Big Trouble For The Silver Market If Mexico Monetizes Its Silver Libertad Coin

Recently, there was a debate in the Mexican Congress on the proposal to monetize the Silver Libertad Coin.  The debate took place during a forum for “The Promotion of Savings for Mexicans.”  If Mexico decided to monetize its Silver Libertad Coin, it could have a severe impact on the silver market and price.

How much of an impact would the monetization of the Mexican Silver Libertad have on the market?   There could be serious ramifications if we consider the vast amount of silver consumed by the minting of Mexican silver coins in the past.  Before I get into that data, let’s look at the following text from the article, The Mexican Congress Debates the Monetization of the ‘Libertad’ Silver Ounce, on Hugo Salinas Price’s plata.com site;

The central feature of the proposal is that the Central Bank of Mexico (Banxico) shall determine a value in pesos for the “Libertad” silver ounce; and that this value shall be slightly higher (by a percentage that would be defined in the corresponding Law) than the price of silver in the international market, in order to provide Banxico with an assured profit in minting and placing these coins in monetary circulation.

…. if the price of silver should shoot upward, Banxico would have to issue new, higher quotes for the “Libertad” silver ounce (according to the formula to be established by Law). In this way, again, the coin will remain “in circulation”, and since it has no nominal price stamped on it, it will avoid ending up – like all the old silver coins that had stamped values – at the refineries.

Most of those old silver coins, once their content was worth more than the peso stamped value on their faces, ended up in the refineries. The holders of the coins sold their coins at a profit, for their silver content.

This won’t happen with the “Libertad” silver ounce, whose value will be adjusted upward, and benefit the saver, who will thus retain his purchasing power no matter what may happen with inflation. Thanks to owning silver “Libertad” ounces, the public’s savings will float on the ocean of currency through the years.

The important feature in the proposal to monetize the Silver Libertad was that the Central Bank of Mexico would adjust the value of the coin based on the price of silver, rather than striking a permanent numerical value on the face of the coin.  By basing the value of the Silver Libertad on the market value of silver, this would protect the Mexican citizen from the ongoing devaluation of the Peso.

For example, the Mexican Peso has devalued 93% versus the U.S. Dollar since the mid-1970’s:

The Mexcian Peso was valued at $0.8006 to the U.S. Dollar in the mid-1970’s but is now trading at $0.0570.  Thus, the Mexican Peso has lost 93% of its value in just the past 40+ years.  We can see the devaluation of the Mexican currency much better by looking at the relationship between the amount of silver contained in each coin versus the number of Pesos struck on the face of the coin.

The following table came from the MexicanSilverCoins.net site:

The Peso minted between 1869-1913, contained 0.786 (oz) of silver in the one-ounce coin.  The value struck on the front of the coin was 1-Peso.  However, if you look down to 1950, the  1-Peso coin only had 0.1286 (oz) worth of silver in it.  The amount of silver contained in the 1-Peso coin was six times less in 1950 than compared to 1913.

Now, by examining the amount of silver in the 1913 1-Peso of 0.786 (oz) versus the 100-Peso (1977-1979) of 0.6426 (oz), we can see that there was only 0.00642 (oz) of silver backing 1-Peso in the late 1970’s than the 0.786 (oz) of silver backing the 1-Peso in 1913.  Please understand that the Central Bank of Mexico stamped 100-Peso on the face of the coin with only 0.6426 (oz) of silver contained in it.

Thus, the Mexican Peso lost 99.2% of its silver content between 1913 and 1977.

Mexico Minted A Vast Amount Of Silver Coins In The 1900’s

While I knew the Official Mint Of Mexico produced a lot of silver coins in the past, I had no idea the huge amount until I looked up the data.  According to figures put out by the SilverAgeCoins.com, the Mint of Mexico produced a great deal of Silver Pesos and Silver 50 Centavos in the early to mid part of the 20th Century:

I focused on the mintage figures for these two coins in 1943.  Total Silver Pesos & 50 Centavos minted in 1943 were 89.2 million coins.  However, the total silver contained in these two coins minted that year was 26.5 million oz (Moz):

Mexico Silver Peso & Silver 50 Centavos (silver content):

1943 Silver Peso = 47,662,000 x 0.39 (oz) = 18,588,180 oz

1943 Silver 50 Centavos = 41,512,000 x 0.19 (oz) = 7,887,280 oz

1943 Silver Coins = 89,174,000 = 26,475,460 oz

I did not do extensive research on all the silver coins produced by the Mint of Mexico in 1943, but I would imagine there were others.  For example, I found on the same website listed above that 3,955,000 of the Mexican Silver 20 Centavos were produced in 1943 as well.  However, the amount of silver in each of the 20 Centavos was only 0.08 (oz), which netted a total of 316,400 oz of silver consumed.

