# Devalued Peso and Gold Coins



## El Blanco Sol (Feb 5, 2012)

To All of My Fellow Ex-Pats in Mexico:

Two Questions: Do you think they will devalue the Peso? To hedge against this I am thinking of purchasing gold coins (kruggerands, etc.) Where can I purchase these. I have tried the exchange places that buy and sell gold and silver, but they only buy. Someone suggested the banks but the premiums are sky high. Any info would be greatly appreciated. Thank you


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## dwwhiteside (Apr 17, 2013)

My personal opinion is that they will not devalue the peso like they did back in 1993. Of course, I could be wrong about that. Anyway, if you want to hedge against that sort of devaluation, you really don't need to purchase gold coins or anything that exotic. Just keep your money in US dollars.

Now, I am making the assumption that, since you are originally from the US, you are getting paid in US dollars. If that is not the case and you are living and working in Mexico and making Mexican pesos, then that may not be an option.


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## joaquinx (Jul 3, 2010)

dwwhiteside said:


> My personal opinion is that they will not devalue the peso like they did back in 1993. Of course, I could be wrong about that. Anyway, if you want to hedge against that sort of devaluation, you really don't need to purchase gold coins or anything that exotic. Just keep your money in US dollars.


This is the correct course. Gold vs the Peso is not the smart choice, but gold vs the US Dollar is and the Dollar will be calling the price of gold.


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## El Blanco Sol (Feb 5, 2012)

A few more facts. I have a substantial amount of money in pesos and that's what I'm trying to protect. A friend suggested real estate instead of gold. Any thoughts?


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## joaquinx (Jul 3, 2010)

El Blanco Sol said:


> A few more facts. I have a substantial amount of money in pesos and that's what I'm trying to protect. A friend suggested real estate instead of gold. Any thoughts?


Not knowing much about real estate in Mexico except to stay away from condos and ejido land, the only real estate that I would buy would be in Mexico City in the colonias of La Condesa, Hipodromo, and Roma Norte.


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## eastwind (Jun 18, 2016)

My experience watching several devaluations is that there is no serious risk of a devaluation until the finance minister of the country concerned feels forced to deny on TV that they are considering a devaluation. Once that happens it's inevitable, and usually a done deal within two weeks.


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## perropedorro (Mar 19, 2016)

El Blanco Sol said:


> To All of My Fellow Ex-Pats in Mexico:
> Two Questions: Do you think they will devalue the Peso? To hedge against this I am thinking of purchasing gold coins (kruggerands, etc.) Where can I purchase these. I have tried the exchange places that buy and sell gold and silver, but they only buy. Someone suggested the banks but the premiums are sky high. Any info would be greatly appreciated. Thank you


I thought the peso was floating, i.e. allowed to follow the market rate with some stabilization by the central bank attempted when it starts to swing too much. Anyway, what's become apparent is Mexican anxiety over the U.S. election, and a good deal of angst and obsession over Trump. I'm not making a judgment of him here--there's another controversial topic where one can do that--but my guess is _if_ he wins, the peso will drop substantially. It'll might even do that before, if his poll numbers start to catch up.


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## joaquinx (Jul 3, 2010)

perropedorro said:


> . . . but my guess is _if_ he wins, the peso will drop substantially. It'll might even do that before, if his poll numbers start to catch up.


Now you have me wondering what would happen to the US dollar.


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## El Blanco Sol (Feb 5, 2012)

perropedorro said:


> I thought the peso was floating, i.e. allowed to follow the market rate with some stabilization by the central bank attempted when it starts to swing too much. Anyway, what's become apparent is Mexican anxiety over the U.S. election, and a good deal of angst and obsession over Trump. I'm not making a judgment of him here--there's another controversial topic where one can do that--but my guess is _if_ he wins, the peso will drop substantially. It'll might even do that before, if his poll numbers start to catch up.


I'm not sure if the peso is a floating currency though I have seen the central bank (Cartenas) take some corrective action when needed. I'll have to investigate further. I did learn that the peso is 1 of 3 currencies that can be traded round the clock hence fluxs in the exchange rate. I do agree with you that if Trump is elected the peso will take a dive but since the US economy needs a stable Mexican economy, I hope more reasonable thinking towards Mexico will prevail.


