Letter Re: GPS Receivers with a Back Road Mode

Jim,
In answer to the recent inquiry: I can’t speak for other manufacturers, but Garmin’s Mapsource software has a setting for the road types along routes. I took my family on a camping trip a few weeks ago and we were on a single-lane dirt road for several miles between paved roads. We saw a group of wild turkeys cross the road and numerous deer bounding away as we passed.
Since this trip, I found the setting in Mapsource that the software uses to determine road types. Click the “Edit” menu and select “Preferences” and in the resulting dialog, select the “Routing” tab. There is a slider for “Road Selection” adjusting from “Prefer Highways” to “Prefer Minor Roads”.

I personally have the Garmin GPSMap 60CSx and wouldn’t trade it for anything else. I have had the unit just over a year and updated maps once from City Navigator North America 2008 to City Navigator North America NT 2009. NT is a smaller file-size allowing you to hold more maps on a single Micro SD card. I use a 2-gigabyte card and have both sets of City Navigator and Topo 2008 for a good portion of the Eastern Seaboard. Updated maps are imperative as roads are always changing, but Garmin does a good job of software releases and bug fixes. – Reid

Odds ‘n Sods:

John T. spotted this thought-provoking piece by Chris Sullins posted over at Of Two Minds: The Self-Selected Remnant

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David in Israel recommends the Pyromid Folding Grille. David notes: “I got mine at an outdoor gear shop closing sale. I was surprised by the high list price for a grille but that was before I used it. Made of stainless steel the infrared energy from the coals is all aimed upwards toward the food, after many seasons of use the once mirror shiny grille is a dull gold color where it was heated but there is no sign of corrosion. I follow the instruction to use a foil liner every time and this makes cleanup easy, just carefully remove the foil liner with the dying coals add a little water and once the grille is cool fold up and go. Newer grilles also include a super heat grate which is supposed to intensify the heat by holding briquettes sideways so the ash will fall off. Since the grille is only an inch deep and 12 inches wide when folded up in its bag it easily straps to the side of my bicycle rack for trips to the park or farther. I have burned everything form Sterno to charcoal to driftwood when touring and it has always been good to grill burgers, cook a chicken, or boil a pot of water.

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Reader CRW notes: “David Walker, a national hero and former comptroller for the US government, who resigned earlier this year, now heads the Peter G. Peterson Foundation which is devoted to warning the public about the looming bankruptcy of the government. I have just discovered that they have a movie, “I.O.U.S.A.” coming out in theaters in a few weeks. A movie trailer is available on their web site. “I.O.U.S.A“. may be to the US economy what “An Inconvenient Truth” was to the environment.

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Take a look at the new Be A Survivor blog. It is quite interesting.

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Inyokern sent us this ABC News article link: Into the Economic Abyss: How Deep Will It Go?

Jim’s Quote of the Day:

“The harsh reality is that Starbucks is a microcosm of scores of enterprises that have come to comprise the core of the U.S. Bubble economy. The economic viability of so many businesses and even industries will be in jeopardy in the unfolding credit and financial landscape. The stock market is still in the early stage of discounting the unfolding credit and economic bust. And I’ll reiterate that we expect the unfolding economic adjustment to be of such a magnitude as to be classified as an economic depression.” – Doug Noland, The Prudent Bear

Note from JWR:

Today we present another entry for Round 18 of the SurvivalBlog non-fiction writing contest. The contest prizes include:

First Prize: The writer of the best contributed article in the next 60 days will be awarded two transferable Front Sight  “Gray” Four Day Training Course Certificates. This is an up to $4,000 value!
Second Prize: A three day course certificate from OnPoint Tactical. This certificate will be for the prize winner’s choice of three-day civilian courses.
Third Prize: A copy of my “Rawles Gets You Ready” preparedness course, from Arbogast Publishing

Round 18 ends on September 30th, so get busy writing and e-mail us your entries. Remember that articles that relate practical “how to” skills for survival will have an advantage in the judging.

The author spent his time in the Army working in Long Range Reconnaissance and Surveillance (LRRS) and 11B scout units. He recently returned from a tour in Iraq. This article is abased upon his hands-on experience, rather than doctrine and manuals.

