# Story of a Gold Coin

Mish

Here's a true story of one gold coin, a 50 Pesos gold coin like that pictured above.

Earlier this month, my friend Hugo Salinas Price emailed an interesting story about a single gold coin that that he still holds dearly.

Story of a Gold Coinby Hugo Salinas Price

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 was \$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 Â 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.

Hugo Salinas Price

In an email exchange Hugo informs me "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.

Mike "Mish" Shedlock

No. 1-11
shamrock

Good grief, Gold has gone from \$46 in 1972 to \$1280 today. \$46 put into the DOW with dividends reinvested would now be worth \$5200 or over \$100M pesos. Does that coin still look like a pretty good investment?

St. Funogas

Yesterday I read again the old saying that an ounce of gold has always bought a nice manâ€™s suit. Well, I know way more about Carhartts than I know about menâ€™s suits so I was wondering what I could use as a comparison. My grandpa stated in his history that in 1929 when he was a first-year teacher, he made \$85/month. At \$20.67 an ounce, that comes to 37 ounces of gold per 9-month school year. I used \$1,200 an ounce for gold to weed out some of the wild fluctuations of late and came up with my grandpa making the 2018 equivalent of \$44,412/year. When I went to the Albany County, Wyoming school district website I discovered that a first-year teacher starts atâ€¦\$44,460 per year, a difference of only \$48. Needless to say, I was pretty blown away.

stillCJ

Editor

AGW of the Mexican 50 peso coin struck with dates from 1921 to 1947 (but actually struck until 1972) is 1.2057 oz. AGW of the US \$20 gold coin struck from 1849-1933 is .9675 oz.

jivefive99

Dont forget your 28% tax on precious metal gains, everyone. You can hope the governments of the world will disappear, but that doesnt mean they ever will. Sorry.

jberman4

Mish,

It is my understanding that you regularly advocate for gold as a part of one's portfolio, etc. If someone had followed your advice wrt investing since 2009, how would their portfolio have fared?

Sincerely,

Jeff

everything

Gold has always been hoarded, it never did circulate particularly well. Thus, it has been used as a store of value, and now most of it is hoarded by central banks and certain countries as a savings plan or in the central banks case, an inflation hedge. Now, what the heck are central banks worryied about inflation for. Other countries like Russia/China central banks have somewhat equal amounts and are thus in a race to keep their stacks even or close. Gold is something you buy and put away, or if otherwise wear as jewelry.

Ima Dragon

I'm just a Numismatic Hobbyist and I really enjoyed the story . I like to collect U.S. \$20.00 Liberty Head Gold pieces(not fond of St. Gaudens or G.A.E. coins) but I haven't thought of them or any of my other coins as an Investment .Naturally they increase in value , for me they are History you can hold in your hands and share with your children and grandchildren .

Mcklaipm

What I am having a hard time understanding is how obama spent trillions and loaded up debt, but we have never paid the inflation price for all the wasteful spending and debt burden. Ypu can only debase the currency for so long before things have to change. bama spent eight years of debasing the currency but we never did have hyper inflation. We did have slow to no growth. When will we be paying the price for this wasteful spending?

pgp

It is unlikely that governments will let gold holders walk away with billions of dollars in gains while the economy folds without expecting a lot of it back. Any time wealth is transferred from the non-ruling class, oppression follows.

Christian dk

IF gold is so useless, then why dosent the Bank of Endland release Venezuela's gold, and just sell all the useless gold back to South Africa at the SAME price that they paid for it, mostly 35 \$us per oz of gold up to 1100 tons per years when it was the worlds largest gold producer, in the now 3-4 km deep Witwatersrand mines that use most of the clean water of that mega dry Country, that is running out of drinking water. To be fair, I will pay 36 \$ per oz of gold, but first all the pollution that was never cleaned up in ALL the Commonwealth nations must be fully paid.

Hansa

I hope Mr. Price is not suffering poor health, because he does not expect to live six more years.