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## El Blanco Sol (Feb 5, 2012)

perropedorro said:


> I thought the peso was floating, i.e. allowed to follow the market rate with some stabilization by the central bank attempted when it starts to swing too much. Anyway, what's become apparent is Mexican anxiety over the U.S. election, and a good deal of angst and obsession over Trump. I'm not making a judgment of him here--there's another controversial topic where one can do that--but my guess is _if_ he wins, the peso will drop substantially. It'll might even do that before, if his poll numbers start to catch up.


You are absolutely correct. The peso is a floating currency with adjustments made by the central bank when needed. Hence the recent buying of dollars. Learn something new every day. Thanks


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## Gatos (Aug 16, 2016)

El Blanco Sol said:


> To All of My Fellow Ex-Pats in Mexico:
> 
> Two Questions: Do you think they will devalue the Peso? To hedge against this I am thinking of purchasing gold coins (kruggerands, etc.) Where can I purchase these. I have tried the exchange places that buy and sell gold and silver, but they only buy. Someone suggested the banks but the premiums are sky high. Any info would be greatly appreciated. Thank you


Many intelligent (well-off) Mexicans seem to be moving funds to the US OR investing in real-estate. Perhaps we are unintelligent but I take comfort in knowing that all of our eggs are not in a single basket - and the monies we have here are making in the area of 5%.

You can easily purchase silver coins at banks such as Banco Azteca. You can purchase gold coins via the mint in Mexico City (at a premium). If you are in Penn. you might consider buying there.


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## El Blanco Sol (Feb 5, 2012)

Gatos said:


> Many intelligent (well-off) Mexicans seem to be moving funds to the US OR investing in real-estate. Perhaps we are unintelligent but I take comfort in knowing that all of our eggs are not in a single basket - and the monies we have here are making in the area of 5%.
> 
> You can easily purchase silver coins at banks such as Banco Azteca. You can purchase gold coins via the mint in Mexico City (at a premium). If you are in Penn. you might consider buying there.


Thanks. Currently in Saltillo. Real estate seems to be popular in most peoples' minds. Some others have suggested "Cetes." Know anything about them? And out of curiosity, what investments are you making 5% on? I have some money in investment certificates with my bank, but they are not earning anywhere near that. Thanks again.


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## chicois8 (Aug 8, 2009)

Are the 5% Cetes taxable? If so how much?


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## DiverSailor123 (Sep 17, 2016)

I suggest getting an investment counselor .. We are making 6.25% to 7% on numerous Income Investments.. (Usually) the higher the risk the higher the Interest paid.. We, have a very low risk tolerance, seeing as we are both retired and hopes of any future income outside of SS... Pensions.... and what we saved and invested is NIL! Your age, your health, your wealth your debt load .. There are a *Lot* Of Contributing factors..


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## eastwind (Jun 18, 2016)

If you think you are making 7% with low risk then I suspect there are additional risks you do not realize you are taking.

TANSTAAFL


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## DiverSailor123 (Sep 17, 2016)

I agree ...There are no free lunches but that one is , for what it is , pretty good buffet.. We dumped a Franklin to pick up a short term 6.25 and that could come back and bite us. hahahaha We are diversified.. Could it collapse? Anything could happen but I do not live in the fear that most Americans choose to live in..


eastwind said:


> If you think you are making 7% with low risk then I suspect there are additional risks you do not realize you are taking.
> 
> TANSTAAFL


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## jackBnimble (Oct 18, 2016)

The peso is floating - the peso has devalued about 40% over the last 12 months - not sure how you missed that if you are living here - was 12 or 13 to $ last year and slid all the way 19.xx/$ recently, even spent short time over 20/$ for a few days. They blame the "threat" of a Trump admin, but really, its more likely due to just a slow down in the MX economy and drop in petro prices - with the fall in revenue from petrol - they like to devalue their currency and ease their debt burden - just like us up in the USA, with QE. But no need to worry about anything much more brusque than what we have seen - that's from the old days before the peso floated - and before IMF demanded transparency in their balance of trade and reserves on hand.


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