A Practical Guide to the Recon Patrol, by TMC

Okay, the stuff has hit the fan, you have made it to your retreat, and you are geared up, stocked up and ready to survive. Inner security has been established, with LP/OPs located at likely avenues of approach. You at some point will start to wonder what else is out there, how far away it is, and what it means for your group. You might want to start implementing the recon patrol. While I could write what may very well be a small manual on the subject, I will just put out the basics that will point you in the right direction to successfully run a patrol. As most retreats will not be in the desert, I am using the normal type terrain expected in a well selected retreat. Your mileage may vary. I will also not go into detail on certain subjects that can easily be researched. If I did, I would surely exceed any limit on how large a document on the subject should be. Rather I will concentrate on things learned in the field, not in any manual.

What exactly is a recon patrol?
Field reconnaissance is the gathering of information of your surroundings in a stealthy manner. You will use this information to determine the safety of your current position and it will most likely be a determining factor for your daily operations planning. Information gathered can give you an idea of opposing force (OPFOR) strength, intentions, direction they are traveling and the likelihood of them coming in contact with your base element.

While much of the doctrine is the same a standard patrol, the recon patrol is a bit different than a regular patrol. The recon patrol is to gather information on your surroundings without making contact with other elements. That being said, I have on occasion been ordered to use harassing techniques to slow down or try to change the course of an element, which I will touch upon later.

Patrol Size
The size of a recon patrol is going to be smaller than the standard squad patrol. You are trying to be invisible and the more boots you have on the ground the more noise you will make. In my experience, a four person team is the size limit which I would recommend. Three is the optimal number, and two being the least that should go out. This is in comparison with the standard squad patrol size of nine (if you are lucky enough to have that many in your squad. [Even active duty military units are often short of manpower versus their authorized strength under their table of organization.]).

Patrol Equipment
Travel light, flee the fight. Unless you come across a solo element, you will most likely be outnumbered and if compromised you will need to hastily retreat. The preferred engagement ratio is 3:1, so bear that in mind.

Weapons
Take light carbines such as the M4 or Mini-14. I choose the AK-47 for myself as I believe it has a lot to offer for this type of mission. Should you get compromised, you will need to lay down a furious wall of fire to make the enemy think they just encountered a platoon or a least squad sized element so semi-auto is in my opinion a bare minimum. Larger weapons such as the M1 Garand or long barreled assault rifles will slow you down as they are heavy and cumbersome, but if that is what you have you will have to make do. Even though I sometimes carried a sidearm, it would be better just to take a couple of extra mags for your primary. This is much better added value weight. You should pack two reloads for your combat load just in case you keep getting paralleled by OPFOR and have time to refresh magazines.

The “light” part seems to be getting to be a stretch with this type prep, which is why I stress lighter ammo such as 5.56 or 7.62×39. The 7.62 NATO ammo gets pretty heavy with this type of packing and does not add much value in a reconnaissance mission. If you do have a mule in your team (a human one) and he has skills with a sniper rifle, you may want to consider taking it along in an appropriate style carrier as a target of opportunity may come up that may be just way too good to pass up. This does violate the “no contact” premise of the recon patrol, but proper escape route planning can be implemented to help with this scenario. Just a thought and should only be done by experienced personnel.

Optics
Optics such as binoculars or [spotting] scope are pretty much necessities. The further that you can stand off and observe your objective the better off you are. Binoculars with some type of “flash kill” device are recommended. Also make these quality optics that you are comfortable using. I don’t mean you have to buy a $1,000 pair of Steiners. For under $40 at WalMart you can get Bushnell’s 10×42 hunting binoculars that are clear as a bell and very rugged. You can use a sheer sniper veil over them as a kill flash. Rifle scopes are okay, but require that you expose yourself a little more than with binoculars. Generally, you also have a better field of view with binoculars. In my opinion binoculars are a better choice.

Food
You need to travel light, so try to keep this to a minimum. A recon patrol should be fairly short, a day or two probably at most. If it is going to be extended,then pack 2-1/2 times the food you think you will need. Utilizing light foods like jerky that you can carry a lot of will go a long way. I learned that one the hard way. When a two day patrol turns into six days that extra little bit of “Pogey bait” is worth it and can be rationed. Also learn what is edible in your surroundings as this can help sustain your mission without being a burden on your supplies. Take foods that need little or no preparation. Jerky, trail mix, MREs and foods of that nature are recommended.

