Memoirs Of A Man Fighting For Silver (And With Little To Show For It)
Hugo Salinas Price says "The hero who would monetize silver must be willing to face the condemnation of all men...and face an international lynch mob"...by Hugo Salinas Price of Plata.com.mx
I have had an interesting life, in the course of my retirement from business; my retirement happened somewhat by chance, in the year 1988; one Friday evening I presided a meeting of a group directors of Elektra, a Mexican company the property of my father and myself. We had had some 500 of these meetings in past years; they took place every two weeks. My son Richard was present, having been with the company since 1980. (He had arrived in 1980 from Dallas, Texas, looking for a post at Elektra, after being fired from his job - he had called his supervisor a fool, if not something worse. He was probably right in his judgment of his superior officer's decisions, but of course saying what you think is not the best way to get along in business).
Well, having risen to leave from the meeting I mention, suddenly an impulse came upon me and I announced: "This is the last meeting that I shall preside. My son Richard will take over from here. Cancel all my Powers of Attorney and my signatures in bank accounts". Thus, I fired myself. Richard really deserved to run the family company, since he is far more able in business, than myself.
So that's how I found myself unemployed at 56, a situation which I have thoroughly enjoyed the last 30 years, especially since Richard turned out to be a businessman of singular ability, whose efforts have made me a rather wealthy man. The shares of Elektra to my name, if their number is multiplied by their quoted value on the Mexican Stock Exchange, and divided by the current rate of exchange of the Peso against the Dollar, amount to about - well, I'd rather not say. Bad luck might ensue!
I advance the clock to 1995; a terrible financial collapse had hit Mexico with a heavy devaluation of the Mexican Peso against the Dollar.
During this crisis, I had conversations with some of my conservative friends, and the conversations turned to silver money; my friends suggested that I put my thoughts into print, and so I did. I published a tract which intended to show how a silver money could be adopted by Mexico. It was much too ambitious and impossible to consider as a serious proposal.
Consequently, I put out another tract, urging the use of silver as a means of saving for the Mexican people. There has been available, since 1982, a pure silver coin weighing one Troy ounce, with no stamped value upon it: the "Libertad" silver ounce. The Mexican people have been acquiring modest amounts of this coin, over the years. One defect that puts off many purchasers, is that the monetary value of this coin fluctuates, and at times make it seem a bad investment, especially for new investors - though over time, the value of the coin does show a constant rise.
Elektra is a chain of stores selling durable consumer goods - for cash or on credit. I guess it was perhaps the year 2000, that I had Elektra add to its activities, that of being a seller and purchaser of the coin. Unlike the banks, whose employees were instructed to examine each coin purchased from the public, and discount real or imagined defects from the coin's price, Elektra sold and re-purchased the coins with no diddling about defects. The first coins that Elektra sold, went for $54 pesos; I remember the price because at that time, I myself purchased a coin at a store in Cuernavaca - a little village at one time, now a large city, South of Mexico City.
The fluctuating price of the "Libertad" coin kept bothering me. One evening, as I was smoking my evening cigar after dinner, the solution to the problem of "How to turn the "Libertad" coin into money" suddenly popped into my mind.
The precedent of the monetary behavior of the Mexican silver peso, which circulated in Mexico as its fundamental monetary unit, from 1920 to 1945, and known popularly as the "0.720" Peso (that being the weight of the silver in the coin, as against its full weight) presented the solution: This Mexican peso, which I had treasured as a child, contained 12 grams of pure silver, and was stamped "One Peso" (the Peso was made up of 100 Mexican centavos). Therefore, that peso was overvalued, though no one ever thought about that, because the peso, worth 100 centavos, only had 51 centavos of silver in it! The value of the silver in the Mexican peso, even went down in the Depression of the 1930's, to about 32 centavos - but no one was the wiser and the Mexican peso was accepted by everyone.
So - what killed that Mexican silver peso? It was the rise in the value of silver, after WW 2! The 12 grams of silver in the coin, became worth more than 100 centavos. The banking system collected all the silver pesos it could - a paper peso was then in circulation - and sent them in truck-loads to the refinery, where the silver was sold for a profit by the banks.
The solution for the problem of monetizing the silver "Libertad" ounce became clear: It bears no stamped monetary value, and this makes it possible for the Central Bank, the monetary authority, to grant it an official monetary value, by means of a public quoted value, on the part of the Central Bank.
Following the example of the "0.720" Mexican peso, the quoted monetary value must be higher than the value of the silver in the "Libertad" ounce. And also following the experience of the "0.720" coin, if the price of silver falls, the monetary value of the "Libertad" ounce must not fall.
On the other hand, if the price of silver rises, it will not mean the death of the "Libertad" ounce, as it meant for the "0.720" Mexican silver peso, because the monetary quote will simply be adjusted upward, so that the silver in the "Libertad" ounce, will again be worth more than its value as silver bullion.
