Hi, this is Jennifer from the Discount Silver Club. I want to welcome our newest members J.R. from Texas, and J.G. from Alabama.
Silver had a small correction this month, and almost touched the $9 level before rebounding. The dip seems to be over, as silver closed at $9.59 today, but still below its recent high of $9.93. Take advantage of silver under $10 spot while it's still available.
Win a Free DVD!
At Lone Star Silver Exchange, we're having our first contest ever. You can win one of seven copies of GATA's Gold Rush 21 DVD set, a $19.95 value. The DVD set records the presentations during the Gold Rush 21 Conference, which was held in August 2005 in Dawson City, Yukon, in Canada. Two DVDs contain almost 8 hours of speeches from the best minds in precious metals investing from around the world. Speakers include Catherine Austin Fitts, Hugo Salinas Price, Alf Field, and John Embry. The DVDs also feature a 25 minute summary of the conference.
A top economic advisor to Russian President Putin, Andrey Bykov attended Gold Rush 21. After praising the quality of the conference, silver rallied $2.59 per ounce and gold soared over $120. The $6 price capping rule for gold has been crushed. Is it a coincidence? Watch the DVDs and decide for yourself. You can see a preview at http://www.goldrush21.com.
To enter the contest, just guess the closing prices of silver and gold on March 15th, 2006. Email your name and your choices to me at jennifer@discountsilverclub.com by March 8th. Please only make one guess per person. The seven people who are closest to the correct prices will win the DVDs. This offer is open to MEMBERS ONLY, so make sure you join if you haven't already!
Return of Silver Money?
You may be wondering why a silver dealer would have a contest for the Gold Rush 21 DVD set. One of the reasons is the historical relationship between gold and silver. For thousands of years, silver and gold have been the two monetary metals. In the past century, their prices have returned to the classic 16:1 ratio three times. In the 1970s, they both had tremendous bull markets, although silver experienced a larger percentage gain. I expect a similar outcome for the precious metals within the next ten years.
In addition, we know that the gold price has been suppressed by leasing and central bank sales. Although the mechanisms which have kept silver cheap despite a 16 year supply deficit are less clear, we have to assume similar price manipulation. As Franklin Sanders points out, "They couldn't exactly have left silver alive as a witness, now could they?"
One of the DVDs features Hugo Salinas Price's presentation at Gold Rush 21, on his plan to remonetize silver in Mexico. As Mexico has been blessed with an abundance of silver, this strategy would create huge financial benefits for his country. Not only would employment in the mining sector increase, but the citizens would be cushioned from the risks of currency crashes and inflation inherent in a fiat-only system.
Originally, paper money was designed to be the "servant" of silver and gold, as receipts are less bulky than coins. However, paper soon became dominant, and the "servant" became the new "master." Salinas Price advocates an incremental approach to reintroducing silver currency. He plans to have the "master" return to the house in a "humble disguise" by circulating silver coins in parallel with paper.
The Libertad is a perfect choice for this purpose. In 1979, the President of Mexico introduced the one ounce silver Libertads which are still minted today. They have no face value, and are legal tender. Over 20 million are saved by the Mexican people. The Libertads were intended to circulate as money, but the fluctuating value of silver in pesos caused financial losses, so they are not spent today.
Salinas Price argues that the Libertads must not have a face value in order to successfully act as money. As paper money is debased by the central bank through inflation, the price of silver will eventually reach the face value stamped on the coin. This happened in the U.S. in the 1960s. When the "point of fusion" is reached, the coins will be taken out of circulation and melted or saved.
Instead, Salinas Price believes that the Libertads should have a quoted value that can increase, but can never decrease. Citizens and businesses will not accept money that could depreciate. Under his plan, the national bank will quote a rate that allows them to make money after coining the Libertads. It should be rounded off to the nearest 5 peso increment, as that will be easy to remember. The rate can be announced in newspapers, on the radio, and on the internet. Libertads won't need a separate bank account, they will be credited at the current legal tender value. This will be a safe way for people to both save money, and spend it when needed.
Salinas Price is aware of the resistance to silver money from the Mexican central bank and other powerful interests. He believes the elites have inherited the monetary problems, and don't know how to solve them. If they feel that they need to appease the people by remonetizing silver, they may try it. Even if his plan is not implemented now, it can be attempted in the future.
Salinas Price's proposal has popular support in Mexico. In a poll by the second largest TV network, TV Azteca, 96% of viewers wanted silver money. All 31 governors of the Mexican states favor a return to silver currency. All though the current bill is stuck in committee, 343 of the 500 Mexican legislators support the remonetization of silver. Some of the legislators were so enthusiastic about the plan that they introduced it to the Latin American Parliament in November.
Jennifer Barry