Dear Jim,
I’ve been following the investing threads and would like to weigh in. The first item is to consider what emergency your investments are for. A collapse of order or society could make ammunition and other tangible hard goods very valuable. Conversely, an economic collapse could predate that by years (see Germany during the Depression), in which case freehold real estate and bullion are much more useful. Some people are stating that “X will be worthless,” but that all depends on the scenario. To assume that one and only one disaster will happen, and will happen within a set time frame, is taking a long bet. As you’ve pointed out, beans, bullets and band-aids first, because they are always useful in the present world, and can become more so under certain circumstances, then invest in additional goods (bullion, extra land) that can serve as a cushion against financial crises.
Another consideration: Even if one’s society crashes totally into anarchy, it may not be the same worldwide. A border guard is not likely to be persuaded by a pack of ammo, while an ounce of Swiss gold or similar goods is a much more persuasive argument.
Something to consider is public perception. Before Y2K [1], I dissuaded a friend of mine from buying gems for trade goods. Who but a professional jeweler can tell the value, and what is their marketability? It comes down to being an unmounted pretty rock, in a potential situation where engagement and wedding rings will be common low-end barter goods. Nor do stones generally keep their value.
However, I am willing to bet and go on record that if a disaster destroys our society (as opposed to a political or economic failure), most people will take good old greenbacks. If the government isn’t printing more, that will just increase the value, since they won’t be inflatable. The US Dollar is a fiat currency, but it’s been so for a long time. People take it because they see it as “money.” The finer points of economics, market value and such are lost on 9 out of 10. Don’t believe me? Try buying gas with silver coins tomorrow. Even though the silver is certainly worth more, most clerks won’t take it for more than face price (Assuming pre-1965 [2] US coins). I don’t believe there are any non-fiat currencies in the world anymore, and a great many people have an unhealthy distrust of any non-cash transaction (Or even of cash transactions above a few dollars. Offer cash for a car or even a generator and see what looks you get).
I suspect that a realistic scenario will involve hard valuables (bullion, land and cars) being sold to keep those with foresight solvent (sold for currency in increasing amounts, since that’s what businesses will insist on). If recovery isn’t immediate, a bullion and barter economy will develop to replace the worthless cash once everyone is made aware of the fact, and if trouble persists, hard to replace goods like ammo and coffee will be much in demand. For a more immediate issue such as enemy attack or natural disasters on a major scale (say Yellowstone erupts, or a large meteorite strike), cash will be the exchange medium of choice, with banks down and government distribution a problem.
Of course, in such a scenario, the idea would be to spend the cash fast for goods and services you need, if it looks like a recovering government will “solve” the problem by printing a bunch more, writing off debts and creating a false surplus that will destroy the value of said currency. – Michael Z. Williamson [3]