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.