Why Precious metals and gems?

[NavyVet]

This whole thread is somewhat humorous to me...

If we all thought the same, and did the same, we could still not COMPLETELY prepare for whatever comes in a SHTF scenario. The best we can do is identify the things we know how to do, connect with others that have skills we don't have, and stockpile things that might be needed to survive with extra to barter for the rest of the things we didn't prepare for. If I need a mechanic, I need to be prepared to have whatever THEY view as valuable to them, or I will be walking.



I for one, am glad that not everyone here thinks like I do. Survival in these situations will depend as much on the community you develop as any preparation you can do individually.

 

[BehindBlueI's]

I think taking a barter mentality too early in one's preps will lead most people to hard times, the mortgage company and electric bill can't be paid with ammo or rum and it could be a real problem trying to convert those types of goods into whatever currency is needed to keep a roof over your family's heads.

They can't be paid with gold or gems, either. Who's buying your gold and gems for cash in an economic collapse? A liquidity issue will result in the same problem, not enough cash on hand.

 

[indiucky]

Hehe, Scrooge McIndiuky

You know you do the same Snorko.....

At least I don't bathe in .22 cartridges like you do...That's just weird......

 

[Justus]

They can't be paid with gold or gems, either. Who's buying your gold and gems for cash in an economic collapse? A liquidity issue will result in the same problem, not enough cash on hand.

Do you think the world markets shut down because one country's currency or economy is in collapse?

Check the history books, as I said before, an economic collapse does not equal TEOTWAWKI, it's a temporary hiccup.
Economies still function, people still use currency, it may just be another country's currency.
PM brokers still buy and sell PMs.

 

[BehindBlueI's]

Do you think the world markets shut down because one country's currency or economy is in collapse?

Check the history books, as I said before, an economic collapse does not equal TEOTWAWKI, it's a temporary hiccup.
Economies still function, people still use currency, it may just be another country's currency.
PM brokers still buy and sell PMs.

I have checked the history books, and I've also checked the current economic books. I can't condense everything down into one post but I'll hit the highlights.

1) Gold is not the safe haven against currency collapse it once was. There is no more gold standard, gold's value is measure in dollars, and "paper" gold, ETFs such "The Spider", and derivatives have tied gold to the world economy in ways not previously seen.

2) The dollar is not just another currency. If the peso collapses, nobody notices. Multiple currencies and commodities are tied to the dollar or tied to a basket of currencies that heavily weight the dollar. A collapsing dollar drags the world economy with it.

3) If you don't have enough wealth to have a year's worth of cash to pay your mortgage, you don't have enough cash to buy enough gold to pay your mortgage for a year (or whatever time frame you believe is appropriate for your hiccup). Cash vs the price of your mortgage never fluctuates, its a fixed number of dollars each month. Gold can collapse as easily as it can skyrocket. It is not a good place for your emergency savings or your EMERGENCY! savings.

4) Economies are more and more intertwined. The US market heavily influences other markets. If we're to the point the dollar has collapsed, other currencies are tanking, too.

5) Economies may or may not continue to function. Currency may or may not continue to circulate. The Great Depression had people paying doctors with chickens and trading beef for gasoline. As it drug on, some areas of the country had a complete collapse where there were no goods left to exchange and cities simply disappeared as people migrated away in search of work, food, etc.

 

[Justus]

I have checked the history books, and I've also checked the current economic books. I can't condense everything down into one post but I'll hit the highlights.

1) Gold is not the safe haven against currency collapse it once was. There is no more gold standard, gold's value is measure in dollars, and "paper" gold, ETFs such "The Spider", and derivatives have tied gold to the world economy in ways not previously seen.

2) The dollar is not just another currency. If the peso collapses, nobody notices. Multiple currencies and commodities are tied to the dollar or tied to a basket of currencies that heavily weight the dollar. A collapsing dollar drags the world economy with it.

3) If you don't have enough wealth to have a year's worth of cash to pay your mortgage, you don't have enough cash to buy enough gold to pay your mortgage for a year (or whatever time frame you believe is appropriate for your hiccup). Cash vs the price of your mortgage never fluctuates, its a fixed number of dollars each month. Gold can collapse as easily as it can skyrocket. It is not a good place for your emergency savings or your EMERGENCY! savings.

