Note from JWR:

This is last day! The big 25% off special on Mountain House and Alpine Aire freeze-dried foods in #10 cans, offered by Ready Made Resources ends tonight (Saturday, February 14th.) To do better than any competing offer, they are offering free shipping on case lots, and are including some free bonus items with each order. This sale ends at midnight tonight, so be sure to get your order in immediately!

Letter Re: Gold and Silver Coins as an Investment

JWR:
Christopher W. asks a very good question, “should you buy gold and silver coins as an investment?” I think this brings up the point that there are really two uses for gold and silver, as an investment and store of value and as a barter/trade item to facilitate commerce. Unless you want to overpay for an item, you will need change, which for every day purchases is provided by smaller silver coin. A friend on Wall Street put it this way “what are you going to do, chip a piece off a gold brick to buy some food?” Smaller coins can also be a good investment, in the sense that they hold their value better than paper money, but you will create more value faster with bars than coins, if it is return on investment you are after.

Countries with very limited or dysfunctional banking systems have this problem today. Any readers who have traveled to Third World countries know you have to keep your big bills (over $5) hidden away, the smaller bills are what you pull out to transact. Many vendors don’t have change — they are basically living hand to mouth and whatever they make is immediately consumed to feed their families. Also, in many of these countries, there is not a lot of coinage in circulation, hence the need for change. I’ve been in many situations where the item I want to buy costs the equivalent of $1, but I had to spend $5 to get it because I had no change. Fortunately, this was a tourism-travel situation and I viewed the extra cost as a kind of charity. In a SHTF scenario, charity might be limited to donations of items you could easily reproduce, like food from a garden. Coins will become much more precious.

Using gold and silver (and possibly platinum and other rare metals) as a form of investment implies a larger transaction size than those used for every day commerce. Maximizing your return on investment is the goal, not facilitating an efficient commercial transaction, so what is most important is to buy at the lowest cost possible. As an example, if the premium for an American Eagle [one ounce] silver coin is $4 per coin and the cost of silver is $13, you would pay $17 per ounce, a 31% premium. If you bought a large silver bar on the COMEX and paid for physical delivery, it would cost a little over $13, a few percentage points over the actual silver cost. So if you bought 5,000 ounces of silver in American Eagles, it would cost $85,000, while 5,000 ounces of silver in bars would cost $65,000. You could own another 1,500 ounces of silver bars for the same amount of money compared to coins, in this example. When it comes time to sell, silver bullion coins can be counted quickly (assuming they are still in their sealed U.S. Mint boxes, 500 per box), but they will not command the same premium paid when they were purchased. Bars, even though most dealers accept them as genuine as they are serialized by the manufacturer, could require an assay in some circumstances (up to $300 per bar). . Most investment metal traders will be set up for this occasion and in an investment scenario it shouldn’t be a big deal. In large volumes, the coin premium is a significant cost that cuts into investment profits.

The bottom line is you should start with coins, junk silver is very good, as well as some gold coins. If you are fortunate enough to have completed all your other preps and have money left over for “investment”, you will want to go with bars. – CK

Two Letters Re: Denominating in Time Versus Dollars

Sir:
I bought a cross cut saw on eBay and was wondering how one might sharpen and care for it. I was directed to a USDA Forest Service web site that has a 30 page downloadable document all about cross-cut saws, their use and care. And it is free! Supposedly it is one of the best resources around on this particular topic.
Kind Regards, – Jay

Jim,
The note from SF in Hawaii about the cost of barley versus the work to produce it made me think of one of my favorite tales from Laura Ingalls-Wilder’s book, “Farmer Boy“, about the boyhood experiences of her husband Almanzo. In this scene, Almanzo has been double-dared to ask his father for a nickel to buy lemonade. When he asks, his father gives him a lesson in the value of money that I have tried hard to instill in my children:

