> TEOTWAWKI Blog: Precious metals: a prep or a waste?

8/12/10

Precious metals: a prep or a waste?

So, lots of survivalists push precious metals, others say they're a waste of time. Who is right? Let's take a look.

Complete worldwide TEOTWAWKI
 
In a complete, worldwide TEOTWAWKI situation that knocks out all infrastructure, topples all governments and destroys all economies, will precious metals have value? To people who are starving to death or dying of thirst, not so much. You can't eat or drink gold, so yes - there's no demand and your metals are of little use in the initial stages post-TEOTWAWKI.

If, however, there is enough stability that young people are getting married or men are buying their wives jewelry, then hey, your metals will have some value. That is what people use gold for now, it's what they've used it for hundreds and even thousands of years. A token of appreciation and love and a status symbol. That's not going to change - when people get married, precious metals are involved, and they will work or pay a good amount to buy 'em.

Heck, you don't need a whole lot of stability for people to be marrying and gift-giving, and with higher mortality rates and the logistical need for a husband/wife unit, people will get married younger and more often. There may be a surplus of wedding bands to pull from the corpses of the unlucky, but I think your metals will have some value.

So, post-TEOTWAWKI, if you're out of the initial "everyone's starving" stage and living in some measure of local stability, your precious metals will have value to others.

Other SHTF Situations

Mankind hasn't had a complete, worldwide TEOTWAWKI situation yet, so we can place that fairly low on the list of probability. Higher on the probability list are things like hyperinflation, nationwide troubles and civil war.

Things like hyperinflation and collapsing currencies have happened time and time again, and precious metals are a hedge against that. Your local currency loses its value but your metals will retain their value.

Many people have needed to make a speedy exit from their native countries when dictators took power, mobs took over or war broke out. See Germany during and post-WWII. These are the real-deal bug out situations that we saw plenty of in the 20th century, where you've gotta bail on your homeland and head for somewhere more stable and safe. You can't stop by the bank on your way out. In this situation, precious metals, especially gold and platinum are a very compact and transportable form of wealth. A single pound of gold - sixteen one-ounce Gold Eagles currently has a melt value of $19,280, and the flat little coins can easily be concealed or sewn into clothing or bags.You can use your precious metals to get your family set up and safe in your new home.

Finally, precious metals, unlike most of the rest of your preps, have investment value. That means you can sell some off when you're old, TEOTWAWKI hasn't come, and you need to support your retired-self. At a minimum, gold gets you out of the fiat currency that you hold and the associated risks. Which is why, with the depression,  Buy smart and you'll make some money when the time comes to sell. Gold right now is high, pushed up by economic concerns, but it's $50 or so less than it was two months ago, and your guess is as good as mine as to where the value will go from here.

What's the priority?

Precious metals are NOT high on the priority list. Cash on hand, food and water storage, a reasonable firearms battery and ammo and many other things take a higher priority on your "prep list." However, as you get squared away with preps and/or start investing and saving, include some precious metals.

I am not a big fan of silver, because it fails at many of the things you need your precious metals to do. It is NOT particularly concentrated/transportable form of wealth. For example, silver is currently ~$18/ounce compared to ~$1200/ounce for gold; you'd need approximately 67 ounces of silver (over 4 pounds) to equal the value of ONE ounce of gold. Silver is not also in as great of demand for wedding band/jewelry/luxury purposes, so it will be lower on the barter totem pole during the "local stability" phase. It is an inflation hedge, but doesn't do this any better than gold. It is easier to make small-scale barters with, but I don't see $20-value exchanges being the key to anyone's survival. And if you find yourself needing some silver in a precious-metals driven market, I'm sure you could trade a gold coin for some.

I don't have any gold; we do have five silver Morgan dollars that my wife received as a gift, but otherwise we have zip in the way of precious metals. The point what we're ready to start buying them up is in the future, hopefully not too distant, but for now, there are many other things that take precedence. I suppose many of you are in a similar boat, but if you've got money to spend or are looking to get out of more volatile investments, gold certainly is a worthwhile preparation.