4) Economies are more and more intertwined. The US market heavily influences other markets. If we're to the point the dollar has collapsed, other currencies are tanking, too.

5) Economies may or may not continue to function. Currency may or may not continue to circulate. The Great Depression had people paying doctors with chickens and trading beef for gasoline. As it drug on, some areas of the country had a complete collapse where there were no goods left to exchange and cities simply disappeared as people migrated away in search of work, food, etc.

You hit the nail on the head, economies are very much intertwined.
Traders shift in and out of foreign markets daily.
PM prices will fluctuate but there will always be a business trading currency for it.
The Great Depression keeps being brought up but it is worth mentioning that there was still an economy that functioned and a stock market that traded.
It was not a barter-to-survive world, it may have been regionally related and it was not widespread.
But those are the stories that remain so that's what we believe.
I'm sure there are some places that barter for medical care in today's world too.
Just like there were shops in NYC accepting Euros after the Lehman debacle.

The OP was comparing PMs vs stockpiling barter items for an economic collapse.
What I am trying to say is that I feel that PMs are the better place to park extra money because they can be liquidated faster if needed and without the 25-75% loss associated with trying to sell off something quickly at the pawn shop or thru Craigslist.
Also, most of the items that are mentioned for barter are physically perishable, PMs are not.
The End-of-the-world scenarios that are being described or envisioned are not going to come about overnight (and exclusively) from an economic collapse.
If a person has to liquidate due to inflation and/or job loss, PMs will at least provide a better chance of obtaining what it's worth than a hundred bricks of rimfire ammo.


I think the disconnect in these discussions is that some folks believe that conditions around them will become immediately medieval from serious economic troubles. Sometimes it seems that some folks feel like they will remain employed and comfortable until that day the economy falls off the cliff but the reality is there is a ton of financial hardship between where we are at now and where we will be if/when it's time to barter bullets.



It seems that as each bubble bursts, things get tight for a certain segment of the population. That segment adjusts to it's new reality while the rest of the world moves on.
If it hasn't affected you yet, congratulations, and I hope you stay unscathed.

 

[BehindBlueI's]

The Great Depression keeps being brought up but it is worth mentioning that there was still an economy that functioned and a stock market that traded.
It was not a barter-to-survive world, it may have been regionally related and it was not widespread.
But those are the stories that remain so that's what we believe.

We believe them because they are true, and the people who lived through it told us about it.

I'm curious, which history books of the period suggest that barter wasn't widespread and was only limited to certain regions? Even if true, what happens when you live in that region?

What I am trying to say is that I feel that PMs are the better place to park extra money because they can be liquidated faster if needed and without the 25-75% loss associated with trying to sell off something quickly at the pawn shop or thru Craigslist.
Also, most of the items that are mentioned for barter are physically perishable, PMs are not.
The End-of-the-world scenarios that are being described or envisioned are not going to come about overnight (and exclusively) from an economic collapse.
If a person has to liquidate due to inflation and/or job loss, PMs will at least provide a better chance of obtaining what it's worth than a hundred bricks of rimfire ammo.


I think the disconnect in these discussions is that some folks believe that conditions around them will become immediately medieval from serious economic troubles. Sometimes it seems that some folks feel like they will remain employed and comfortable until that day the economy falls off the cliff but the reality is there is a ton of financial hardship between where we are at now and where we will be if/when it's time to barter bullets.

All of which speaks better for actual currency than precious metals. Zero liquidity issues, because its currency. Currency continues to be accepted when its not "back to medieval times" because its currency. Your bank won't stop taking dollars because of an economic downturn. If your goal is, as stated earlier, to keep your mortgage current and your lights turned on, you'll need dollars for that.

 

[pudly]

You might want to watch this excellent review of monetary history/standards to get a better idea of the relationship between dollars and gold. There have been four world monetary standards since the invention of the 1911 and there likely will be a new standard very soon. The US has changed to "new dollars" multiple times in the last 100+ years and stops honoring the old ones because it never lives up to the promises made with these standards and ends up printing and spending more dollars than are justified each time.