Regardless, the Mint of Mexico produced one heck of a lot of silver coins during that period.  Now, if we consider that the Mexican government consumed 26.5 Moz of silver to mint the Silver Peso and Silver 20 Centavos coins for a total population of approximately 20 million in 1943, how much silver would they consume to protect the value of its current 130 million citizens?

Big Trouble For The Silver Market If Mexico Monetizes Its Silver Libertad Coin

As I stated in the previous section, the Mint of Mexico consumed 26.5 Moz of silver in producing their Silver Peso and Silver 50 Centavos coins in 1943.  That being said, let’s look at Mexico’s total silver mine supply during the same year.  According to the information put out by the U.S. Bureau of Mines, Mexico produced 86.4 Moz of silver in 1943:

Thus, Mexico consumed 30% of its domestic mine supply just to produce two of its silver coins in 1943.  Furthermore, the population of Mexico at the time was approximately 20 million.  Thus, the Mint of Mexico consumed 1.3 oz of silver in the Peso & 50 Centavos coins for each citizen.  That’s a lot of silver.

Now… let’s fast forward to present day.  The amount of Silver Libertads, the Mint of Mexico, produces today, are a fraction of what they were in the past.  According to the data put out in the 2017 World Silver Survey, there was only 800,000 oz of Silver Libertads produced in 2016:

As we can see, the Mint of Mexico produced 800,000 oz of Silver Libertads versus 40.3 Moz of Silver Eagles fabricated by the U.S. Mint last year.  The irony about those two figures is that the U.S. had to import silver to produce the 40.3 Moz of Silver Eagles as its domestic mine supply was only 35 Moz.  On the other hand, Mexico produced 186 Moz of silver in 2016, more than five times that of the United States.

Something is seriously wrong here.  Why is Mexico exporting all of its silver for worthless fiat money if its citizens could acquire domestically minted Silver Libertads to protect their wealth in the future?  I would imagine the U.S. government has something to do with controlling Mexican officials in keeping their citizens entirely in the dark about silver as MONEY and a STORE OF VALUE.

If the proposal to monetize the Silver Libertad gains traction in Mexico, the silver market would be in serious trouble.  Here’s why.  Currently, Mexico produces about 186 Moz of silver:

If the Silver Libertad was monetized and 30% of Mexico’s silver production was used to produce these coins, as it was in 1943, it would consume nearly 56 Moz of the country’s domestic mine supply.  Moreover, with a population of 130 million in Mexico, 56 Moz of Silver Libertads would amount to less than a third of an ounce of silver for each citizen.

While it is an excellent idea that the Silver Libertad is monetized as protection for Mexican citizens against the ongoing devaluation of the Peso, it will be an uphill battle in state politics.  Unfortunately, the world depends on a lot of silver coming from Mexican mines to supply the global jewelry, electronics and investment industries.  If its citizens consumed a significant portion of Mexico’s silver production in acquiring vast numbers of Silver Libertads, it could severely impact the silver market and price.

It will be interesting to see how far this proposal to monetize the Silver Libertad goes in the Mexican government.

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72 Comments on "Big Trouble For The Silver Market If Mexico Monetizes Its Silver Libertad Coin"

  1. This proposal will go nowhere. You just killed it! 😉

    • Hmm as if it were an option. When the money markets blow up, it won’t be an option.

      • Several states in the US have already passed legislation allowing for the US of silver or gold coins as legal tender.

        Preparation.

        • Gold and Silver are legal tender in Australia Doulos. A 1oz Gold coin from the Perth Mint is worth AUD $10.00 a 1oz coin is worth AUD $1.00.

          • Correction……. A 1oz Silver coin is worth $1.00

          • Legal tender or not you still pay capital gains tax in Australia, moreover, legislation not only allows confiscation of gold but also Silver. Recently the West Australian govt increased royalties on the gold miners by 50% and gold hasn’t even taken off. Expect a super tax on the precious metals going forward.

    • I am with you Jean Fossil… It is waffle, politicians at play, gives the minion’s something to talk about

    • Correct me if I’m wrong, but isn’t EROI supposed to ramp up the value of physical silver significantly within the next 3 years?