Father looked at him a long time. Then he took out his wallet and opened it, and slowly he took out a round, big silver half-dollar. He asked: “Almanzo, do you know what this is?”
“Half a dollar,” Almanzo answered.
“Yes. But do you know what half a dollar is?”
Almanzo didn’t know it was anything but half a dollar.
“It’s work, son,” Father said. “That’s what money is; it’s hard work. You know how to raise potatoes, Almanzo?”
“Yes,” Almanzo said.
“Say you have a seed potato in the spring, what do you do with it?”
“You cut it up,” Almanzo said.
“Go on, son.”
“Then you harrow – first you manure the field, and plow it. Then you harrow, and mark the ground. And plant the potatoes, and plow them, and hoe them. You plow and hoe them twice.”
“That’s right son, and then?”
“Then you dig them and put them down cellar.”
“Yes. Then you pick them over all winter; you throw out all the little ones and the rotten ones. Come spring, you load them up and haul them here to Malone, and you sell them. And if you get a good price, son, how much do you show for all that work? How much do you get for half a bushel of potatoes?”
“Half a dollar,” Almanzo said.
“Yes,” said Father. “That’s what’s in this half-dollar, Almanzo. The work that raised half a bushel of potatoes is in it.”
Almanzo looked at the round piece of money that Father held up. It looked small, compared with all that work.
“You can have it, Almanzo,” Father said. Almanzo could hardly believe his ears. Father gave him the heavy half-dollar.
“It’s yours,” said Father. “You could buy a suckling pig with it, if you want to. You could raise it and it would raise a litter of pigs, worth four, five dollars apiece. Or you can trade that half-dollar for lemonade, and drink it up. You do as you want, it’s your money.”

Regards, – Jason R.

Economics and Investing:

It is noteworthy that spot silver and gold prices have remained fairly solid near their six-month highs, despite the IMF’s saber rattling move of announcing 403 metric ton sale of gold.: This is evidence that wise investors have not been fooled by all the governmental and bankster blustering and that they will continue to shelter more of their assets in tangibles.

“The Other Jim R.”: flagged this must see: video link: ‘Worst economic collapse ever’. (Don’t hold back, Mr. Celente, tell us how you reallllly feel!) For those readers that don’t have a fast Internet connection, Matt B. mentioned that there is a transcript of the interview at the Russia Today web site

Thanks to G.G. for sending this from Wall Street Journal – Europe: We’re Heading Toward a Global Weimar; Things are grim, but he who masters green tech will be a superpower. A key quote: “The global banking system is thus on the brink of bankruptcy. So the worst-case scenario is the most likely scenario: a collapse of the banking system followed by world-wide inflation.”

E.L. suggested listening to An Interview with Ambrose Evans-Pritchard in Don McAlvany’s latest podcast.

MPS in Alabama flagged this New York Times editorial: The Worst-Case Scenario. MPS had this droll comment: “The plot summary of your novel has been appropriated.”

Courtesy of Jeff in Alaska: Large U.S. banks on brink of insolvency, experts say

Larry T. sent this: Revealed: The true horror of everyday life in Zimbabwe

Items from The Economatrix:

US Unemployment Climbs to 32-Year High

Where Do All the Gold ETFs Get Their Bullion?

A Pension Deficit Disorder

Banks Agree to Foreclosure Moratorium

Wave of Bad Debt Swamps Companies

Silence is Golden (The Mogambo Guru)

Doug Casey on 2009: Another Year of Shock and Awe

European Bank Bailout Could Push EU into Crisis

Ireland to Take Control of Banks, While Plans for Fortis are Rebuffed

As Vacant Office Space Grows, So Does Lender’s Crisis

Stimulus Still Can’t Help Wall Street

Stimulus Puts $13 in Weekly Paychecks

Caterpillar CEO Contradicts Obama on Stimulus

Europe’s Industrial Base May Never Recover from Crisis “European Commission warns EU states running out of money for rescue packages”

US Family Net Worth Down 20%

Senator Schumer’s “Pork” Comment Draws Ire

Odds ‘n Sods:

J.H.B. sent us the link to this update at the Gun Owners of America (GOA) web site: Firearms Legislation in the 111th Congress. (a good page to bookmark.) Readers should note that H.R. 45 currently has little support (it is not gathering co-sponsors) so at least for the present time please don’t expend too much time organizing and letter writing about this bill.

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John C. sent us this article, which has some implications for survivalists that foresee a breakdown in law and order, and large, organized gangs of looters: Congo town mounts own defense against rebels

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The WRSA has announced a couple of more sessions of their excellent “Grid Down” Medical course, in Peyton, Colorado, and Clackamas, Oregon. Not only is it excellent training, but you are also very likely to meet fellow SurvivalBlog readers. (Wear your SurvivalBlog hat or T-shirt!)

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My friend Bob in Tennessee sent this article from Jihad Watch: 35 Jihad Training Compounds on American Soil. Not only is the terrorist threat significant in itself, but so is the possibility of government reaction casting a wide net, perhaps making anyone doing tactical training out in the woods a “terrorist”, and possibly arrested for “paramilitary activities.”