20 comments :

  1. Another pretty neat plus is that precious metals can be submerged in nasty materials, safe (or safer) from thieves. Some sailers have been known to submerge their gold coins in the old bilge of their sailboats for example.

    Think small denominations as well. A gold coin cannot be broken to pay off a small item, but a gold chain can be cut to adjust the weight of it. Gold chains can also be hidden pretty easily, tape around door jamb / head frames as an example.

    Yep, some big pluses for precious metals. My wife certainly appreciates her 'baubles', she has a good head on her shoulders.

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  2. When Gold hit the 1,000 buck mark a few years back a friend of mine went to every flea market and yard sale he could find. He bought up swaths of old costume jewelry. Low quality gold, but gold none the less. He took it to a goldsmith we have here in town. He cashed it in and got well over 2,500 bucks in total. His investment was only about 300 bucks. Paid for a nice trip to NYC.

    I've never been a fan of precious metal stockpiling for SHTF scenarios. Goods and services will be the currency, if you ask me. Of course if I'm wrong then my giant collection of Silver Dollars my Grandfather gave me will be put to good use.

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  3. Lead, tin, antimony, copper, brass, zinc, mild steel, high carbon steel, stainless steel, precious.
    Mountain rifleman

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  4. Ive thought about the whole gold and silver thing. It really depends I believe on the extreme of the SHTF situation. The More extreme the less value. Ive decided that somethign that may be of value would be certain types of ammunition. Firearms provide tools for protection and food. Haveing a decent supply for your own weapons is not only good for you but having extra may provide valuable trade to those in need of ammuniton. Traded for food or other goods it could be worth its weight in gold in some cases.

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  5. kpinkerton -

    Ammo and firearms certainly have their own advantages and will be a sought after item under most SHTF scenarios. Defense will go from an afterthought to a prime consideration for even the most clueless.

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  6. In a SHTF world, I believe it will be Guns, Guns, Bullets, Bullets, Food, Food, Medication, Medication. Then depending on how long it lasts Boots and animals.

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  7. Davenv

    Many historical shtf have proved otherwise. Unless it is a worldwide shtf, most often the best option is to bug out to a safer ao. Another region or a more stable country

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  8. To add onto the above(was posting from an iPhone):

    Guns, bullets, beans and bandaids OF course have their place in your survival preps, and obviously take priority over gold. BUT, if you're setting aside or investing extra money (hopefully we will all have some extra money to set aside for retirement, etc.), put some into gold.

    My wife put it this way the other night - IF we get hit with a worldwide TEOTWAWKI situation and gold becomes worthless, anything else you will have invested or stored away in a bank will disappear and become worthless as well. Gold you will at least have on hand, stored away, so that if/when demand for it returns, you can use it.

    As far as I know, gold has always been in demand - for the history of civilization. It has NEVER been worthless, through all of man's wars, disasters and SHTFs. We would have to be blasted back to the stone age (which COULD happen) for it to become so. I would say it's a fairly safe bet to retain good value in most situations.

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  9. We do not own gold yet either, but were considering making a small purchase once we save up. What is the best way to buy gold? I see the Goldline ad next to the article, and also see a lot of pawnshops have signs saying "We buy and sell gold" but are there other ways? Thanks.

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  10. Apartment Prepper -

    If it were me, I would find avoid Goldline and other online dealers and find a local coin shop. The online dealers require mostly large purchases, and then there's the added paper trail as well. At a good coin shop, you should be able to get comparable prices, buy a smaller amount, and pay cash. Know the values of what you're shopping for before going, too - expect to pay a premium over the melt value, and avoid any coins marked up for numismatic (coin collecting) value.

    Unless you're a gold buying expert, avoid the pawn shops - too easy to get ripped off, I'd think.

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  11. We will find a gold coin shop once we save up some cash. Thanks for the reply.

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  12. Better get that gold soon.

    Starting in 2012 the gov is going to require a 1099 be issued for purchases!