Try to avoid foods that are particularly aromatic, such as curry, onion, garlic, etc. I can’t tell you how many times I have found an OPFOR element’s area of operations (AO) just by smell. While in Korea, I could find Korean [troop] elements by their body odor due to their diet of kimchi sometimes up to 400 meters away, depending on the wind and how long they had been out. This odor discipline also includes cigarettes, No smoking! Obviously colognes and other “smelly goods” have no place on a recon patrol.

Communications
Radios should be carried but utilized only when absolutely necessary. Chances are your patrol might take you out of radio communication reception distance especially if you don’t have high power equipment. This is risky, but sometimes necessary. You need to know the operating limitations of your comms equipment and operate accordingly. Designate times and places to transmit from if you cannot [continuous] maintain radio contact during the patrol.

Uniforms
Camoflage should go without saying. The type will obviously be determinate on your terrain and season. Burlap with proper color spray paint is a great way to make cheap [outline] breakup for weapons. It can be manipulated to just about any terrain out there. You can use [burlap strips] to throw off scent-detecting animals such as dogs by using fox urine or other types of masking scents. A very useful item indeed.

Helmets and body armor are optional, but I do not recommend them on a recon patrol. The body armor is heavy and can impede your quick getaway. It merits are known factors in the safety of soldiers, but in this mission you need to be able to flat out run if compromised. The ballistic helmet is also heavy, but its main downfall is the fact that it masks your environment. It can impair your vision and it mostly covers your ears and keeps you from hearing sounds that may be the enemy. A boonie cap is the first choice, patrol cap is second for traditional headgear.

Plan the Route
Route planning is essential. Pick a route that will minimize danger area crossings and contact with high traffic areas. Do not use roads, rivers, trails or any other obvious routes of travel. You may skirt these areas to view them. Never plan a straight route. Use various patterns of travel such as zigzagging or button hooking. This keeps the enemy off guard as to where you came from. Also, should you think you are being trailed, do a wide 360 until you come back on your own tracks. If you encounter more tracks than yours, then you are being followed. React according to your [contact] SOPs.

Learn to use a compass and map. While GPS systems can be useful tools, they are not always reliable and in a Grid Down situation may not even function. Know this: the US Department of Defense owns all the GPS satellites and merely provides data to GPS companies like Garmin so their GPS devices will work. Should the government choose to, they can encrypt them at will and leave your commercial GPS worthless. Learning how to use a compass and map can be a fun experience for everyone. It can give kids and adults alike a great sense of accomplishment and help get you or keep you in shape. Map and compass skills can trump a GPS any day, and on many occasions I have been right on the mark while the guy using the GPS has been wandering around waiting for the satellites to give him a decent grid. Rely on basic navigation skills. Technology is a crutch for the weak.

Plan Actions
Make sure to plan out the time you are leaving, time to be on the objective, time you will transmit information if necessary, and time you expect to be back. Plan for contingencies, such as what to do if you make contact, where to meet if you get separated, and what frequencies to be on at what time of the day. Most of these will be dictated by your groups prior established SOPs. Follow them.

Preparing for the Patrol
If you follow proper procedure when you leave the base of ops you will conduct “stop, look, listen, and smell” (SLLS). This is to get you oriented to your environment. However, I have found that a short 10 minute halt like this is not nearly as effective as having the recon team acclimate [to the natural environment] over a day or so without distractions such as television, radio, or any other man-made devices that are not essential to ops. In a grid down situation this will most likely not be a problem. Your sense of smell, hearing, and vision get better the longer you are out. If possible, do this and you will be much more inclined to pick up on enemy positions and movement long before they pick you up.

Make sure all equipment gets inspected, including weapons and optics. Make sure all equipment is quiet and free of protruding gear or things that will snag on foliage. This includes weapons that have a multitude of “Mall Ninja” gear hanging off of them. While it may be value added in a MOUT situation, it is just more junk to hang up on vegetation and obstacles. Have each patrol member jump up and down and run in place with their gear on to identify anything noisy and use 100 m.p.h. [olive drab duck] tape or 550 [parachute] cord to lash it down. Make sure food and water are easily accessible as you may be eating on the fly. Check for proper and complete camouflage. Get ready to roll, get your mind right.

