seek out investments in Mexico because of a presumbaly stable currency?

-- Would that encourage other governments to do something similar?

-- How high might the price of silver then go?

-- Could the Mexicans really pull that off?

:silver: :silver: :silver: :silver:
Click to expand...

Love the questions you raised.

Would investors seek out investments in Mexico? For me it would depend on the ability to inflate the currency supply (expand paper derivatives by whatever means) despite its putative backing. All silver backing would do then is put a check and balance in place that could serve as both an alarm and a trigger for collapse (in the event of a convertibility run). Meanwhile, prior to such a collapse, the price of silver would go up - relative to irredeemable paper currencies, even though the Mexican currency is inflated.

One of the biggest problems Mexico would face with a stronger currency is with its exports. They already give China, Viet Nam and others a run for the money by having such a weak currency. However, Mexico could more than make up for this if it stabilized the political environment in such a way that it caused a capital flight of silver from unstable regimes and into Mexico, as more people look for protection. Ironically, that might actually encourage others to try it, given only that it can increase backed assets which expand the illusion of solvency that allows banks and governments to inflate, manipulate and siphon at will. The more silver the banks have, the more "fractional reserves" they get to leverage.
 
Libertad program: Mexican Civic Association for Silver [Legalization]

Just wanted to bring your attention to this Mexican organization which is working towards the re-legalization of silver: Mexican Civic Association for Silver [Legalization] (Asociación Cívica Mexicana Pro Plata A.C.)
Website (Spanish + English):
http://www.plata.com.mx/Mplata/default.asp

The key figure behind this is Hugo Salinas-Price.
Here's a good interview with him:
Hugo Salinas-Price: What Every Politician Needs to Know About Silver
http://www.marketoracle.co.uk/Article31982.html

And here's an older interview with him by James Turk:
 
^ Merged with existing discussion thread. :)
 
Mexico getting it right?

http://www.plata.com.mx/mplata/articulos/articlesFilt.asp?fiidarticulo=178

Basic idea of the article: Make the Libertad silver coin legal tender in Mexico over the dissent of the Bank of Mexico

If this manages to become law, how would this affect these areas:
1) Mexican currency value against other currencies
2) The ability for the Mexican governement to spend more than they tax
3) World wide silver prices

Discuss! :popcorn:
 
That's from December. I wish we had some good news to report on the passage of the bill.
 
The introduction of a silver libertad as legal tender would cause the price of silver to explode. Demand would outstrip the Mexican governments ability to supply coin. In fact, they would have to assign a face value far above spot, at least they would have to if they didn't want to end up having to constantly revalue the damn things.
 
ancona said:
The introduction of a silver libertad as legal tender would cause the price of silver to explode. Demand would outstrip the Mexican governments ability to supply coin. In fact, they would have to assign a face value far above spot, at least they would have to if they didn't want to end up having to constantly revalue the damn things.
Click to expand...

Why should you put any face value on it? I like the Krugerrand method: denominated in fractional ounces!
 
They would be better off following the HR 1098 model and merely defining the size, weight and purity of legal tender silver and let the value be determined by the markets.
 
On scanning this thread, I'm getting confused. Monetizing silver isn't the same as going on a silver standard, or even making *only* silver legal tender. It's just adding another type of currency, this one not fiat. I don't see the crucial details that would say what's going on here on a quick scan, anyway.

If they still also have fiat - nothing really changes except for a bump in silver demand to make coins, right?
 
DCFusor said:
On scanning this thread, I'm getting confused. Monetizing silver isn't the same as going on a silver standard, or even making *only* silver legal tender. It's just adding another type of currency, this one not fiat. I don't see the crucial details that would say what's going on here on a quick scan, anyway.

If they still also have fiat - nothing really changes except for a bump in silver demand to make coins, right?
Click to expand...

If you had a choice between getting your salary in fiat currency or silver currency, which would you choose?

I would be highly interested in the consequences of such a law passing.
 
Monetizing = making it money (legal tender)

The text of the bill is contained in the link in benjamin's post #11. Essentially, it offers to make silver libertads legal tender with an assigned nominal value close to market value for silver.
 
So, if I'm understanding this correctly, the enthusiasm is misplaced here, other than that it will increase silver demand to make the coins. They'll still have fiat, it won't be silver certificates redeemable for silver (at least not guaranteed) and so on - basically it will have the same nil effect as our mint coining silver and gold coins then. No big deal in other words, just a new coin.
 
As I understand it, the Libertads will be free interchangeable with fiat without any capital gains or sales taxes. I would expect Gresham's law to rule the day - people are going to save in silver and transact in fiat whenever possible. Demand for Libertads will likely explode.

BTW - the Libertads already exist. It's not a new coin. It's removing shackles from the existing coin.
 
DCFusor said:
So, if I'm understanding this correctly, the enthusiasm is misplaced here, other than that it will increase silver demand to make the coins. They'll still have fiat, it won't be silver certificates redeemable for silver (at least not guaranteed) and so on - basically it will have the same nil effect as our mint coining silver and gold coins then. No big deal in other words, just a new coin.
Click to expand...

Since an American Silver Eagle is not legal tender, you can not walk into a store and force them to accept it as payment like you can with a twenty dollar bill. Once their silver is legal tender, businesses may begin to favor payment with silver versus fiat. It would hopefully be the first step back towards a sound money system based on more than just paper and ink.

For example, if you had the option of getting your paychecks in twenty dollar bills or in coins that contained twenty dollars worth of silver in them, which would you choose if they spent with equal ease at local businesses?
 
