The Gartman Letter sneers at GATA, and a reply


By Hugo Salinas Price
For The Daily Reckoning
Tuesday, September 14, 2004

The last Mexican economic debacle of 1994-1995 prompted
my search for monetary stability.

Intuitively, I first thought of gold, but I reached the
conclusion that the enmity of the United States and of
the IMF toward the monetization of gold would make that
avenue a dead end. Therefore, I took the alternate route,
a plan to monetize silver, a metal of which Mexico is
the world's No. 1 producer.

Mexico's history is inextricably linked to silver money,
since silver minted in Mexico was the world's most
important money for centuries. I should point out that
the U.S. silver dollar, as defined in the Constitution, is
based precisely on the characteristics of the "Ocho
Reales" coin minted in Mexico.

The memory of our silver coinage is still with us. It was
a popular coinage for everyday use, unlike the gold coin
that was reserved for more important transactions. The
gold coin disappeared anyway, after U.S. pressure
following the Spanish-American War forced Mexico
into the monometallic use of gold.

The Mexican audiences that I have addressed in the
last nine years have enthusiastically received my idea
regarding the introduction of silver into circulation. It
is too early to say whether or not my plan will come to
fruition, but there are hopeful signs.

I believe that the only road to a monetary system that
permits the survival of industrial civilization is one that
retraces the steps that carried us to our present state.

Paper money was introduced after real money already
existed. For a time, paper, gold and silver money
circulated together, side by side. Overextending and
mismatching credit finally resulted in the creation of
such large amounts of paper money that real money
became an obstacle to further creation of paper money.

I believe that we must go back the way we came, by
reintroducing real money to circulate in parallel with
paper money.

I cannot imagine any country in the world -- or any group
of countries -- reforming paper money and the banking
systems as we know them and reinstituting gold or
silver coinage and bills redeemable for metal at sight.

I do not believe that the world's monetary and financial
system can be reformed; any attempt at reform would
decimate the world's economic activity instantly. There
is no alternative: We have to let the world's monetary
and financial system proceed to its own destruction;
we cannot "go back to gold."

What we must therefore strive for, as much as possible,
is the reintroduction of silver or gold -- or even both
-- into parallel circulation with the fiat paper money
we use everywhere. Eventually, the world fiat money
system will destroy itself through its inherent

Humanity has selected gold and silver as money. No other
metals or objects have served humanity so well. Precious
metals will never be supplanted by fiat money. The era of
fiat money in which we find ourselves living is an
aberration in human history and will soon pass.

Once silver and gold are in circulation with paper money,
a number of positive changes will begin to emerge. These
results will further enhance the attraction of precious
metals as money, reinforcing the movement.

Slowly, the world should begin to regain its monetary and
financial composure, after the paper orgy of the past
hundred years, with paper issue tamed and civilized by
the presence of gold or silver circulating in parallel
with it.

Is there a political will to implement my plan anywhere in
the world? That I do not know.

However, I do have the conviction that the plan I propose
will work, and that silver in Mexico, or gold in the United
States or Europe or anywhere else, can be brought into
circulation in parallel with paper money.

I believe my plan offers a viable way to "get there from
here." It does not address the reform of the present
worldwide system of fiduciary money. It outflanks the
problem by resorting to the introduction into circulation
of real money, in parallel with fiduciary media.

It is my fond hope that other minds interested in the
vital subject of sound money may find some inspiration
in what I present, and that better minds than mine may
wish to focus their political efforts and monetary research
along the lines I am sketching.

Precious metals are painted as "antiquated" and have
been superseded by technology and modern finance.
Those of us who insist on gold currency are derisively
labeled "goldbugs"; however, as soon as we are able to
put silver or gold into circulation with paper, all those
arguments crash. As with all things that are to work
naturally and automatically among millions of human
beings, simplicity is essential.

The plan I propose is quite simple.

1. The 1-ounce troy pure silver Libertad coin minted
by the Mexican Mint will be selected as the coin to
circulate in parallel with paper (fiduciary) pesos. This
coin will have no nominal value engraved upon it. This
is an essential characteristic of any coin that is to
circulate in parallel with paper money.

2. The Mexican central bank will issue a daily quote
on the full legal tender value of the 1-ounce Libertad
coin, expressed in fiduciary pesos. At its quoted legal
tender value, the coin is good for all types of payments,
without discount of any sort.

3. The Mexican central bank will not reduce any quoted
value of the Libertad ounce in fiduciary pesos, in any
future quote. Successive quotes may stipulate a higher
value in fiduciary pesos or may remain unchanged for a
period of time, but quotes will never be lower.

Such is my plan for the introduction of silver into
circulation in Mexico.


Hugo Salinas Price is president of the Mexican Civic
Association Pro Silver. Since the peso crisis of 1995,
Salinas Price and other outspoken peers have dedicated
themselves to spreading the word about real money. For
35 years, Salinas Price was CEO of Elektra. Under his
leadership, Elektra grew from being a small electronics
store into a publicly traded behemoth with over 600
stores nationwide. His work is represented in both
English and Spanish here:


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