On the Patrol
Use your wits. Be aware of your environment, and anything that may not be right. Learn to use nature to warn you of potential danger. Have you ever been close to a squirrel’s nest in the woods? He will let you know you are too close by making a lot of noise. This type of natural warning device can serve you as well as hinder you. Be mindful of nature and learn to move in the woods as part of your surroundings rather than against it. This takes time, is a learned behavior, but can be done by just about anyone. Avoid sandy terrain where you will leave an obvious trail. Use rocks and other terrain to move while minimizing [leaving] sign and making noise. Be mindful of how loud your footsteps are. That is a common mistake I see soldiers make all the time. They don’t listen to how much noise they are making. Learn to roll your feet. This can be practiced around the house while doing chores. Just learn to walk quietly.

On the Objective
If you are doing an area recon, which is a specific area you want to check out, make sure you spend the time you need on the objective to properly gather intelligence. Walk a zigzag pattern to cover as much terrain as possible.
If you are doing a point recon, which is a recon of a specific target such as a house or a point on a road, lay your team in collect as much info as you can. Include info you would normally not consider important as later on down the road you may find it useful. Remember, you can never collect too much intel, but you can collect not enough. You can sort through what is important later on when you have time to analyze the intel.
While glassing your objective, make sure only one member of each buddy team is using binoculars, while the other keeps an eye out for anyone who may be using a clandestine approach to your location. Use a notebook to write down everything you see.

Departure
When the allotted time on the objective is complete, always leave the objective in a different direction [than from which you approached]. Pick up any trash or tell tale sign of you being there. Brush over where you were laying, cover any foliage cuts you might have made. Try to leave no sign at all that you were ever there. Maintain noise discipline on the way back just like you did on the way in. You are in just as much danger going home as you were going out. Don’t get complacent.

Well, there you have it. You can research the patrol by using military manuals and implement what I have written here for a successful mission. This will give you a heads up on what’s out there and give you an advantage over any element that may be inbound on your location. Knowledge is power, and if you have solid intel on your enemy and surroundings, then you have the tactical advantage. I hope this is of use to you.

Letter Re: Advice on Finding a Retreat

Hello Mr Rawles;
Back around 1996, I downloaded (and paid for) a copy of your novel “Triple Ought” [an early shareware draft “Patriots”]; I and others around me, learned from it and enjoyed it immensely. I now have an autographed copy of “Patriots“, and have read it more than once.

A little background;
We lived on a ‘farm’ retreat in Michigan’s Upper Peninsula (“U.P.“) with two other families from the Summer of ’99 (read: Y2K) to the Spring of 2002 and experienced first-hand the trials and joys of such an existence. We survived on the very basics; we raised our own chickens, a few head of beef cattle, one hand-milked dairy cow, had a couple pigs, and several meat rabbits. Built and utilized a greenhouse and gardened as much as is possible in that climate. Picked apples from our own apple trees, made cider, and put up hay from our own 40 acre hay field, (with a neighbor’s help and equipment that we bartered barn space for). Stocked our pantry with home canning, including venison. Had generators and fuel on hand. Heated at least in majority with wood-burners, etc, etc.

Unfortunately, due to a change in employment circumstances, and a very tough job market in the U.P., we had to move back ‘down-state’ and resume a ‘normal’ life. The whole retreat has been sold (we didn’t have much ownership) and everything is gone. We are left with little other than the mindset that we know how to survive and now have a little ‘been-there-done-that’ know how.
I work in the construction industry and have never been able to get far enough ahead of the bills to do much of anything ‘extra’ and right now with the economy where it is we couldn’t be much less affluent! We are not able to maintain anything above a minimum standard of preparedness, and I worry that when the ‘balloon goes up’ on this economy, we certainly will lose our home (we are close now) and therefore will be little more than refugees ourselves, with limited ability to carry our gear on our backs. I don’t have any connection to anyone that has a home that they wouldn’t lose in a spiraling economic collapse.

My question in this letter is this: What is your best advice for people in similar situations that lack a retreat or the means to acquire one, and cannot plan on maintaining their residence as a ‘stronghold’?
Tactically, I know an R.V. is just transportation to the next ambush, and don’t have the funds to acquire one anyway, but I know we will be ‘boots on the ground’ long before things get really bad.

