The Libertad is a Mexican coin that was first issued in 1981 in .999 fine gold and then in silver in 1982. Beginning in 1991, the Libertades became the only coins in the world that were issued in the convenient sizes of 1/20, 1/10, 1/4, 1/2, and 1 ounce—again, in both gold and silver. This made them very practical if they were to be used as currency.
But of course, gold and silver coinage has traditionally had a bit of a problem when either inflation or deflation is the norm in the world: a denominated face value. A century ago, a one-ounce US Liberty gold coin had a face value of twenty dollars. Today, its scrap value alone is nearly 65 times that amount. So, as the value of precious metals changes from day to day, the face value of the coin becomes meaningless.
The Perfect Coin
However, the Libertad, unlike most gold and silver coinage in the world, does not show a face value; it shows only a weight. It can therefore change in value daily, assuming that the Mexican government were to also create a standard by which the Libertad prices could be calculated each day as the prices of gold and silver fluctuate.
In 2003, the Mexican government became worried that their central bank, the Banco de México, held reserves of some 50 billion US dollars. President Fox stated, “We really don’t know what to do with them, they are so large.†Today, the reserves are more than twice as high. And it would be safe to say that, much like the rest of the world, Mexico worries about the level of US debt and the likelihood of a dollar crash that could wipe out the value of Mexico’s dollar holdings.
So, Mexico eventually began to increase the issuance of silver coins. The coins are put into circulation as legal tender with a floating value that is quoted daily by the Banco de México. The coins can additionally be exchanged for paper pesos at certain Mexican banks.
Although the decision to issue the Libertad in this fashion is a simple one, in terms of importance, it has the potential to be monumental. In a world in which all countries presently operate on a fiat money system—a system that in the not-too-distant future may well collapse—the Libertad could be a true monetary solution.
