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Will Mexico Have A Silver Standard?

Billionaire Hugo Salinas Price has campaigned for Mexico and Greece to return to a silver standard. He’s even laid out a five step plan to accomplish just this in this video clip. (fast forward to 13 minute point) In the above-linked Keiser Report, Salinas-Price makes these points:

  1. The prime time to introduce  monetary reform is during a collapse.
  2. Greece should leave the Euro and issue return to the drachma as a fiat currency.
  3. Greece should also issue silver coins with no listed monetary value; rather only the weight is inscribed on it. Salinas-Price offered an example of a coin that was simply 1/3rd ounce of silver.
  4. Greece’s treasury then determines the exchange rate between these coins and paper drachma. This exchange rate can fluctuate, and can do so independently of what the market price of silver may be in other countries.
  5. The first step is to issue silver money that can be used in parallel with paper money.
  6. Gresham’s Law will take effect, and silver will be hoarded while fiat drachma will be spent. In this way, the people of Greece can re-build their savings. If Greece tries to keep an artificially low value of the silver coin relative to the paper drachma, Greece citizens could always go to other jurisdictions and trade silver on the free market.

Greece indeed has some history of mining silver, but Mexico has historically been known as a silver producer. Much of its wealth, in fact, comes from silver mining.  Mexico’s silver supply has increased steadily over the past decade and the country will likely set the pace for global silver production in the year 2014.

But recent rumors that Mexico was very close to moving towards a silver standard were shot down when Jeff Berwick reached out to his billionaire friend Price, who told Berwick there were no concrete plans to move towards a peso.

“Neither the Mexican government nor ANY GOVERNMENT IN THE WORLD will ever swear off of inflating the money supply and expanding credit when it can be done. That’s why we need the alternative money, which can be said to be “indexed” to the market price of silver…Besides, the Banco de Mexico is effectively a branch – body and soul – of the Fed. So talk of silver with them is like proposing a Black Mass in St. Peter’s, Rome.”

Salinas Price also told Berwick that, “If things proceed as they are going, Mexico (from the waist up – ie. the Northern parts of Mexico) is going to be a sort of Puerto Rico within a generation.”

Furthermore Mexico doesn’t even have silver in its reserves, and its gold reserves don’t even compare to the nation’s fiat currencies holdings. Most of Mexico’s reserves are in the US dollar.

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