  2. That’ll be a truly international currency with value in any part of the world.

  3. This proposal would be excellent for all currencies if they had standard weights – a currency recognized worldwide not controlled by bankers.

  4. There would be no impact on the silver price if Mexico decides to monetize the Silver Libertad Coin. We already have more silver demand than supply every year and the price of silver has continued to go down. Examples: 1) 5 years ago, silver was at $34.52…2) In March of 2008, silver was $20.14…and now the price of silver is $17.54. Since 2008, demand has exceeded supply EVERY year by an average of 114.7 Moz per year. Logic would dictate that increasing the demand for silver to monetize the Silver Libertad Coin should lower the price of silver even further.
    Steve, your articles are well written and researched, however, until the silver manipulation ends OR the above ground silver stockpiles are depleted, (thereby resurrecting fundamental supply/demand economics), charts and graphs mean nothing in regards to the future price of silver.
    We are stacking in a rigged game hoping that some day the manipulation ends. I hope some of us live long enough to see that day come.

    • Crayfish….. You are looking at the price of silver short term. If you bought silver back in the 1930’s @ say $0.30c per ounce and kept it; you would be some 6000% in front. So you can’t say silver is not moving in price! 🙂 You can only say it is not moving in your expected time frame or your life time. You might have to leave it to your kids!!

      • It astounds me that people who actually buy silver and gold are valuing it in dollar prices. Who cares what the dollar price of gold and silver is? The ENTIRE point in buying gold and silver is because you reject the dollar. Gold and silver didn’t all of a sudden become valuable when America was born and the dollar was created.

        “If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered…. I believe that banking institutions are more dangerous to our liberties than standing armies…. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.” – Thomas Jefferson

        By INFLATION (hyperinflation) then DEFLATION (asset prices crashing), then you pick up a property or a business for a couple hundred ounces of silver or few ounces of gold.

        You aren’t trying to make money for fiat but to be able to buy assets for pennies join the dollar when the dollar collapses.

        • Agree wholeheartedly, Mike.

          I am explaining to my daughter as she acquires silver Maples or Eagles that she should never look at what they are “worth” in dollars after she has purchased them unless she is going to have to suddenly sell them and turn around and use the fiat conversion to buy something immediately as in an emergency or pay taxes.

          Otherwise, the only time you should pay attention to the how much gold or silver is “worth” is when you are buying it, in which case you ask “How much PMs can I acquire for my fiat FRNs?

          Once you have made the PM purchase, the only question you should now ask yourself is “How many ounces of silver or gold do I own?” The dollar “valuation” should now be irrelevant.

          I am slowly breaking her into this line of thinking. It takes work and repetition and there is a heavy bias (thanks to stock market and portfolio management analyses based on valuation in terms of fiat valuations,) but it can be done. Takes discipline and knowledge.

    • Hey Crayfish: You present a great example of selective statistics by using AG price from 2008 to today. While your numbers are correct and AG manipulation in the AG paper or derivative market is a major problem, why not reset your initial silver price to 2004 or earlier? In Sept 2004, we had about $6.25 silver….which has now risen to $17.54 silver. Hmmm thats a reasonable 280% increase over 13 years. Just like a legitimate STORE OF WEALTH should be able to do over a medium or longer time frame. If you speculate you may lose, but if you invest long term, seems to me silver works.

      Has it occurred to you that annual deficit of 114M oz per annum may actually be fueling this price rise? Albeit in an erratic fashion DESPITE the manipulation. ….and if the manip eventually is stopped or does stop …. then what?

      • It astounds me that people who actually buy silver and gold are valuing it in dollar prices. Who cares what the dollar price of gold and silver is? The ENTIRE point in buying gold and silver is because you reject the dollar. Gold and silver didn’t all of a sudden become valuable when America was born and the dollar was created.

        “If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered…. I believe that banking institutions are more dangerous to our liberties than standing armies…. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.” – Thomas Jefferson

        By INFLATION (hyperinflation) then DEFLATION (asset prices crashing), then you pick up a property or a business for a couple hundred ounces of silver or few ounces of gold.

