The world of reserve currencies is changing rapidly. The latest salvo in the currency wars could be fired by Mexico. Since the United States can’t seem to get its act together regarding its national debt and is still printing money and devaluing the United States Dollar, Mexico is considering backing its currency with silver, a precious metal it owns in abundance.
If Mexico backs its currency with something of value, this could trigger a tectonic shift in global economics. Silver is in short supply and is well bid. This will further boost demand for the Mexican peso.
What would be the practical effects of Mexico backing its currency with the precious metal? The immediate result would be more entities and individuals around the world wanting to buy the peso.
Once the investing world sees that Mexico is serious about pegging its currency to silver, people will want to invest assets in the country for security and probable economic return. This in turn would reduce the interest rate Mexico would have to pay to borrow money in the global capital markets. This reduction would have a beneficial effect on the Mexican economy.
Silver Up 10.3% YTD - Should Continue To Outperform Gold And Other Assets
- Why Silver is in a Bull Market and How High Could it Go?
- Is Silver About Returns Or A Hedge Against Inflation & Systemic Risk?
- Silver: Very Small Global Supply
- Silver’s Unique Properties
- Silver: Increasing Technological, Industrial and Medical Demand
- Silver: Increasing Investment Demand
- Silver Undervalued Versus Gold
Silver has been one of the top performing markets in recent months. Silver has risen to $21.41/oz and is up more than 10.3% year to date. It is important to remember that silver rose to a recent nominal closing high $48.41/oz on April 28, 2011. Thismeans that silver is nearly 60% below its record nominal high of just over three years ago.
CME Group Inc. and Thomson Reuters Corp. will run the replacement for the 117-year-old silver-fixing benchmark that’s ending in August, the London Bullion Market Association said.Testing is set for early August with the new mechanism to go live on Aug. 15, the LBMA said today in an e-mailed statement. The London Metal Exchange, Autilla Ltd., Bloomberg LP, Intercontinental Exchange Inc., ETF Securities Ltd. and Platts had also proposed alternatives last month.Mining companies to central banks use fixings to trade or value metal. The phone-based ritual for silver that takes place each day at noon will end Aug. 14 as Deutsche Bank AG’s exit from the process as it scales back its commodities business would leave just two banks to set prices. Precious metals are getting more attention from regulators after price-rigging in everything from interbank lending rates to currencies led to fines and overhauled financial benchmarks
Mexican Peso to be backed With Silver: “Would Unleash a Global Power Shift”
In August of last year multi-billionaire Hugo Salinas Price told King World News in stunning fashion what he believes to be the frightening plan to control the world going forward. He described the people planning this as “barbarians,” and said, “this is not going to end well.” He also issued this ominous warning, “I have very serious doubts about the survival of our civilization under such people.” Below is what the multi-billionaire had to say in this incredibly powerful interview.