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Old 10-26-2011, 06:41 PM   #1
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Hugo Salinas Price pushing Mexico to monetize silver

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

Quote :
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.
...
http://online.wsj.com/article/BT-CO-...04-722917.html

Quote :
...
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.”
...
http://kingworldnews.com/kingworldne...struction.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:
Quote :
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.
...
http://www.plata.com.mx/mplata/artic...idarticulo=171

Current News

Quote :
... 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.”
...
More: http://kingworldnews.com/kingworldne..._Currency.html
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Old 12-07-2011, 10:26 AM   #2
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Hugo was interviewed by Hera Research:
Quote :
...
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.
...
More: http://news.silverseek.com/SilverSeek/1323272915.php
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Old 12-07-2011, 12:18 PM   #3
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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?

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Old 12-07-2011, 12:23 PM   #4
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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.
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Old 12-07-2011, 02:56 PM   #5
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Originally Posted by DoChenRollingBearing View Post:
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?

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.
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Old 03-22-2012, 09:54 AM   #6
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Thumbs up 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:
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Old 03-22-2012, 10:58 AM   #7
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^ Merged with existing discussion thread.
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Old 03-22-2012, 11:13 AM   #8
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Sorry I forgot to use the search function
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Old 03-22-2012, 12:05 PM   #9
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Originally Posted by swissaustrian View Post:
Sorry I forgot to use the search function
Here is your bag...



back on topic...

This would be a very big help to those of us who live in a border state.
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Old 03-22-2012, 12:31 PM   #10
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Originally Posted by dereksatkinson View Post:
Here is your bag...



back on topic...

This would be a very big help to those of us who live in a border state.
Imagine: an acceptable common currency, not another fiat (Amero)
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Old 04-30-2012, 08:04 AM   #11
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Mexico getting it right?

http://www.plata.com.mx/mplata/artic...idarticulo=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!
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Old 04-30-2012, 08:16 AM   #12
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That's from December. I wish we had some good news to report on the passage of the bill.
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Old 04-30-2012, 08:18 AM   #13
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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.
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Old 04-30-2012, 08:25 AM   #14
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Originally Posted by ancona View Post:
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.
Why should you put any face value on it? I like the Krugerrand method: denominated in fractional ounces!
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Old 04-30-2012, 08:27 AM   #15
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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.
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Old 04-30-2012, 08:59 AM   #16
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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?
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Old 04-30-2012, 09:13 AM   #17
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Originally Posted by DCFusor View Post:
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?
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.
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Old 04-30-2012, 09:15 AM   #18
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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.
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Old 04-30-2012, 10:03 AM   #19
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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.
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Old 04-30-2012, 10:13 AM   #20
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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.
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