        You aren’t trying to make money for fiat but to be able to buy assets for pennies join the dollar when the dollar collapses…

      • My focus has been more on the past 8 years since I have started stacking. It just so happens the the manipulation we are experiencing was kicked into “high gear” when silver spiked to around $50.00.
        The reason I don’t believe the 114 Moz average yearly deficit is fueling a rise in price, since that time, is that the numbers just aren’t there to support it. We are talking about out an average yearly deficit that is more than 10% of the total yearly mining supply. We have had demand outpace supply for about 20 years now. In what other asset class could you be that deficient and the price not explode to the upside. This is proof enough that manipulation is present.
        You are correct that when this manipulation ends or the above stockpiles of silver run out, we will see an explosive move to the upside for silver. It’s just no one can predict when that will happen. It may very well not be during our lifetime.

        • In our lifetime? I don’t know, how long does a Crayfish live?
          The factors that will send Silver to the moon are many and building by the day. When you look at the Silver Charts you see a cup and handle ready to explode higher and soon, possibly early 2018. Many an expert have given time frames and all have been wrong, I’m no expert just reflecting chart data. patience is a virtue..

        • Manipulation only works well when it can operate under a shroud. The recent “light” thrown upon it may just be what is needed to shrivel up the disease and diminish its influence. Literally ALL THE WORLD can watch it. The amount of “paper” gold and silver is staggering, but the real metal ain’t. I vote for the real metal over time, using the paper metal (derivatives or mine stocks)for short terms. While the AG derivative market is manipulated as to specific timing (of going in and going out), any simple chart of silver price gives you a general clue when to buy and when to sell if you are physical metal affectionato wishing to speculate just a bit. Remember in the short run you dont make or lose money if you dont sell. Here in 2017, dips occurred in Jan, march, may and July, usually going below $16 for a while. If the highs parallel the build up of “shorts”, you can assume the shorts will close out at some point during the lows. Soo, if you are so inclined, perhaps ride the see-saw and play the game with your paper-play money and keep on stacking at or about the nadir of the repeating patterns IF they continue. You might not catch them all, but it does help save a buck for an average price accumulation.

          As to Crayfish’s legitimate deficit issue. Large stocks of above ground silver are problematic, and AG producers (of which I have been)are always plagued by the fickleness of the silver stockpile dribble that affects the market, (its not that much different then the paper manipulation price suppression we currently sustain, but deficit supply obviously will have eventual depletion) Literally silver comes out of the woodwork when prices rise…..BUT if we DO look back at the suggested 20 yr period of deficit production, we had $4.50 to $6.00 AG in the late 90’s and early 2000s. Currently, we have say $16 AG in 2017. A rise of $5.25 to 16 bucks aint too bad (+300%)while from 2000 to today, the S&P did about 1000 to 2500 (250%) and the DOW did 11,000 to 22,000 (200%) hmmm HEY actually thats not too bad saiz I ….I am delighted to “preserve” some of my “wealth” that way!

          Now, here is the kicker. In today’s market, would you rather have a paper DOW investment at 22,000 or a silver bar at $17.50? How high can a DOW paper contract go?, how high can a Silver oz go. And at a +75:1 AG:AU ratio, which metal has the best breakout possibility …HMmmmm….but that is another discussion for a later day…….

    • Crayfish,

      Sorry for getting into this debate too late. However, I disagree with you that a monetized Silver Libertad that would consume 50-60 million oz a year, would not impact the silver market and price.

      While the annual deficits haven’t mattered YET, they will. As I mentioned in a previous comment, the world has been working through billions of oz of old Official Silver Coinage that has been remelted and used to supplement the deficits. This stockpile has been severely depleted.

      If Mexico was to consume 50-60 Moz of silver to produce its Silver Libertad, that would really impact the silver market by draining the remaining stockpiles of old silver coinage very quickly. Furthermore, if Mexico did monetize it’s Silver Libertad, that would inspire other countries, such as Peru and etc to do the same thing.

      steve

  5. I’m not sure how much demand would change. Perhaps I’m slow on the uptake. The current Libertad derives its value from the spot price which goes up and down with the market. The monetary value stamped on the coin does not determine its value. So the mint takes the number off the coin..now it’s supposed to be worth more? I don’t think so. For example: There are several U.S. And Canadian produced gold and silver coins that don’t have a monetary stamp and they are worth about the same as a stamped coin of equal weight and purity. If Mexicans are not saving in silver today, I’m not sure the new Libertad coin would incentive them to save in Silver as a hedge against a devaluing currency. Most people in Latin and S.America save in Dollars and Dollar based financial products. Once the Dollar falls off a cliff then I think Silver will become a savings vehicle. I do think this new legislative agenda might be more indicative of a declining Dollar. Maybe the Mexican authorities are trying to get in front of a continued devaluing Dollar and are providing alternative vehicles of savings investment for the average Mexican.

