As I was shuffling papers in some old files, I came across a slip of paper on which I had written down the price I had paid for a Mexican $50 gold peso coin: $717 Mexican pesos.
Judging from the price, I figure that the purchase was made sometime in 1972, when the price of a Troy ounce of gold was $46 dollars. The Mexican $50 gold peso coin contains 37.5 grams of pure gold, and 37.5/31.1 grams per Troy ounce, is 1.206: so there is 1.206 times more gold in a Mexican $50 gold peso piece, that in a Troy ounce of gold.
Thus, $46 dollars per ounce x 1.206 = $55.48 dollars as the value of the gold in the $50 gold peso coin, in 1972.
The rate of exchange Dollar/Peso in 1972 was $12.50 Mexican pesos per dollar, so $55.48 US x $12.50 = $693.50 pesos. I paid $717 pesos, because gold coins are always sold for a small percentage more than the price of bullion gold; in this case, the surcharge was for 3.4%.
The international price of an ounce of gold, as of November 30, closed at $1,222.10 dollars. The rate of exchange was at $20.40 Mexican pesos per dollar. So today’s price of the Mexican $50 gold peso coin should be close to $1,222.10 x $20.40 x 1.206 = $30,067 pesos. The quote this morning is: $30,890 pesos.
So my investment of $717 pesos, made 46 years ago, has turned into an investment worth $30,890 pesos today. Looks like a good investment.
But there’s a lot more! Because back in 1993, our President Salinas de Gortari chopped three zeroes off the rate of exchange. So actually, the $717 pesos I invested turned into – $30,890,000 of the old pesos!
Mexico has a brand-new President. Nobody has any idea what the peso/dollar rate of exchange will be, when his term is over in 2024. I really don’t care, for I don’t expect to live another six years. But for the time being, I am not selling my $50 gold peso coin.
“I have been long gold since I was 10 yrs old. And I still am, long gold. Amply rewarded, at the present price. However, I may live to see much higher prices.“
I believe much higher prices are coming, sooner, rather than later, as confidence in the Fed and central banks in general dives.
Written by Hugo Salinas Price and published by Plata ~ December 3, 2018.
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