Thank you for ‘taking my call’. – GvO

JWR Replies: I often get inquiries from readers that, like myself, have a tight budget. The best course of action is to join an existing retreat group, offering your skills. To find such as group, see our Finding Like-Minded People in Your Area static web page. If you can’t find one, then form a new one, by putting out “feelers”–looking for like-minded people in your region.

Odds ‘n Sods:

Reader KAF suggested this piece over at Pajamas Media: Ask Dr. Helen: Preparing for Disaster — Prudent or Paranoid? It sounds like she might have been reading SurvivalBlog.

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Steve N. flagged this article: Iran threatens to shut Gulf shipping lanes

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Eric sent us this piece on the significance of “local” produce: Supermarket Chains Narrow Their Sights

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A reader e-mailed me to ask: “Do you know of any GPS that has a “Scenery mode” or other mode that chooses back roads instead of major roads and highways, so I can move quickly and efficiently during a G.O.O.D. event?” This goes beyond my expertise, since my personal research was for picking out the best model for back-country topographic modes, and that was four years ago. (So that technology used in my GPS receiver is now practically obsolete.) Can anyone make a detailed recommendation?

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Speaking of GPS, here is a lesson on over-reliance on gee-whiz navigation devices, and leaving common sense at home: Convoy rescued after GPS led them to Utah cliff.

Notes from JWR:

There was recently an interesting write up of SurvivalBlog in the Scripps Metropulse newspaper. Somehow, they came to the conclusion that I live in Georgia. But I can assure them that I indeed live “somewhere west of the Rockies.”

Today we present another entry for Round 18 of the SurvivalBlog non-fiction writing contest. The contest prizes include:

First Prize: The writer of the best contributed article in the next 60 days will be awarded two transferable Front Sight  “Gray” Four Day Training Course Certificates. This is an up to $4,000 value!
Second Prize: A three day course certificate from OnPoint Tactical. This certificate will be for the prize winner’s choice of three-day civilian courses.
Third Prize: A copy of my “Rawles Gets You Ready” preparedness course, from Arbogast Publishing

Round 18 ends on September 30th, so get busy writing and e-mail us your entries. Remember that articles that relate practical “how to” skills for survival will have an advantage in the judging.

On Rural Retreat Safety and Secrecy, by E.I.D.

A major worry for many urbanites considering maintaining a rural retreat is their ability to, from a distance, ensure the secrecy and security of their property. Many of us cannot afford a full time retreat-sitter, and must use other legal methods to ensure the security of our property and supplies in both grid-up and grid-down scenarios.

First, county roads running to or through your property are always a liability. I set my retreat as far back off of the gravel county road as possible by clearing my own road, with the help of friends, through thick pine forest. My road is wide enough for a single large vehicle, and is approximately a mile long. The road is not straight, but rather, zig-zags like a large Z, with each leg of the road intersecting with, and then continuing beyond, the next leg, and then stopping at a dead end. This design is advantageous for a few reasons: first, if someone looks down a single leg of the road, they will see it die in a dead end some distance ahead. The “turn off” onto the next leg is not visible until you are almost right upon it, because of the acute angle of the turnoff. Secondly, these turns create many opportunities for barricades or defense concealment. Vehicles must also make sharp turns onto each leg of the road, and thus must slow down to a near stop, making them more vulnerable to fire at these locations.

To disguise the entrance to your road, use natural foliage. The county road near my retreat has ditches dug on either side of it. Rather than putting a permanent bridge or tin horn culvert, I left the ditch as it was. This provides an initial defense, and helps disguise the entrance to casual drivers-by. Because I drive a 4×4 vehicle, I cross this ditch by tossing large logs into the ditch, driving over them, and then removing the logs when I leave and stashing them back in the woods a short distance. One could also use a section of cattle-guard as a portable bridge. Paint it camouflage and stash it back in the foliage.

To disguise the entrance further, I allowed the natural grass and weeds at the first five feet or so of my forest road to grow as tall and thick as they could. I can easily drive my vehicle right over these weeds, but visually, they help to conceal the 8 foot gap in the trees, and deter any unwanted foot-traffic. I didn’t trim any of the tree limbs that stretched across the road (so long as my vehicle could pass beneath them), and even used ropes to train younger limbs to grow across the road as well. This helps to disguise the road itself from air-traffic and satellite photos. It’s true that the limbs sometimes fall across the road, but that just gives me an opportunity to add to my firewood stash.

