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Silver Coin Proposal Jason Hommel GATA's Gold Rush
21 Conference was designed to help precious metal advocates determine
the best ways to promote gold and silver. Inspired by their
leadership, inspired by Hugo Salinas Price's silver coin movement in
Mexico, inspired by the Liberty Dollar, inspired by New Hampshire's
Silver Coin ballot measure, and most importantly, inspired by what I
have learned about honest weights and measures and economic principles
in the Bible, I developed this Silver Coin Proposal. So, in
mid-July 2005, I sent the following Silver Coin Proposal to all 50
governors of all the states in the U.S. So far, I've heard back
from about 15 states, and two Governor's administrations have called me
saying that when they are ready, they would like to book an appointment
with me so that they could discuss this further.
This Silver Coin Proposal was originally written for State Governments,
(and the nations of the world), but most of general priciples are also
suitable for any employer--especially large employers. Gold and
silver mining companies (producers) should be among those employers who
would benefit the most from paying their employees (who wish it) in
silver. Issuing silver
as money is the best way to promote the use of silver as money!
But also, city governments and county governments could adopt this
silver coin proposal. It is too much for one man, me, to contact
or persuade all the many employers and local or national governments in
the world. Therefore, it is up to you, my readers, to take this
to your own mining companies, to
your own employers, to
your own local governments, or to your own national
governments. Only you, the many in the market place, can
demand and promote using silver as money.
Why Silver? Why Now?
We live in a unique time in history. No nation on earth uses gold
or silver as money. This has created the greatest investment
opportunity in the history of mankind, because lack of monetary demand
for gold and silver has lowered their value.
Silver used to have a much higher value. For over 2000 years, the
amount of silver in a silver dime was worth a day’s wage, whether 100
years ago in the U.S. or Canada, or whether in Roman times with a
silver denarius. At $7/oz., those same dimes are worth about 50 cents
each, and you can buy about 300 silver dimes with a day's wage of
$150. Thus, silver today is valued about 1/300th of the historic
value when it was plentiful—and this is an opportunity to be
exploited.
Even better, silver is more scarce now than ever before in human
history due to the fact that modern industrial nations have consumed
about 7/10ths of an ounce of silver per person, annually, since 1945,
consuming about 90% of the silver mined in the history of the world.
The people, the leaders, and the employers, who first recognize this
monetary
opportunity, and take advantage of it, will surely benefit the most.
Over the last five years, I have invested millions of dollars in
silver. About 15% of my silver is in bullion bars and coins, and
about 85% is invested in stocks of silver exploration and mining
companies. I am one of the world’s experts on the
opportunities available in silver stocks, as I keep track of about 80
silver stocks at silverstockreport.com. I have given speeches in
mining conventions in Vancouver, Toronto, Calgary, Chicago, and
Idaho. I
am a very good trader and investor, as my personal portfolio is up
about 40% since Jan, 2004, which has been a difficult time in the
precious metals market. In 2002, my picks and portfolio were up
about 150%, and in 2003, my picks and portfolio were up about
300%. Of course, gains of this magnitude are much easier to do
with my small, multi-million dollar portfolio.
Speaking of successful investors, one of the world’s best is Warren
Buffett, who averages about 20% gains each year. (But that is
more significant because Warren invests billions, and the larger your
holdings, the more difficult it is to grow rapidly.) The point is
that Warren Buffett purchased 130 million ounces of silver in 1997,
which was 2% of Warren Buffett’s holdings. Today, this is nearly
half of all known stockpiles of above ground refined silver. When
Warren bought his silver, he understated the case when he said,
“equilibrium between supply and demand was only likely to be
established by a somewhat higher price.” This can be confirmed
here:
http://www.berkshirehathaway.com/news/feb03981.html
Various states and nations are now beginning to re-consider a slow
return to using gold and silver coins as money for the benefit of their
people. New Hampshire, Nevada, Idaho, and others are considering
legislation to make this happen. See http://www.goldmoneybill.org/
Hugo Salinas Price, a billionaire in Mexico, has lead all 31 govenors
of Mexico to ask the Mexican Federal government to begin minting and
using the Libertad, a one-ounce silver coin, for general commerce. See
http://www.gold-eagle.com/editorials_03/salinas061103.html
Additionally, Muslim nations have begun a return to the dinar and
dirham, the gold and silver coins of the Muslim world. See http://www.islamicmint.com/
In sum, it’s about truth. Will you stand up for the truth of
honest money, honest weights and measures? The alternative is to
stand up and support the fraud of “broken promises” of un-backed paper
money.
Silver Coin Proposal
The State should buy silver on the open market, mint the silver into
one-ounce silver coins (or hire a company such as NorthWest Territorial
Mint http://www.nwtmint.com/), and pay silver to employees of the State
who choose
to be paid in silver. (Acceptance of the coins must be voluntary.)
Employees could decide, and select, on a questionnaire form,
whatever percentage of their paychecks they want to be paid in silver
(rounded to the nearest price of an ounce of silver).
The coin should be “sold”, “traded”, “priced”, or “valued” at 10% above the
spot price, (The spot price is the bullion price of silver
traded worldwide) which would give a nice profit to the State.
(Private mints today, can mint silver coins at 4-7% above the spot
price.) State coins could be “bought”, “repurchased”, or
exchanged for cash by the State, (or accepted as payment for State
taxes), at the same value of 10% above the spot price.
Extra profit for the State would be also be gained as the price of
silver rises between the time of purchase of silver in the spot market,
and until the time of coin distribution, as surely the price of silver
would rise due to increased monetary usage and demand. This extra profit, I
anticipate, could reach, or even exceed 100%-200%, due to the
fact that the silver market is so small, and prices so volatile in
response to even tiny increases in investment demand. In other
words, the State could purchase raw silver between $7-15/oz., and by
the time the State issues coins, the price of silver could rise to $21
to $45/oz. in anticipation of the increased demand for silver that a
successful coin program could bring.
