Story of a Gold Coin

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 Coin by 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  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

Mish Comments

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

Comments
No. 1-11
Hansa
Hansa

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

Christian dk
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.

pgp
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.

Mcklaipm
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?

Ima Dragon
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 .