    • Steve explained it well, now Mexico Libertad Medal demand is around 1 million oz. and with silver as money it could grow 50 times.

    • Hi Crayfish, You sound like you know much more that I do about the silver market. I’m impressed ! I’m retired and have bought small amounts of silver bars. I’d like to continue buying but your logic and figures frighten me. Do you think this is risky for a retired school teacher ?
      I’d appreciate your opinion. 🙄

      • Silver is the most undervalued asset on the planet. Over time…it will prove be a great investment, however, since you are a retired school teacher, it may be your children who enjoy the reward. I have been stacking for years, and believe that investing 10 to 20% of my net worth in precious metals is a sound way to diversify my portfolio. Just understand that the market, right now, is manipulated and therefore you “will not” see a significant return on your investment until this manipulation ends. The big question is when will the manipulation end! I have shown above, that supply and demand fundamentals of physical silver has had no positive effect on the silver price for over 10 years even though demand is out pacing supply by over 114 Moz per year on average. You may ask…how can this be…when silver is in such high demand for industry. It’s because above ground silver stockpiles have been able to supplement this yearly deficit of silver supply. When these stockpiles run out…the price of silver will skyrocket, however no one knows how much silver is stockpiled or when the stockpiles will be depleted.
        My advise is to keep on stacking as long as it is not putting your current financial situation at risk. The nice thing about physical silver is that you can pass it on to your children under the radar.
        Please understand that most of the articles you read will be from people who have a vested interest in selling precious metals and even though much of their data has merit, no real positive change in the silver price will happen until the manipulation ends…and no one has the ability to know when that will be…nobody!

        • ” . . when the manipulation ends”
          This system is overdue for a devastating, yet unseen crash. They used up EVERY Method to prolong the inescapeable bust of the biggest multiple-bubble-bubble ever.
          It HAS to happen. There is NO way out! The time it took longer than expected just made it much much worse!

          BUT the sad thing about it is that BEFORE the silverprice rises the goldsmiths/banksters will trigger the well set up third WordWar to escape the downfall of the US-Dollar-West and make it a sudden-death-game with china.
          I am not kidding. They only think about: DIE or WIN THE WOLRD.
          That is why the new created “cold war” ist getting hotter on a dozend newly made fronts. For NO other reason than killing the witnesses of their crimes to start over with a view surviving kids and grandkids who learn the same work-hard-for-the-one-percenters-lifestyle as the generation after WW2 who was just happy to be alive.

          You will see. Prepare for war . . not for silverfrenzy.

    • Pete: The Mexican population would not be saving voluntarily. An AG based coin of the realm would be covering their “wealth” by preserving the value of their day-to-day production and monetary transactions. In other words, a NON-inflating, heavy metal backed, fiat currency of their own. It seems these days that Dollars,as well as most other fiats are helium filled. :>)

  6. As a silver producer, Mexico should have a major interest in this. Hugo Salina Price has been talking about this for years. Imagine, if 1/3 of Mexican paper savings went into silver within a short period… BOOM went the dynamite. But as long as this remains just talk it’s nothing more but an interesting observation.

  7. Mexican oil production has been steadily declining and will only add to their financial problems.

  8. What’s wrong with floating the value of the Libetad? They float the value of the fiat currency anyhow by inflation. Therefore the prices of things change (upwards) anyway. I kind of like having money which circulates as a defined percentage of silver and defined weight.

    • There is nothing wrong only risk is American Mercenaries defending the American Shekel by bombing DF like they did in Lybia and Iraq

    • Literally, there is nothing wrong with floating the Libetad. But, it does soak up a bunch of scarce silver from an already deficient market. A potential 56 M oz bite out of some 880 Moz of annual world AG production is a staggering immediate 6.4% increase of new AG consumption in a world (and perhaps 30% for just Mexican mines) that is (are) potentially past “peak” AG production for the time being. Despite Crayfishes “logic”, I would not expect the long-term value to go down.

      Will it happen? ………..unlikely. the Mexican govt would need to be very “responsible” for them to do that. And what are the odds of ANY govt to behave fiscally responsible?????