Make sure that your retreat itself doesn’t stand out too hard from the surroundings. Paint your retreat using the colors of the surrounding area, perhaps even in a camo scheme, and don’t forget about the roof! The roof is most visible from the air, so take great care in painting it so that it blends. Any outbuildings should also be disguised thusly, and some structures can merely be covered with weather resistant camo netting. One of my past bosses lived in a subterranean concrete home that was visible from only one side. Three sides, and the top of the home, appear as a natural grassy hill with small trees and shrubs, but one side of the hill had a door and windows! This would be the ultimate retreat home for anyone willing to invest in it, as he spent very little on heating and cooling the home, and never worried about tornadoes, heavy winds, or other such destructive weather.

Remember that your clearing doesn’t need to be a pasture. My retreat is built amongst the trees, helping to disguise it. I cut the shrubs and smaller or dead trees out, but left the larger, aged trees behind to provide shade and concealment. There’s plenty of room for everything I need beneath these giants, and enough sun gets through for a variety of natural fruiting trees, shrubs, and wild vegetables to grow. Speaking of, make sure to plant many edibles that naturally occur in your area and will grow without your constant attention. My retreat features pecan trees, blackberries, wild grapes, persimmon trees, and wild onions, and I’ll soon be adding other self-sufficient plants to the mix.

It’s very possible that others will discover your retreat, and thus you must take care to make sure your property is safe. Some items, such as guns, ammunition, and other items purely stored for TEOTWAWKI can be properly packaged and buried on site. I plan to bury such items in both sealed ammo cans and large rubber tubs. I also plan to build an underground brick pit, approximately the size of a small car, in which I can easily stash and remove large rubber tubs full of supplies. This pit will be covered with a painted steel or aluminum lid, and covered with a layer of soil and grass seed to disguise it. Some items, however, cannot be adequately hidden…such as your cabin, recreational vehicle, or trailer. For this purpose, I once devised a cheap and simple idea to give snoopers the idea that someone might be home. Simply hook up motion sensor lights, such as what you might already have at home, but wire up the light inside the building, and make sure the motion sensors have adequate coverage of all likely areas of approach. If someone gets too close, the lights turn on (inside your building), lighting up the curtained/shuttered windows and giving the appearance that someone has just turned on the lights. This system can easily be powered with a solar 12 VDC system. Speaking of windows, one should always use heavy shutters to cover all glass windows on one’s retreat. These shutters should lock from within, and the screws should not be accessible externally. Again, if someone really wants in, they will likely get in, but this might be enough to deter a child looking to snoop or make some trouble.

This setup could be utilized in other creative ways: for example, how about a secondary motion sensor that initiates the playing of a loud recording of a vicious dog, snarling and growling, inside the building, or the sounds of a mountain lion in a nearby thicket? (Thanks, Ferris Bueller.). Obviously, these “tricks” are not a foolproof security system, but they may deter the casual local kid who wanders upon your property – in some cases making him too fearful to return.

Three Letters Re: The Potential Perils of Bank Safe Deposit Boxes

Hi James –
Nice letter from D.C. today, but for cryin’ out load Jim, please advise him to get his precious metals out of a bank’s safety deposit box. He seems to be able to afford a decent wall safe and the few bucks it might cost to install and camouflage it. When banks fail, they close the safety deposit boxes too – at least for a while. Not a great strategy to be cut off from your contingency funding right when you need it most. Too, get sideways with the IRS, and you will go to bank to see your safety deposit box sealed with a red and tagged nylon strip. Happened to a friend of mine – these guys play hardball!
Keep up the good work, and continued prayer that you wife is healing well. – Duck n’ Cover

 

Mr. Rawles:
As a metals investor myself, I am always looking for the opportunity to sell high and buy low and keep a healthy reserve for the future.As its been stated,Silver is a good buy and so is Gold at the current prices. Unfortunately, when you deal with an ETF, you are still dealing with paper. In case of emergencies, getting your gold might take months and could never come at all ! The last rally in March proved this to be true because there were huge delivery delays-even up to 8 weeks and more! Thinking a safe deposit box at a bank is safe? I wouldn’t! Your a lot safer having a Safe at your home, In your possession. Money, Gold &Silver will not do you much good when you don’t have it in your possession and you need it now. With the economy and the many bank closures, I in fact have very little money in my accounts–just enough to pay bills and have any form of currency (metals) in my possession.

