I bought some Mexican gold on Monday.
Old gold. Pre-World War II stuff. Two-peso coins slightly smaller than a U.S. dime that Mexicans used to carry around in their pockets — only these are not all banged up and gnarly like normal pocket change. They’re all in uncirculated or “about uncirculated” condition, meaning they’re really nice coins.
They each contain about a 1/20th of an ounce of gold, rounding out my coin collection that starts about 1.2 ounces per coin and decreases in size down to these tiny pesos.
I’ve built this collection not because they’re particularly rare. They’re generally not. Though they’re certainly collectible, their real purpose is something altogether different — my Boy Scout-like preparation for prices that will exceed $10,000 an ounce in a currency crisis.
And I don’t say that as a goldbug with blinders on. I say it as a sober-minded investor who sees a growing risk to Western currency stability and the potential that governments are forced to take some of our wealth to pare the unmanageable debts they’ve built up.
Gold, as I’ve said many times, has played a primary role in every substantial financial crisis in history — from Roman emperors devaluing the currency to wage wars and pay for governmental excesses, up through FDR’s confiscation act in 1933 and Nixon taking the buck off the gold standard in the early ‘70s.
Today is no different. Fiat currencies are a disaster, particularly in the West. Because they’re backed by nothing but government, governments feel they have free rein to spend without much resistance. So, they’ve accumulated tremendous debts by spending in tremendously stupid ways.
But that horse is out of the barn. Now, we just wait for what will likely be the collapse of one or more currencies, or for a central bank to announce that it will shore up its currency by backing it with gold in some fashion.