      • My “Logic” comment was sarcastic given that fundamentals in a manipulated market don’t work. What fundamentally should happen and what actually happens are two different animals. We had a 147Moz deficit of silver in 2016 which would be considered highly significant yet the price of silver has changed little. Any significant gains tend to be continually offset by the paper market shorting the price. There is no reason to believe an additional 6.4 percent increase in demand as stated by Antler333 would changed this current scenario in todays environment. Until manipulation ends fundamental charts and speculation is mute. The price of silver will be what the manipulators want it to be…period. It is their best interest that silver and gold are not perceived as a competing currency and they will control the pricing to deter people from accumulating these precious metals. I agree with Antler333 that the long term expectation for precious metals positive. But the rate of growth is unrelated, at this time, to fundamentals. However, fundamentals, over time, will always win out. How long you are willing to wait and how much patience you have is the key. If you believe as I think Antler333 and I believe that silver is undervalued, then stacking will be rewarded. Just don’t count on it soon. Remember in 2013 the USGA said that mineable silver would run out by 2020 and at that time the Debt Clock showed 13 billion oz of global silver reserves…now (4 years later) the debt clock shows 19.45 billion oz of reserves. You don’t hear anymore talk about silver running out and with little or no money being spent on silver exploration the reserves that keep growing. Seems a bit odd. The truth for silver knowledge and prediction is fickle…so be patient and stack.

  9. The yuan-oil-gold trade. Mexico goes phyz. Mnuchin visits ft Knox. Hmmm..

    When fiat currencies stop working, and that moment approaches, then what? A more local, physical world is on its way. May take a few years. Watch for more signals.

    • Another thing. In India a lot of people don’t have a bank account. They trade with cash. Modi removed a lot of this cash out of circulation by simply forbidding certain denominations. In India, the same people without bank accounts own physical gold and silver. Was this move by Modi an attempt to promote trading with physical gold and silver? These people don’t have a choice. Modi was hammered down all over the place, but maybe he did something wise. Without growth, all fiat currencies die. Period.

      • Perhaps unintended consequences. I understand the central bank expected 30% of the obsoleted currency would not be redeemed for new. That did not happen. 99% of the outstanding currency was turned in, making a foolery of the excuse that much of cash was being used for illicit activity.
        So the bank spent a lot of money to achieve nothing. The government, instead of receiving a boost in their central bank dividend, had it cut in half.

        Stupidity in action, or the four dimensional chess of a master deceiver? Lets hope for the former.

  10. I’m looking at you, Bhavesh. What’s your take?

  11. This would be GREAT for the people of Mexico not only for the reason described above of providimg Mexicans with protection against the devaluation of the peso, it would also mean increasing the price of silver and thus increasing the wealth of the Mexican people.

  12. You keep saying that it would have: huge, impact, ramifications, but never stating if the prices would surge upwards or come crashing down.

    • Dan,

      I need to write a post on this. We must remember, the billions of oz of silver used as official coinage were removed from circulation over decades and then melted to supplement the market. This silver was used to offset the annual deficits.

      Even though there is approximately 2.6 billion oz of silver held by the market as INVESTMENT SILVER, most of it is held in tight hands. On the other hand, the melted down official silver coins were dumped onto the market over the past three decades. There isn’t much of that inventory remaining.

      We have run through most of that official silver coinage supply.

      Thus, if Mexico did monetize the Silver Libertad, it could take 50-60 million oz of silver off the market. This would disrupt the market as the world doesn’t have much buffer remaining.

      steve

  13. How come they keep on fluctuating the silver content?

    • DisappearingCulture | September 17, 2017 at 12:26 pm | Reply

      The chart above lists the year, denomination in pesos, and % of an ounce in silver content…but NOT the size/weight of the coin or % of silver in each coin. The 1947/48 coin I by chance was looking at this morning was 90% silver, while the 1978 I am looking at as I type is 72% silver. The “why” is currency debasement. Canadian silver coins went from 80% to 50% to 37.5% [for the dollar coin] to 0%. U.S. Half dollars went from 90% to 40% to 0%. Similar story with British coins, but decades earlier.