Jim’s Quote of the Day:

“It will not be enemies at the gates who overwhelm the American empire. It will be the army of politically armed economic dependents inside the gates. Granny will bring it down. If you want a mental picture image of the end of American empire, imagine a man dressed in uniform, holding an automatic rifle, being pelted mercilessly by an old lady who is beating him over the head with her handbag.” – Dr. Gary North

Notes from JWR:

The economic news has been so copious for so many months that I’ve decided to create a new daily Economics and Investing section, to divide those items from the extant Odds ‘n Sods section. My heartfelt thanks to The Economatrix (our volunteer Economic Editor) and to the many SurvivalBlog readers that have sent such a deluge of economic news and commentary links. Please keep them coming, via e-mail. Thanks!

—

Just two days left to bid! The current high bid in the SurvivalBlog Benefit Auction is at $1,650. This auction ends at midnight (Eastern time) on Sunday, February 15th. This auction is for a large mixed lot, which includes::

1.) A “be ready to barter” box of 36 full-capacity gun magazines, from my personal collection in JASBORR. This box includes: 12 – Used original Bundeswehr contract HK91 (G3) steel 20 round magazines, 6 – Used original Austrian FN-FAL steel 20 round magazines, with cartridge counter holes, 10 – Used AR-15/M16 USGI (all Colt made!) alloy 20 round magazines, 6 – Excellent condition original Glock Model 19 9mm 15 round pistol magazines (early type, with “U” notch), and 2 – New and very scarce original FN (Belgian-made) US M1/M2 Carbine blued steel 30 round magazines (marked “AYP”) . All of these magazines are of pre-1994 manufacture (and hence legal to possess in New York.) These magazines have a combined value of approximately $710, in today’s market. Note: If you live in a state where full capacity magazines are banned, then you must choose to: refrain from bidding, or designate a recipient in an unrestricted state, or re-donate the magazines for a subsequent auction.

2. ) A brand new-in-box Hot Jaw Bag Sealer and a box of 10 Mylar bags . (Every retreat group should have one these, since they are a tremendous labor saver!) This is a $200 retail value, courtesy of Ready Made Resources.

3.) A huge lot of DVDs, CD-ROMs and hard copy nuclear survival/self-sufficiency references (a $300+ value) donated by Richard Fleetwood of www.SurvivalCD.com

4.) A NukAlert compact radiation detector donated by at KI4U.com (a $160 retail value). 

5.) A gift certificate for $100 worth of books, courtesy of Back 40 Books.

6.) A case of 12 cans of recent production nitrogen-packed storage granola (mixed varieties) This is a $96 retail value, courtesy of CampingSurvival.com.

Thus, this auction has a combined value in excess of $1,565.

Again, this auction ends at midnight (Eastern time) on February 15th. Please e-mail us your bid. Your bid will be for the entire mixed lot.

Letter Re: Gold and Silver Coins as an Investment

James Wesley,
I’d like your input regarding the purchase of gold and silver coins from third party vendors. Instead of paying $1,000+ for a single gold coin of one troy ounce. I’d like to buy ten 1/10th troy ounce gold (or silver) coins. I feel smaller denominations of “hard” currency promote better trade/purchase power. I have noticed in a multitude of Gun/Survival forums/magazines various companies that offer coins that are not directly from the U.S. mint but are [in smaller fractional sizes] than what you normally purchase from the US Mint.

I can foresee having a handful of one troy ounce gold coins [when] all you need is a dozen chickens. Any thoughts? – Christopher W.

JWR Replies: The situation that you describe is precisely what I showed in the Barter Faire (“For an Ounce of Gold”) chapter of my novel “Patriots“. A full ounce of gold is far too compact a form of wealth to be practical for day-to-day barter transactions. That is why I recommend that readers here in the US invest in small-denomination US pre-1965 silver dimes, quarters, and half-dollars, for barter. (Or get their equivalents, if you live elsewhere, such as pre-1948 (pre-decimal ) silver English coinage, or decimal or pre-decimal 1964 or earlier silver coinage in Australia.) The prospect of making “change” from gold coin transactions with a cold chisel is neither practical nor aesthetically appealing.

Letter Re: Denominating in Time Versus Dollars

James,
Today I picked up 200 pounds of pearled barley from my local health food store that had ordered it for me. As I loaded it into my living room so I could mylar seal it, I flashed on what it would have represented in terms of time (man hours) in an earlier age. To get that 200 pounds of barley, I would have had to:

1) Have land
2) Have seed
3) Till, irrigate and plant the land
4) Protect the crop from birds and thieves
5) Harvest, thresh and transport the grain

The number of man hours required to get 200 pounds of grain would have been enormous, compared to the amount of time I had to spend to make the money to buy the grain.
As we witness the collapse of the current economic model, I have begun to ask myself not just how much something costs, but if I had to make it or do it myself, how much time would it take. From this perspective, the relative value of things change. Wheelbarrows and horses aren’t necessary, but they sure are faster and easier than transporting things on my back. Water filters aren’t necessary, I can chop and carry wood and boil water, but this takes more time then using a water filter. – SF in Hawaii

JWR Replies: The foregoing observation becomes even more sobering when you consider the prospect of doing work with “the sweat of the brow” versus diesel fuel or electricity. Engine-powered and electrically-powered equipment is a tremendous labor saver. As my grandfather Ernest E. Rawles was fond of saying: “There’s nothin’ like power tools!” That saying has been passed down to my children.