Important implications & considerations:
1. The State Pension Fund could invest in silver before the
introduction of the coin. Thus, the investment into silver would increase in
value as increased monetary demand for silver would
follow. Increased liquidity for silver would also follow, (making
it easier for State Pension Fund to liquidate and sell any investment
of silver) as there would then always be a large and ready market for
silver after the coin program.
2. The State’s purchase of
silver in the open market, and/or through the dealer community,
should be done
discreetly at first for perhaps six months to a year. The
State should buy through a hired broker that hides the identity of the
buyer (the State), so as to get the most silver at the best
price--without moving the market price upwards too much. Doing
this could add 100% or more to the State’s initial profits from the
coin program.
3. To encourage and strengthen the coin program, private hoards
of .999 fine silver could be brought to the State mint and coined for a 5%
fee. This would encourage others to buy silver and bring
it to the State mint to coin it, for the profit of being able to
"market" the coins at 10% higher than the silver price. This
would thus enable coins to be placed into the hands of non-State
employees, and circulate more widely, and be more widely accepted.
4. Since the coin would not be federally issued, the coin would not be accepted
by any banks. This would have to be made clear to the
people, but would not be a problem.
5. The coins would be accepted by:
A. The State, at 10% above the spot price.
B. Coin dealers, at whatever discount they offer (typically 5%
off.)
C. Regular merchants, at whatever they decide they are worth.
(typically 5% to 10% over spot.)
6. Since the coin would not be federal,
one advantage is that it can contain the image of a living
person. (Only Federal notes and coins must restrict the images to
dead people.)
7. The coin would be entirely constitutional. Authorization
is probably only needed by the governor and the State Treasury.
(Check with State attorneys.)
8. To advertise the benefits of silver, a one-page fact
sheet on the historical value of silver, and facts about silver
today--which could be placed into the paychecks of state employees.
This could really create increased voluntary demand for the coins,
which is the entire point.
9. Free market dynamics: A coin that is accepted, voluntarily,
is an important free market principle. Other free market
principles are choice and
competition. A silver coin would be a viable &
meaningful choice to holding Federal Reserve Notes (U.S. paper
dollars.) A silver coin must remain a choice.
10. A coin with a value always
slightly higher than the value of the silver content and minting costs
would help the coin to circulate. The coin cannot have a fixed
dollar value, because the dollar's value is always changing. If a
one-ounce silver coin was denominated as a $10 piece, or a $20 piece,
the coins would not be valued closely enough to the free market value
of silver. Few would choose to accept a grossly overvalued silver
piece, and neither would the State, as it could be overwhelmed by
people cashing in, or minting, silver. On the other hand, a
dollar denominated coin would become obsolete, by being hoarded, if the
silver price exceeded $10 or $20/oz.
11. Coins can be sent out through U.S. Post Registered
Insured Mail very safely and cheaply. Coin dealers in the
U.S. routinely send silver via U.S. Post Registered Insured Mail.
All registered mail is transferred under lock and key, and signed for
at every step of the way by each employee, and signed for by the final
recipient. The cost varies from about $5 for a small
package to $60 for a large amount of silver. This may add costs
of up to 1-10%, depending on the amount of silver to be shipped.
To further reduce shipping costs, an alternative might be to ship
silver payments in bulk; for example, to be distributed by a school’s
administration to the teachers.
12. Other
denominations, such as 1/2 oz., 1/4 oz., and 1/10 oz., could
also be minted as demand increases, or as silver's value
increases. Gold coins
could also be introduced in the same manner, after a successful review
of the silver coin program.
13. The proposed State coin program will be vastly more successful
than the Federal Silver Eagle coin program for the following
reasons: (Advantages over U.S. silver eagles)
First advantage over U.S. silver Eagle coins: The State coin will
be more
reasonably priced. The Federal Silver Eagle sells for up
to $2.50/oz. over the silver price, or up to 50% over the silver
price. The State coin will be only 10% above the silver
price.
Second advantage over U.S. silver Eagle coins: The State coin
will be issued
to employees (who choose it), and thus, will be more widely
distributed to more people.
Third advantage over U.S. silver Eagle coins: The State coin will
be accepted
for State fees and taxes, unlike the Silver Eagle, which is not
accepted by the Federal Government for any fees or taxes, thus, the
State’s acceptance of the coin will legitimize the coin, and actually
create demand for the coin.
Fourth advantage over U.S. silver Eagle coins: The
State coin will be “created” by
people who will bring in their own silver to the State mint, in
order to “spend” their silver at a small profit, which will thus boost
circulation of the coin among merchants.
Fifth advantage over U.S. silver Eagle coins: The State coin will
circulate
widely outside the state, as people, nationally and
internationally, will have the alternative of a “State-backed” silver
coin that is cheaper than the overvalued Federal coin that is not
Federally backed (not repurchased.) (Just as the Mexican “piece
of eight” silver coin was once widely circulated in the U.S.)
Suggested design for a State-Issued silver coin:
On one side (heads), an engraving of scales for honest weights and
measures.
Arched across the top: “Silver is Money”
Arched across the bottom: “.999 fine silver”
Lower corner: Year minted (2005)
On the flip side (tails), the inscription, "Economic Strength through
Honest Weights and Measures"
Arched across the top: "State of ________"
Arched across the bottom: “one ounce pure silver”
Questions about the Silver Coin Proposal can be sent to me at:
Jason Hommel, 19543 Explorer Dr., Penn Valley, CA 95946, Phone: (530)
432-9671
Email: j@silverstockreport.com
www.SilverStockReport.com
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