  14. Good question Dan on prices up or down. By the way Steve what happened to the oil stock crash ?

    • Tim,

      Sorry, I did not discuss the silver price. If Mexico did monetize its Silver Libertad, the huge demand would impact the price higher. However, I have my doubts that the Mexican govt would allow it to be monetized.

      steve

      • Steve,
        I still don’t see how you can state that a 50 to 60 Moz of additional silver demand will impact the price of silver higher. In 2014 we had a deficit of $63.8 Moz of silver and the average price of silver in 2014 was $19.08 per ounce. The following year in 2015 the silver deficit increased by 42.9 million additional ounces to 106.7 Moz deficit and the price of silver “dropped” to $15.68 average price for the year. In 2016 we added another 40.8 Moz additional oz of silver deficit to reach 147.5 Moz deficit for the year. Yes, the price of silver did increase on average to $17.14 per ounce but it was still way under the 2014 price of $19.08.
        So for the last two years we have seen an annual “increase of silver deficit” of around 41 Moz per year and that increase has not impacted the price of silver higher.
        We do not know how much silver is still stockpiled. JP Morgan alone has been accused of hoarding over .5 billion ounces of silver in recent years. I don’t know if that is true or not but a lot has been written about it. If you add their stockpile to the stockpiles of silver that have been around for years, we may have a long way to go before the stockpiles run out…and until the stockpiles run out, additional silver deficits, even with an additional 50 to 60 Moz for the Silver Libertad, will not affect the price.

        • Crayfish: Your factual rendition of deficit production and lower prices over the past few years is correct, but is much more complex than a simple supply and demand situation. One must further ask, what is the form of the deficit? Some 50% of 2016 demand is for jewelry, coins and silverware etc which are NOT really consumed. Since this silver not used up and lost in a consumptive use, then each of those ounces is potentially available as an above ground supply, hence able to feed back into the system if the demand increases and the price rises. the higher the price goes, the more likely it migrates back into the market and in 2016 some 140 Moz did just that (12% of demand). In reality, Silver mine production is more than enough if only industrial consumption is measured. Supply (mined) 885 Moz vs 570 Moz literally consumed, some of which could even be salvaged again from electronics if the price goes high enough. That is a 325 Moz surplus. That should Kill the AG price, but it does not. Why? Well, like gold, it has a value which transcends its industrial use….that’s its historic monetary value. The poor man’s gold. The more nervous the world is, the more gold or poor mans gold the world acquires, specifically for the reasons Steve has described in prior articles. An ounce of gold or of silver is a small blob of stored energy, which can not simply be created by a machine willy nilly. One has to really WORK A LOT to get an ounce. Mule, or oil or human energy must in invested in it at great cost of time and energy to achieve a nice pretty blob of malleable, fascinating stuff, not easily reproduced.

          Obviously governments prefer ink and paper. Its easier to create!

          Interestingly, your thoughtful logic is the specific reason for silver to benefit in the long run, albeit at the expense of some in the short term. The market has NOT behaved rationally (it seems disconnected from normal supply and demand) for the last several years due to the possible (probable) derivative manipulation. Why would a manipulator do such a thing? 1) simple short-term cash gains, and/or 2) achieve a lower average cost of ounces over the long term. Morgan has that 1/2 billion for a reason and the question then becomes, who else is adding to the bullion kitty by running the price up and down. If they can do it, why cant I?

          Lastly, history is full of examples of governments or central banks trying to shore up their currency by dumping metals illogically, but the results are always the same. Short-term success, is always followed by long term failure. Can the deficits last forever, NO. And in a stable world it might take a while. Are you expecting stability?

          • I’m expecting that the price of silver will remain suppressed until the stockpiles run out and the manipulation ends. I’m anticipating that no one can determine when that day will be due to the fact that the amount of silver in reserves is unknown. Until then, charts and graphs about supply and demand economics will have no impact on the price of silver. The waiting game is on…how long will it be before the metals find their true value. I know that the powers that be will use all of their tricks as long as they can to keep the price suppressed. Will the suppression end within the next 5 or 10 or 20 years…I don’t know…do you?

  15. Interesting Steve, thanks. Regards

  16. “If”

  17. It is my opinion PM’s will never become favored money of commerce by decree of govt., only by necessity of individuals.
    Of coarse a govt could create the environment of real money with value, but only by giving up most of their tools in their toolbox of control.

  18. At first I thought, what a great idea. But after giving it some thought, I don’t think it would work. The main obstacle is the guarantee that there would be no risk to the downside. What would happen if silver would drop in price?: Mexicans would buy Libertads abroad and sell them at home for a guaranteed price; or non-Mexicans would sell their Libertads in Mexico for a higher price (and enjoy a cheap holiday).

    But what’s wrong with a floating value? With these suppressed prices of PM, I think it’s a great idea that a government encourages it’s population to save a percentage in PM: as a store of value and a hedge against inflation. This would not just apply for Mexico, but worldwide.

    Although I don’t think the proposal will be accepted, the attention for this topic might Mexicans realise that saving some Libertads is not a but idea at all.