Woe be unto us, if and when we live through an age with a significant disruption in the supply of diesel fuel and gasoline. Presently, here at the Rawles Ranch we burn about three cords of firewood each winter. We could get by with just two cords. But even that represents a tremendous amount of effort if it must accomplished without the aid of a chainsaw. A four day job becomes a four week job. Nearly the same ratio applies to hand tilling and to hand scything. Someday, a pair of well-trained draft horses with pulling tack and tackle might be worth a king’s ransom.

Prepare for times of fuel scarcity. Start looking for high-quality used hand tools. Here is a short list: Axes, timber jacks, timber cross-cut saws, splitting mauls and wedges, scythes, wheeled-cultivator, spading fork, a hand-crank or treadle bench grinder, a brace and bits, carpentry hand saws (cross-cut and rip) a pair of come-alongs, a hand crank meat grinder, a hand crank wheat grinder, a post hole digger, wheelbarrows, garden carts, and so forth. A “WTB” ad on Craig’s List is a great place to begin gathering such tools inexpensively.

Sending “Patriots” as a Form of Protest

Dear Jim,
I was incensed that one of my state’s US Senators (Kay Hagan of North Carolina) voted for the so-called “Stimulus Bill”. I searched for ways to register my protest in such a way that it would get her attention. Thanks to you and your novel “Patriots”, I have a way. I just sent her a copy with a gift card from Amazon.com. The gift card reads: “This is to thank you for voting for the stimulus bill and making the resulting economic collapse and hyperinflation profiled in this work of fiction a reality.” I just hope she gets the message, since it is a bit subtle especially for a politician.

I really like your book and am re-reading it. I hope you understand that I mean no disrespect to you in my means of protesting Hagan’s vote on the Stimulus Bill.

All the best, – John R., Waynesville, North Carolina

Economics and Investing:

From the most recent issue of The Appenzell Daily Bell comes an article that details both banking peril and some blatantly revisionist editing: European Commission report says $25 trillion in toxic EU bank holdings

Reader “DD” sent us this: Thousands losing jobs in housing crisis.

From reader H.D.: The Great Awakening: Boomers, Your Crisis Has Arrived (Part 1 of 3).

From G.G. came this link: German 10-year Bund auction fails for second successive time.

Laura H. said that liked this Wall Street Journal editorial: Capitalism Needs a Sound-Money Foundation.

Items from The Economatrix:

Martin Weiss: Stock Market to Fall at Least Another 40%

Credit Suisse Posts $5.2 Billion Loss

Pimco [runs world’s largest bond fund] Says World Crisis Faces “Second Wave”

Deluge of Financial Calamities Looming by Mid-March

Gold Bullion and Crude Oil Trading Analysis

Jobless Not Helpless: What to Do if You Lose Your Job

GM Offers Buyout to All 62,000 Hourly Workers

As US Economy Tanks, No Limits to Make Ends Meet

Aetna Net Income Hit By Investments; Shares Fall

As Vacant Office Space Grows, So Does Lenders’ Crisis

Shortage of Critical Commodities Already Seen

Odds ‘n Sods:

Hawaiian K. flagged a great article at Kevin Kelly’s Technium Blog: Amish Hackers

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SurvivalBlog’s Editor at Large Michael Z. Williamson pointed us to the comments accompanying this article: Second Circuit to Second Amendment: Drop Dead…. The article was informative, but I thought that the comment from “Bruce” was potentially quite practical: “[I]f you live in a rural area like I do, go out in the woods somewhere and dig a hole. Don’t fill it in. We’ll call it the ‘plausible deniability hole’.
Then, when the state comes for your guns (bullion, whatever), take the officers to the hole. When you get there, say ‘D**n, somebody dug up my guns! They musta been watching me from the ridge top! I had a funny feeling when I was digging it, but I didn’t see any people or cars, so I figured it was just nerves!'”