[video=youtube_share;wD3KYlpE2lk]http://youtu.be/wD3KYlpE2lk[/video]

If you find this video interesting, the same presenter has created a series that really provides a comprehensive history of currencies and money (no, they are not the same thing) and gives you the big picture so that you can better understand what is happening currently, why it is happening, and what it likely to happen in the future. I consider it well worth the investment in time.

https://www.youtube.com/playlist?list=PLE88E9ICdipidHkTehs1VbFzgwrq1jkUJ

 

[jd4320t]

Question for Warthog...

I assume you and your family have some precious metals and or gems in your house right now. It may be jewelry, coins, or whatever. I assume you store it all together in a safe place, safe, hidden spot, something like that.

If you don't currently have any then the rest doesn't apply...

However...if you do....

Pretend the SHTF and you have to leave your house. Are you leaving those precious metals and gems behind or taking them with you?

I'll wait for you answer...

 

[warthog]

I don't live with anoyone but me and my reserves have long ago been spent. I was injured on the job 15 years ago and it goes fast when the bills need paying.

IF the SHTF I am not likely to leave the house either, see I am not gonna live long anyway with the medicines I need. But if I were able to leave, I would bring food, water and a way t make more usable, ammo, fire making, and a couple of guns and a change or two of clothes. If it fit and I couldn't fit something better in there, I would take whatever I had of precious metal with me sure but it has to be the last thing on my list.

My family, all of it, lives in FL. I live alone without wife etc in my own house. I have a penny jar and a coin jar for everyday change and no silver or gold or platinum at all. I don't wear jewelry so none is here.

IMO, MONEY, in a TOTAL WORLD ECONOMY COLLAPSE is worthless. Our economy collapses then so do a lot of others who depend on ours to keep going.

 

[Justus]

We believe them because they are true, and the people who lived through it told us about it.

I'm curious, which history books of the period suggest that barter wasn't widespread and was only limited to certain regions? Even if true, what happens when you live in that region?




All of which speaks better for actual currency than precious metals. Zero liquidity issues, because its currency. Currency continues to be accepted when its not "back to medieval times" because its currency. Your bank won't stop taking dollars because of an economic downturn. If your goal is, as stated earlier, to keep your mortgage current and your lights turned on, you'll need dollars for that.

"The Great Depression: A Diary" by Benjamin Roth is a good read
Roth complained mostly about the political division across the country and stated several times that frugality and patience seemed to be the best way for average folks to ride out the Depression. I think it's easy to forget that 75-80% of America was employed at that time and that many countries emerged from the depression in less than 2 years. I don't remember any mention of barter but it's been a few years since I've read it.

When Money Dies is also a good read and is free here:
http://www.iamthewitness.com/books/When Money Dies.pdf
Note that there are several references to the "official use" of alternate paper currencies and people hoarding foreign currencies (now wouldn't PMs be a great way to convert into new currency at a fairer rate than the tanking currency?)......and people selling furnishings for a fraction of the value to foreigners taking advantage of the situation (this is why I put less emphasis on stockpiling "stuff")..

These are two examples of economic hell that are used often on the discussion forums and they were not the TEOTWAWKI as everyone seems to think they were. Some people were seriously impacted, some were mildly affected and some folks didn't feel a thing but society still functioned and bills still needed to be paid no matter what end of the spectrum you happened to find yourself on.


I have my own story how silver got my family through some serious hardship after the 2007-2008 downturn.
I still stand by my statement about PMs being preferable to barter goods in our family plan.

 

[warthog]

We aren't talking a downturn in the economy here. it is more likely to collapse since we are not backed by anything anymore.

 

[Justus]

We aren't talking a downturn in the economy here. it is more likely to collapse since we are not backed by anything anymore.

I'm sorry to hear what you went through.
We went through a similar situation.
I expect that there will be many more people finding themselves in hardship as well as each new wave of economic trouble hits us.

IMO, a total simultaneous WORLD ECONOMIC COLLAPSE is extremely unlikely, I do believe that it will be a long, slow slide into a lower standard of living as the US loses it's financial influence and the world figures out that unlimited growth is not feasible.