    • The floating price only works in one direction: up. If the price of silver drops, the floating price holds steady until the market price catches back up.

  19. Steve,

    As long the stockmarkets keeps elivated with free money from mainly central banks you can be sure gold and silver prices will hardly move. At present the central banks globally print appr. 250 billion per week! Only in my opinion when all this money will
    start moving in the commodities I can see much higher gold and silver prices we are getting though closer to this aha moment.

  20. Not happening, silver way to expensive now because etf funds and whale investors have driven the price up and created huge above ground stock piles, but still good to encourage people to go in that direction, in China most banks have gold for their customers. Here in the u.s. the best I can get from dah bankster are copper pennies.

  21. you really wanna blow your mind, look at the 50 peso “centenario”…

    37.5 grams of pure gold….

    a beast of a coin

  22. I wonder why there are still any 90% silvr coins left on the market. Wouldn’t it be easy just to buy it all up and melt it first before paying for the processing of ore in the ground. Are the dealers not offered premiums by the refiners ? Maybe it is just collectors trading amongst themselves that keeps the old coins around. Any thoughts?

    • DisappearingCulture | September 18, 2017 at 5:26 pm | Reply

      90% silver coins are still on the market because they have sales value in excess of melt value.

    • Junk silver is not sold by face but by the amount of silver in them, and usually with higher premium than rounds.
      Also many feel if the SHTF, junk silver will be the most recognized and usable for barter.

  23. Gold bug here. Sad to say, by long term Elliott wave charts, the gold bear market may last another five years. Unless some other factor enters, silver will follow gold. Hoping for a gold price around $1500 in next few months to lighten up. In 2011, the point and figure chart predicted $700 gold. Time will tell.
    If horror movies are made during recessions, we are probably in one. Is it possible to be in a recession and not correct the stock market? Five stocks hold everything else up?

  24. True that Sammy. It’s more likely between now and who knows when the new price of gold is around 11-13 hundred with inflation, debasements, and negative interest rates all cooked into the stew. Other gold bugs have said we will go to 100 trillion debt before the debt cannot be serviced or we lose our credit ratings, so we are just getting started. But China is grabbing gold and piling debt faster than us, it’s a race to the bottom and whoever holds the most gold thinks they are going to win as the eventual dollar reset will rattle all currencies. This is probably why China encourages it’s citizens to buy gold, that makes the collective pile all that much bigger, and it protects the citizens from you know what. Some gold bugs even go so far as to say the dollar will be the last currency to collapse period. Gold is a long term hold for physical holders unless they need to buy stuff, or the kids get a hold of it.

  25. How about the Equifax screw-over? Only solution is pay cash or you can’t have it. I have several groups on my “North Korea Solution” list. The firecracker bugs who set the Columbia Gorge on fire, Equifax executives, etc. Send them home to their parents in a coma.

  26. The Centenario weighs 41.67 grams and contains 37.5 grams (1.20565 troy ounces) of gold in an alloy of 90% gold and 10% copper, and is 37 mm in diameter…..courtesy of Wikipedia

  27. Having a hard time wrapping my head around all the figures, stats and facts right now, so I’ll just keep doing what I have been; buying PM when i can. BUT, maybe Mexico is looking for a way to pay for the wall or ( in some way ) get even with Trump and the U.S.

  28. “Hugo Salinas Price’s plata.com site”

    http://www.plata.com.mx

  29. Interesting News but no information what the result of the debate was……;-(

  30. STOP THE COUNTERFEITERS!
    Here are some basic thoughts on how it could be done. Start with Hugo Salinas Price’s plan to re-monetize a one-ounce silver coin. The coin has no numerical value stamped on its face. The value of the coin is variable, but always based on spot silver’s most recent, highest market price. Thus, the long-term value of the coin is either stable, or adjusted upward, creating a robust savings vehicle for us regular folks.

    Details here/text of excellent interview with Mr. Price: http://www.marketoracle.co.uk/Article28214.html

    The key to the success of this simple and brilliant idea may be a form of the distributed ledger technology, which would maintain a free, fair, and independent 24/7/365 online quote of the current price of the coin.

    A lot of people are working out the details of this plan now.
    To anyone interested in this, PLEASE comment, critique, amplify.
    GODDAMN the counterfeiters!
    More: https://srsroccoreport.com/big-trouble-for-the-silver-market-if-mexico-monetizes-its-silver-libertad-coin/

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