The monetary quote would have to be applied to the "Libertad" silver ounce, by the Mexican monetary authority - the Mexican Central Bank. With this is mind, about 16 years ago I approached the Mexican Central Bank and was invited to a luncheon at the Bank. I have never in my life suffered such a disagreeable lunch. The minor official who hosted the lunch was unbearably haughty and so offensive that I was not able to eat a single bite, and this has been the attitude of our Central Bank, to this day.
(The last refusal of our Central Bank to consider the monetization of the "Libertad" silver ounce, came the last week of this past April, 2018, when a delegation of Senators, representing all Parties in the Mexican Congress, went to the Bank to inform it of the decision of the Congress, to pass a law forcing the Bank to monetize the ounce with a monetary quote. The Bank refused, absolutely, to accept such a Law, and argued that it would mean the collapse of the Bank - an utterly preposterous allegation. The Senators caved in, when one of their group, a key Senator for passing the Silver Bill, defected and sided with the Bank.)
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Comes 2003, and Elektra became the sole owner of a new bank, "Banco Azteca"; so then it was the Bank's branch, at each store, which took over the operation of the sale and repurchase of "Libertad" coins. Today's sale price for the "Libertad" is $356 pesos, the re-purchase value is $305 pesos. Undoubtedly, the "Libertad" has functioned well as a store of savings, in spite of its fluctuating price.
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Having become unemployed since 1988, I have become a "Monetary Missionary" and I have presented the silver gospel in many different countries - finding no converts, I am sad to say. It seems as if the highly placed officials with whom I have been able to speak, cannot break away mentally from the idea that money must be paper or digital, and that it must be, in fact, various presentations of the US Dollar, in local, national paper costumes; for without Dollar backing in the form of Reserves, no country in the West can have any money, at all.
In the course of my "Missionary Work" I once talked with the President of Guatemala; and also, with the President of Peru, Alan Garcia; with various individuals with connections to the elusive President of Bolivia, Evo Morales; I went to Buenos Aires, Argentina, thinking that, with all their monetary crises, they might be interested in silver; but I was sorely mistaken: I only met a couple of disagreeable women who were supposed to be Economists, and they discarded the idea of silver money at once: "Silver money? Why, people would only put their coins away as treasure, and, how would that help economic development?" With "Economists" like that, no wonder Argentina is a perpetual monetary basket-case.
Years ago, I participated in a monetary gathering in Kuala Lumpur, where the Islamic audience - with President of Malaysia, Mahathir, present - expressed much interest in my proposals; I have spoken in Madrid, to another audience interested in monetary affairs; I have spoken in London - where of course all officials know that they hold an exclusive patent on Truth; I went to Athens, Greece, and urged them to monetize small silver coins, for the use of their impoverished population, when the ECB got their hands on them and reduced them to misery; I have recently been to Kazakhstan, and even made a batch of silver coins with their symbols for the Kazakhs, but it seems to me that they are too occupied with building a perfect Socialist paradise with the money from their abundant oil reserves, to think about something as silly as providing their people with a reliable means of saving.
In 1999, Hugo Chavez, an officer of the Venezuelan army, declared himself President of Venezuela. Among a multitude of other plans, he announced that he would create a money that would be used by all of South America. So the idea occurred to me, that if Chavez offered other countries a silver coin as money, they would probably accept it, and Chavez would thus prove to his countrymen that he was a great leader.
In preparation for a visit to Chavez, I had made up a batch of 500 one-ounce silver coins at a private mint in Mexico City. The coins had a profile of the hero of South America, Simon Bolivar, on one side, and on the other, the official "coat of arms" of Venezuela. This coat of arms traditionally included the image of a horse galloping to the right, but Chavez, being a leftist revolutionary decided that the horse should gallop to the left. So the pretty coins I had minted, had the horse gallop to the left, to please Chavez.
When I got to Venezuela, I found it totally impossible to meet with Hugo Chavez. The best I got was a minor executive at the Venezuelan Central Bank. He patiently listened to my words, but like any bureaucrat, his only aim in life was to keep his job and gather a bit of Capital for his retirement. So I decided to accept defeat and return to Mexico. Alas! That was easier said than done: when the moment came to board our plane at the Caracas airport, the box with 500 silver ounces was taken to one side by Customs Officials - a nice prize for the Customs boys! I placed a call to my acquaintance at the Central Bank, and the coin box boarded the plane. I use the silver box as a door-stop, in my office.
After the death of Hugo Chavez, Nicolas Maduro became President of Venezuela. One achievement Maduro has to his credit: no more need for toilet paper - Maduro's paper money is cheaper. I read deep fear in the face of Maduro that we see on the TV; he knows he is in grave danger of being "liquidated". If he could, I think he would take the next plane to Cuba and get out of Venezuela pronto.
