Tuesday July 20, 2010
Here is an idea for a silver coin but with a different twist. This coin would have a high not a low monetary value. And it could go up in value if silver went up. This would have been a much better idea when silver bottomed at $3.50. But here is the proposal.
On the other hand, people will joyfully accept a silver coin whose quote may be increased due to the increasing value of silver. In fact, this is an extremely powerful incentive to savings, and that is what we are looking for: more savings! No interest payment is necessary to entice people into saving this coin - silver is an irresistible magnet for savings. (The US is using it on a much smaller scale through the issuance of common coins with a marketing appeal, like the states and presidents series - Jesse)
So our proposed legislation is this:
The Bank of Mexico shall publish a monetary quote for the silver ounce, based on this procedure:
a. To the international price of silver in pesos, Bank of Mexico shall add a 10% seigniorage (profit) for itself. ($231.41 pesos X 1.1 = $254.55 pesos. Today's values of silver and pesos, at kitco.com)
b. The Bank of Mexico shall add to this, the cost of minting the silver ounce. ($254.55 + $19.02 estimate = $273.57 pesos)
c. The Bank of Mexico shall round out the sum of the two foregoing, to the nearest multiple of 5, to make the monetary value easy to remember. ($273.57 rounded out = $275 pesos quoted monetary value of the "Libertad" silver ounce)
d. When the international price of silver in pesos falls, the Bank of Mexico shall do nothing.
e. When the international price of silver in pesos rises and impinges upon the seigniorage of the Bank of Mexico, it shall increase the quoted monetary value to restore its seigniorage.
f. The Bank of Mexico shall mint sufficient quantity of Libertad ounces to satisfy market demand and prevent the appearance of a premium over the quoted monetary value of the Libertad.
By this means, the people of Mexico will have an ideal vehicle for savings and even those who cannot read or write will accumulate these coins as a family patrimony. A recent Mexican Treasury study discovered that 85% of all Mexicans do not have bank accounts. These are the candidates for savings in silver!
Under this legislation, the silver Libertad will never be melted down into bullion, as its predecessors. The coin will always be worth more as money, than as bullion.
A fall in the value of silver will not affect this coin. No matter how severe a collapse in the price of silver, this coin will always be preferable to any paper bill or digital money, because the paper bill and digital money have absolutely nothing to back them up, whereas this coin will always have some value due to its being silver. I find such a collapse hard to conceive, but one must take into account this possibility.
I cannot help adding that I believe that this silver money is what the whole world is waiting for, "waiting for the sunrise" out of our present deathly darkness. I believe that if it becomes a reality, it will be an enormous success.
Interesting thoughts... reminds me of the western movies I watched over July 4th weekend, always a family "treasure" to recover or protect. My question, how would you prevent counterfeit silver coins that contain less actual silver per ounce than the Mexican coins with today's technology (guess I have seen too many movies)?
Posted by: Dawn Vrana | July 20, 2010 at 01:37 PM
As with any coin counterfeiting in possible however if I were going to be in the counterfeit business I would go for paper money rather than any content of silver now that silver is $18 an ounce! Paper is prettycheap compared to that
Posted by: Dennis Elam | July 20, 2010 at 02:18 PM
I wonder if the price of silver goes up if you would be able to get these coins cheaper then the market price at some point.
If they are used as legal tender at that point I don't see why not.
Posted by: Dave | July 22, 2010 at 10:27 AM