 

[BehindBlueI's]

We aren't talking a downturn in the economy here. it is more likely to collapse since we are not backed by anything anymore.

Gold isn't backed by anything other than the faith other people will want gold, same as dollars are backed by the faith that other people will want dollars. We're less likely to collapse than a gold standard economy was because other nations can't run your treasury, crashing your finance system by removing all liquidity and driving up interest rates, grinding your economy to a halt. That's one of the major reasons the gold standards ended.

I still stand by my statement about PMs being preferable to barter goods in our family plan.

Not the argument I've been making, I've been asking why PMs over cash. I appreciate the book recommendations, I'll look into them. I'd also recommend one to you, though: The Worst Hard Time: The Untold Story of Those Who Survived the Great American Dust Bowl: Timothy Egan: 9780618773473: Amazon.com: Books

 

[Libertarian01]

To All,

I believe the best reason for investing in PMs along with other necessities is that we do NOT know what is going to happen, or for how long it will happen.

For the past several thousand years middle eastern and western countries have valued gold and silver. Coins were minted using these metals, along with some others. For whatever reason that you can find the majority of civilized cultures has valued, to a greater or lesser extent, precious metals.

Obviously during a crisis food and water become paramount, yet they are NOT the only thing that matters. Shelter, clothing, medicine, knowledge and other needs become of great value.

During a TEOTWAWKI situation barter will probably rule but that doesn't mean that precious metals will not be a part of the equation. For those who think that obviously people won't want gold for food are presuming a totally rational and logical thought process. Whoever said humans were logical and/or rational at all times? If we were always rational and logical there would be NO call for gun control, yet there is. We have parents terrified that their darling angels will be gunned down in school so their answer is to not allow guns in school. Not very rational.

Another issue is that the TEOTWAWKI will end! A "new normal" will arise. In this immediate new normal guns and survival items will have far less value as most people who did survive may well have plenty of each, thus a low demand.

As an example a friend of mine had Austrian relatives that came out of WWII. Post war economy was in ruin and barter ruled the streets. They had a large stash of gold but held onto it. As the economy settled down and a "new normal" was put into place with banks and other financial institutions rising up THEN they sold some of their gold to invest in a garment store - a commodity of new clothes that people were desperate to buy as most of the clothes they were wearing was prewar. The family made a killing. They bartered and traded and survived during the war, and continued slightly (a year or two) after the war, but when stability returned their barter goods were of less value and their gold was of great value and was used to capitalize new investments that pulled them out of survival mode very quickly.

The point is that certain things will always hold value of some sort with natural variances in the market. Most of the products we acquire to pull us through a SHTF scenario almost all loose value. The generator bought five (5) years ago for $3k is now worth $1.5k, give or take. The store of food we bought is worth less than the purchase price. Gold and silver have also gone up or down depending upon when purchased but they haven't gone to $0!

We must also presume that quite possibly, to the regret of a few, there may NEVER in our lifetimes be a major SHTF or TEOTWAWKI situation. All this prepping may be for naught. Then what?

Diversity of assets to maximize our returns over the long run and give us the flexibility to maneuver with greater agility than others.

Just my (or ounce of silver.)

Regards,

Doug

 

[warthog]

Doug, as for your signature, don't make the font so big, I don't have your eyes. So I don't need the magnification.

 

[Libertarian01]

Doug, as for your signature, don't make the font so big, I don't have your eyes. So I don't need the magnification.

To Warthog (et alia),

Sorry. A friend used my computer and messed up my screen. I will try to correct.

Regards,

Doug

 

[warthog]

No worries, I usually am a little nicer than that, sorry. My back and unmentionables were hurting then but the pills are working now.

 

[Justus]

We can now add the UK to the list of nations that are bypassing the US Dollar when trading with China.

China to Start Direct Foreign-Exchange Trades With U.K. - WSJ

 

[Justus]

Brazil, Russia, India, China and South Africa have announced that they will be forming their own version of the IMF.
"We believe the BRICS are an important force for incremental change and reform of current institutions toward more representative and equitable governance."

'BRICS' nations to form development bank to rival World Bank, IMF - LA Times