    Also, if bugging out to foreign soil is in your plan I would avoid American gold coins. Go with Canadian Maple Leafs or Credit Suisse ingots or anything else but American Eagles that would identify you as an American. Too many anti-American feelings out there.

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  13. Gold has always had value. As has coffee and spice. ANYTHING that is not easily obtained or refined has value to someone. Somebody's always got something you want at some level. Gold has value in jewelery, electronics, means of exchange, etc... Imagine trying to buy 2-3 chickens for that gold coin though. Consider various denominations of metal as you have various denominations of cash. Consumables will be forefront in people's minds in a severe situation whereas gold will eventually resurface as the basis of exchange.

    Like all things exercise moderation and consider large to small units.

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  14. I THINK the 1099 requirement is just going to be for business purchases. But not 100% positive - and scary if the .Gov wants to start tracking who is buying gold.

    Good point r.e. the foreign gold.

    r.e. small purchases w/ gold - If you can afford a stockpile of gold coins, you'll probably have other things of value for barter for those chickens. And, if you find yourself needing a smaller "denomination" barter item, you can swap an ounce of gold for say, a dozen chickens and two hogs. Or whatever. You can also shave and cut a coin into smaller pieces for exchange - just need a scale.

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  15. I disagree with the notion some have about post-TEOTWAWKI society quickly adopting junk silver as currency, but see PM as a hedge against investment rather than an investment. The trick is to sell them before the collapse, or be prepared to hold on to them for along time. My guess is PM wouldn't be worth much after a hard collapse; plenty of it would be laying around (like on fingers).

    No gold yet, but I'm doing good on junk silver. But with any large amount, silver can get out of control as far as weight, so gold is in my future.

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  16. That should be a hedge against "inflation"!

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  17. If it gets as bad as the great depression was why would government NOT confiscate gold and maybe silver again? They will outlaw it and require that you sell it to them at a price they set (which will be a lot closer to $200 then $1000). If food shortages threaten lives they will go door to door confiscating food that you "hoarded" and consider that it was YOU that caused the shortage because of your hoarding. They will probably imprison you for putting everyone elses life at risk and 95% of the good citizens will agree with them. I don't think we/you know the rules after TSHTF. Think back to that little old lady trying to just stay in her New Orleans home and she had a gun. Remember that 250 lb policeman that took her down and wrestled the gun from her hands?? Do you REALLY think they will let you keep your guns, gold/silver and years supply of food??? All I need to know in life I learned watching our government respond to Katrina. The more you have the more you have worth taking. If you refuse to go to the Superdome (speaking figuratively here) then you will be "removed" for the safety of society.

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  18. I think key to all of this is caching. If you have your gold/anything else (gunz, ammo, year of food) well hidden then its pretty difficult for the government--or anyone else--to get to it. A good cache needs to be accessible enough but also hard to find. I doubt when any kid of SHTF the Feds will have time to search every conceivable hiding spot you have available just to get their hands on some gold (or whatever). We all just need a Terminator 2 style underground weapons bunker. I'm sure there'd be room for some gold next to the minigun.

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  19. Being a scrapper for a decade as I paid for university and hgih school. I cannot understate the value of precious metal. I recently turned a thousand dollars into ten thousand in a matter of minutes just by knowing precious metals, buy low, sell high.

    Post SHTF, I have about 100 thousand dollars worth of coins, which only cost me 5 thousand so clam down. That five thousand I made from about 250. Also with precious metals. Its a rather lucrative career and its my first stop if i need money quickly. Nothing has a faster turn around than three platinum unmarked rigns from a pawn shop sold as silver, going to a knowledgable jewler and asking for their actual worth.

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  20. Cutting or shaving an ounce coin wouldn't be such a good idea. The benefit of buying coin over bullion is that with a recognizable minting, it's much much harder to counterfeit, and would be more likely to be accepted in trade. A good mix of whole and fractional Krugerrands (or similar) bought a few points above spot could be right for SHTF. Also, silver has it's place for buying small quantities of goods... but not necessarily for bugging out.

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