Finally, in the course of my life as an unemployed man, I had a very favorable response in Russia; I was in Moscow a couple of years ago, and spoke with a teacher of Economics for Advanced Students in Moscow, Dr. Grigoriev, who was kind enough and open-minded enough, to let me address his Economics Class. The positive response by his class, brought me to the edge of tears. The same thing took place in St. Petersburg, where I was invited to address - through translators - a group of important individuals, led by Dr. Vladimir Shamakhov, the President of the Northwest Institute of Management of the Presidential Academy of St. Petersburg, founded by President Vladimir Putin. I presented there, a booklet describing the process of granting a quoted value to the Russian silver ounce; that booklet has been translated into Russian by a fine friend in Moscow, Mr. Dmitriy Balkovsky.
I also had the memorable experience of talking about silver ruble coins with officials of the Bank of Russia, within the precincts of the Bank. Never have I met with a more hostile group of individuals! They most certainly did not appreciate the efforts of a Mexican to meddle with the monetary system of the Russian Federation.
As a result of my efforts in Russia, I had the great satisfaction of being honored last year, with the title of "Honorary Professor", by the kindness of Dr. Shamakhov, in personal representation of the aforementioned Northwest Institute of Management, in a formal ceremony within the Russian Embassy in Mexico City.
I attribute my failure to convince any government in the world to take up the opportunity of creating a new, real and tangible silver money, to exist in parallel with paper money, to the sad fact that the whole world has forgotten that money was once a silver or gold coin, as was the case in the world in the 19th Century and which endured up until the outbreak of WW1in 1914; I think that date can be regarded as the water-shed moment which marked the beginning of the decline of the use of silver and gold as money.
100 years after WW1, paper and digital money totally dominate the economic landscape of the world. The result of this century of paper and digital money use has been that silver is now officially regarded as nothing more than a commodity with extensive industrial use, which is consuming a good part of the silver supplied by mining industries. Nevertheless, old habits are hard to break and stubborn individuals continue to accumulate silver coins - and an unexpected rise in the price of silver bullion may prove them right. The present ratio of silver to gold stands at 1:85 - silver is dirt cheap! Gold refuses to go away, but this embarrassing metal is carefully manipulated by enormous "futures trading" in paper gold, to suppress the price it would have in a free market.
Gold - in spite of the drastic manipulation of its price - remains a metal of great interest to the powers of this world, perhaps with the exception of the United States. Without a shadow of a doubt, at some future time the false paper and digital monetary systems of the world will collapse, and the wiser Powers of this world are hedging against that time. Only a very small minority of individuals who patiently await the resurgence of gold as money, are holding on to it.
With regard to silver, the world's economists and Presidents have quite forgotten about the role of silver as money in human affairs. Their ignorance in this respect, is total. It is fruitless to think that any influential economist or President will have the audacity to favor the monetization of silver, against the prevailing opinion of the world's most eminent authorities. To do so, would require a heroic conviction on the part of any politician: a hero does not take opinion from subordinates - or anyone else, for that matter; he gives orders which must be obeyed, but we have no heroes in political office in the Western World, these days. Kim Yong-un, President of North Korea, is a hero to his people; his political stance is certainly not Libertarian and his nation is very poor. But still, his stance is definitely heroic.
The hero who would monetize silver must be willing to face the condemnation of all men in similar positions of power, as well as the whole world-wide body of economists whose only training has been in Statist policy: the idea of empowering the individual, by allowing him to possess silver money, is simply not a part of the intellectual framework of economists and politicians. to the sad fact that the whole world has forgotten that money was once a silver or gold coin possess sufficient knowledge and personal conviction, to explain thoroughly his heretical adherence to silver money, and face an international lynch mob looking to terminate his political life.
Politicians today, recognize problems and then devise means to deal with them. What they are not able to do, is to discover the causes of problems. If on a morning, a politician finds that his car's engine will not turn over, he first sees if perhaps the battery has run down. But in the complex case of a stagnant economy, the only solution that occurs to the politician is - to create more money. The attempt to find the correct solution to a stagnant economy, would require an inquiry into the motivations of the population - and such an inquiry is beyond the interest of the politician and worse, beyond his intellectual capacity.
Where we are at, in my view: the world's population has soared since the 18th Century, when movement around the world had not changed materially from the way in which people moved about under the Roman Empire. The consumption of energy in the form of petroleum leaped from virtually zero in the late 1890's, to gigantic volumes at the end of the 20th century. This energy, inserted into human life, has affected all aspects of human life and values. In a sense, humanity has become drunk on energy, and to a large extent, has forgotten about the basics of human life, one of them being the imperative need of all societies, to base themselves upon real money.
2018: Today, the energy party is in a twilight zone. It's not the 50's anymore. But the population of the world is drunk on energy - and drunks can be very nasty people.
So, here I am 86, unemployed and with what I have to show for my efforts regarding silver being an Honorary Degree, a mortarboard and a toga!