There can be nothing worse when your bank is closed, the ATM machine has you locked out and you cannot get your metals out of your safe deposit box. Now what do you do? – Richard In California

Hi Jim,
At the end of DC’s letter about physical gold, he wrote “My local bank offers a nice sized safety deposit box free of charge, that is easily capable of storing several million dollars of gold. I’m comfortable leaving the asset there.” I would not consider safety deposit boxes safe at all — they’re way too easy for the authorities to confiscate for any or no reason. You wrote about this [happening in England] back on June 6th. The news story listed there has expired — here’s a different link to the same story: Thanks, – James

Odds ‘n Sods:

From Cheryl N.: Dow is Heading for 10,000 “The markets can’t seem to get that the U.S. is in recession, says Kirby Daley, strategist at the Newedge Group. But a downward movement is inevitable. He tells CNBC’s Martin Soong and Amanda Drury to expect a 15% to 20% drop on the Dow in the near future.”

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David in Israel recommends The Pocket Chainsaw. “It is the smart answer to the flimsy wire saws found in many survival kits. This tool packed in a can the size of a roll of electrical tape is a 28 inch linked saw which when used with included plastic handles or looped to a bow of wood makes your light back country woodcutting a snap. I have been rough with this saw but I have kept it clean, sharp, and oiled, it has never let me down after over ten years of use several times a year.”

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Matt in Texas flagged this commentary from real estate and banking guru Mike Morgan: The World’s Grandest Ponzi Scheme Unravels

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Reader JT forwarded this: Companies Tap Pension Plans To Fund Executive Benefits

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Also from Cheryl N.: Hundreds of banks will fail, Roubini tells Barron’s

Jim’s Quote of the Day:

“The Wall Street crash doesn’t mean that there will be any general or serious business depression. For six years American business has been diverting a substantial part of its attention, its energies and its resources on the speculative game… Now that irrelevant, alien and hazardous adventure is over. Business has come home again, back to its job, providentially unscathed, sound in wind and limb, financially stronger than ever before.” – Business Week, November 2, 1929

Note from JWR:

I noticed that the spot prices of gold and silver took a substantial dip yesterday. I still consider this a secular bull market in precious metals. If you have your survival gear and supplies squared away, then you might want to take advantage of these dips, and buy yourself some silver coins. Keep these well-hidden at home for use as a bad times barter currency, and as a hedge against inflation. Given the declining purchasing power of the US Dollar, gold below $900 per ounce and and silver below $17 per ounce are bargains.

Letter Re: Physical Gold Versus Synthetic Gold, a View Redux

Dear Mr. Rawles:
You don’t seem to be the type of guy who enjoys saying “I told you so” when you are proven to be right, but I thought I’d at least give you that opportunity. Back in May, I wrote to you singing the praises of synthetic gold ownership via Exchange Traded Funds (ETFs), and opined that “physical gold combines the worst of all worlds.”

I’ve since started building my long position in gold (and silver), and I surprised myself by deciding quite early on to hold physical metals rather than to express my long position synthetically. This was particularly surprising, because I am just barely of the view that an extreme economic collapse could be coming, and by both profession and education, our household is very knowledgeable about capital markets. We’re more or less optimistic about the future; I mean, we live in New York City, of all places!

Still, when I really thought about it, I concluded that physical gold was a superior asset for somebody looking to hedge a downside risk over the long-term (as opposed to actively trade a position). I thought your readers might benefit from hearing my logic.

First, the single biggest benefit of synthetic/ETF gold is that it can be bought and sold at low transaction costs. But when I thought about it, I realized that I was not looking to trade. If gold doubled this year, I would not sell; I would only wonder if my “worst case” investment thesis was coming to pass, and whether I should increase my position while there was still time. Similarly, if gold fell in half this year, I would not sell—it would be an opportunity for me to get longer at lower cost. When I thought about it, then, the “low transaction cost” rationale for ETF ownership, really wasn’t that much of an advantage. I want a 10% net worth position in physical metals, and I want to hold it long term as a hedge. Period, paragraph.