That is exactly what I was saying PMBug. When it becomes interchangeable in the marketplace, people will readily choose silver over paper. Even for the average Joe, it is a no-brainer.
 
@ benjamen

I think the Silver Eagle is legal tender, it's worth $1.00, legally.

There was an interesting case in Nevada where some small business man paid his employees with Silver Eagles valued at a buck. The IRS took him to court, but I do not know how the case ultimately turned out.
 
DoChenRollingBearing said:
@ benjamen

I think the Silver Eagle is legal tender, it's worth $1.00, legally.

There was an interesting case in Nevada where some small business man paid his employees with Silver Eagles valued at a buck. The IRS took him to court, but I do not know how the case ultimately turned out.
Click to expand...

I remember that case; he won if I remember correctly.

The problem with putting a fiat number on a precious metal coin is when you inflate your paper money, it pushes the metal value above the labeled value. This is why you should just make your currency fractional ounces of silver/gold. Since you can not print it at will, I doubt this will ever happen.
 
We had (and I looked for a bit, but could not find) another post about employers paying employees in half silver and half cash, by their choosing. The employees only got taxed at face value of the legal tender. If the payment was in bullion, and not denominated in dollar value, then @ zero face value, it legally, should not be taxed?
 
Max Keiser interviews Hugo:



...
In the second half of the video, about 13 minutes in, Max interviews Hugo Salinas Price regarding silver.

Silver Backed Currency Details

It is difficult to fully express ideas in 13 minutes.

For a more detailed explanation of how Hugo’s idea on silver currency might work, please see Silver, liquid and illiquid, the ‘modified open mint’ and gold & silver as parallel monetary systems by Hugo Salinas Price.
...
Click to expand...

http://maxkeiser.com/2012/05/31/kr295-keiser-report-with-hugo-salinas-price/

Hugo says Greece has an opportunity to monetize silver in parallel with a return to the Drachma.
 
...
We have been proposing the monetization of a silver ounce coin for Mexico since 2003. Our contacts in our new Congress are stronger than ever – we’ve been educating Congressmen for 9 years now, on the subject of the monetized silver coin, and now have many friends in more influential positions in the Mexican Congress. Plus the idea of the silver coin with a quoted value is now familiar to Mexican politicians; it makes sense to them and they find nothing strange about it. We are preparing a Bill, once again. Maybe this time it will be voted into law.
...
Click to expand...

More: http://www.plata.com.mx/mplata/articulos/articlesFilt.asp?fiidarticulo=196
 
Hugo seems less enthusiastic in this interview:
...
At the present time, the prospects for our project are poor, because the world “leaders” are really not independent men or women; they are under the control of their respective Central Bankers, who form an international fraternity whose leaders are the Fed, the IMF, and the BIS. Whenever anything “monetary” is presented to these supposedly top world leaders, they all refer the question to their Central Bankers. These, of course, are completely against anything that will devolve real power to the population, real protection for individuals and their families. They are against all forms of SAVINGS; their whole interest lies in promoting more DEBT, and NOT more savings. They one and all consider that savings are simply a drag on GROWTH, and they want people to spend, not to save. And the silver coin promotes savings, which in fact are the fountainhead of all prosperity.
...
Click to expand...

More: http://inteligenciafinancieraglobal.blogspot.mx/2014/01/billionaire-hugo-salinas-price.html

It's a really excellent interview BTW.
 
Looks like Hugo hasn't given up:
...
For nine years I attempted to convince the Federal Congress of Mexico to approve legislation that would monetize the “Libertad” silver ounce, which is minted by the Mexican Mint; the coin would then have value for a given number of Mexican pesos, by means of a quote on the part of our Central Bank. The quote would be a floating quote, somewhat higher than the value of the silver ounce on the international markets, and would increase with increases in the value of silver on the markets, but never fall (in Mexican pesos value) if the price of silver should fall.

My efforts did not meet with success, but the project gathered quite a bit of support in the Congress, both on the part of Federal Congressmen as well as on the part of Federal Senators. An insignificant dispute between the PRI and the Leftist PRD caused the PRD to withdraw its support, which the PRI required to pass the legislation.

Mexico needs some good news! Mexico is a marvelous country! We have many, many problems, but our Homeland is wonderful and generous.

Mr. President of Mexico, Gentlemen Senators and Congressmen:

The government of Mexico has stepped on the toes of every possible sector of the country with the avalanche of fiscal reforms recently enacted, all of which strengthen the State.

Now that the population is well and fully pissed-off, it’s the Federal Government’s turn to do something for the benefit of the general population.
...
Click to expand...

http://www.plata.com.mx/Mplata/articulos/articlesFilt.asp?fiidarticulo=257

h/t: http://globaleconomicanalysis.blogspot.com/2014/12/hugo-salinas-price-asks-mexico-for.html
 
Buried in this blog post about the war on cash, I ran across this snippet:
...
In the Eastern provinces of Mexico, the Campesinos already eschew banks, choosing instead to store their money privately. (Chiapas Province is in a virtual economic war with Western Mexico. They value the Libertad as East Indians value gold.) ...
Click to expand...

https://www.sprottmoney.com/blog/failure-of-the-war-on-cash-jeff-thomas.html

I had not heard this before. I wonder if this is true and how much it might affect the political calculus for Hugo's efforts to get the Mexican government to monetize/recognize silver as legal tender.
 
Hugo wrote a long post talking about the impetus for his crusade to monetize silver and the roadblocks he's faced while talking to the various politicos and central bankers he's approached over the years:

http://plata.com.mx/enUS/More/358?idioma=2
 
You must log in or register to reply here.
Back
Top Bottom