Second, it isn’t like purchasing physical gold is all that expensive. Krugerrands are widely available at about a 1% markup (spot + $10) if you live in a town where there are some reasonably large bullion dealers. And even if you don’t, you can always buy from a reputable internet dealer like Tulving, and pay perhaps 2-3% over spot, provided you are able to purchase five ounces or more at a time to amortize the shipping cost.

Third, even though you might pay more at the front end, if you plan to be a long-term holder of gold, you slowly recover this cost by avoiding the annual .40% expense ratio charged by ETFs. If you plan to hold five or more years, the up-front cost of physical purchase via the internet, is entirely offset by avoiding the recurring ETF expense ratios.

Fourth, ownership in an ETF provides significant regulatory and taxation risk. Under current law, capital gains on gold sales are taxed at 28%, and there are no limits on buying and selling. But who knows what might happen in a hyperinflationary environment? As most fiat currencies fail, the government attempts to stave off collapse by instituting “official” exchange rates, or limitations on currency conversions, to avoid a wholesale run on the currency. In order to have an effective currency control, it seems obvious that you also need to put controls on intermediate stores of value, such as gold. (Otherwise, you would just sell your de-valuing dollars and buy gold, and then subsequently swap into a stable asset).

Physical gold is much more difficult for the government to “control” (setting aside the somewhat paranoid “confiscation fantasies” of many gold bugs). Moreover, the asset is much more difficult to tax. I’m not advocating tax evasion in normal circumstances, but I could certainly imagine a situation where desperate times call for desperate measures. Perhaps the government is imposing confiscatory “wealth taxes” on financial assets, as former Secretary of Labor Robert Reich has proposed, and which some states like Florida had (until it was recently repealed); or perhaps high taxes are levied on gold profits in order to discourage ownership of gold, and impose a de facto currency control. Even my conventional imagination can dream up many dark scenarios.

Fifth, I hadn’t fully appreciated, until I thought about it, exactly how compact a form of wealth physical gold really is. At current prices, if you were buying one ounce Krugerrands, you could transport $1,000,000 with only about 1,100 coins. This amount of gold would fill around 44 coin rolls (of 25 Krugers each), and would weigh about 88 pounds. Easily cached, transported, even smuggled if necessary.

Sixth, when I looked into how secure ETFs were, I could never quite get comfortable that you actually owned, in a risk-free way, the gold backing the ETF. I’ve come to understand that the bullion banks that settle the world’s gold trades, have both “allocated” and “unallocated” accounts. With the former, your ownership of the gold is absolute—the gold is titled in your name, secured separately, etc. However, with unallocated accounts, your claim to the gold is merely an interest against a collateral pool which may or may not be adequate to cover all claims; this is particularly true because bullion banks apparently lend out gold from unallocated accounts, thus approximating fractional reserve banking! All of this was new to me. Granted, some of the sources I relied on were sort of gold-bugish, like this report, pp. 66-70 — but on the other hand, the report was well written and mostly well reasoned. Reading the iShares ETF prospectus didn’t clear up anything at all, except it established that GLD does in fact use both allocated and unallocated gold accounts. Since I couldn’t figure out one way or the other what the truth was for certain, it seemed that physical gold was just a safer course.

Seventh, I realized that it was in my best interest to gain expertise in “normal times” about how to source, authenticate, transport, and store physical gold. I’ve since spent many hours, developing relationships with local dealers, reading gold forums, investigating the reputation of online dealers, observing eBay auctions, sourcing gold through Craigslist, etc. I’ve also bought several different sets of instruments from Fisch Instrument (recommended on SurvivalBlog), a digital scale, a set of digital calipers, and a bullion reference guide. All of this knowledge should be valuable, if it ever looks like there will be a dollar run, and I want to try to build a large [precious metals] position fast. While others will have to research, I’ll have pre-existing relationships, multiple sources, and most of all, experience, that might give me an advantage over others.

Eighth, it turned out storage was really not a big deal. My local bank offers a nice sized safety deposit box free of charge, that is easily capable of storing several million dollars of gold. I’m comfortable leaving the asset there. Really, when you think about it, it seems just as safe behind a five ton steel door, as it does at some bullion bank in Zurich with god-knows-what institutional risks embedded like naked short gold positions, derivative counterparty exposure, etc.

These were basically my reasons for ending up with physical metal rather than synthetic ownership. Thanks for forcing me to challenge my earlier assumptions. – DC