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From the JPFO web site: West Allis Wisconsin Open Carry Trial Update. As I’ve written before: Much like a muscle that atrophies with disuse, any right that goes unexercised for many years devolves into a privilege, and eventually can even be redefined as a crime.

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For just the next five days, the folks at Midwest Outfitters are giving SurvivalBlog readers first crack at a new batch of Portuguese surplus .308 ball 150 grain ammo in sealed 200 round battle packs or full cases. Something tells me that it won’t last long.

Jim’s Quote of the Day:

“You’ve got to understand that we had a big ranch but we only got money once or twice a year out of it. The money wasn’t very free. All the money you got was in gold coin. I remember I was nearly fifteen or sixteen years old before I saw much paper money. It was all gold and silver. They didn’t have any greenbacks that I remember. My dad would take the wool and mutton to sell, and he’d come back with some tobacco sacks full of twenty-dollar gold pieces. He used to drive three or four-hundred head of sheep down to Cloverdale. They only brought about $2 a head. A big four horse load of wool taken over to Ukiah would pay for the groceries and clothes for the next winter. That was the big trip of the year, when I was a boy. That was when the money came in. That was the way that we used to get paid for things. Gold and silver coins. As kids, they used to let us play with the gold coins now and again. That was quite a celebration.” – Ernest E. Rawles (JWR’s grandfather)

Note from JWR:

Today’s first post is a cross-post (with permission) from Dr. Richard’s excellent Virginia Prepper’s Network Blog. His article addresses a fundamental issue that is a concern for most SurvivalBlog readers. Choosing between a rural retreat versus an “in town” approach is a decision that should be made deliberately, with plenty of study and prayer. There is not a “one size fits all” solution. Choosing a retreat locale depends upon your personal circumstances, the size of your extended family , your source of income, your health and fitness, your stage in life, and your personal envisioning of the future. OBTW, be sure to visit the Virginia Prepper’s Network blog site. If nothing else, it will give you links to the rapidly-growing network of state-level preparedness “Prepper Network” blogs and forums. (Of course, all the usual operational security (OPSEC) provisos apply. Some people, particular those in the non-Doomer camp of the Peak Oil crowd, have atrocious OPSEC discipline. If you get involved in a Prepper Network, please do your best to raise their collective OPSEC awareness, and don’t get sucked in to revealing your particulars, just because “everyone else is doing it.”)

Survival Retreat vs. Neighborhood Survival, by Dr. Richard

Earlier this month, I posted Etienne’s guest post Seeking/Starting a Survival Retreat in Virginia / Maryland / Pennsylvania / West Virginia. Today, I had lunch with Etienne de la Boetie and another prepper here in Loudoun County [, Virginia]. We had a long discussion about survival retreats vs neighborhood survival. Etienne is a big fan of the survival retreat concept. He previously had a retreat where he did not own the land but where he was able to store a travel trailer recreational vehicle in which he pre-positioned various preps and supplies. Unfortunately, his friend moved and sold the property. There are four major flaws in the survival retreat separate from your home concept:

  1. There are significant liabilities and social problems with communal retreats where one does not own the property – you are vulnerable to the actions of the others, particularly the property owner.
  2. Property left at unattended retreats is vulnerable to theft and vandalism. This is going to be a growing problem as the economic depression gets worse, especially if we have economic collapse.
  3. Getting to the retreat would be problematic in the event that it is actually needed – particularly in martial law scenarios where the military and law enforcement block traffic at key intersections or in cases where there are fuel shortages.
  4. Relatively undeveloped retreats with a trailer and undeveloped land may not be sufficiently developed for long-term survival and offer insufficient space for storage of the various preps and other items you need. Many of these items would likely be at your day-to-day residence and you cannot assume that you can transport everything at the last minute.

My view is that survival retreats only work if you live there full-time. Furthermore, although remote locations are further removed from the masses, they are also further removed from jobs, markets, customers, hospitals, and many other useful infrastructure and will be harder pressed to gather a sufficiently large group to cover all of the tasks needed in a true long-term survival scenario. Even the best special forces operator cannot defend his property 24 hours a day, seven days a week. Unfortunately, we are rapidly running out of time and it is probably already too late to relocate – especially if relocating means trying to sell your existing home in this real estate environment — in my neighborhood we haven’t had a sale in over eight months and anyone who bought in the last four years and did the traditional 20% down payment fixed 30 year mortgage now has negative equity.

I am a big proponent of the concept that your family, friends, neighbors, and church are your survival group. Yes, I understand that many are unprepared and clueless about both the threats and what they need to do to prepare for them. However, your home is your survival retreat. Strengthen it to the extent you can, but your odds improve exponentially if you can organize your neighborhood and help everyone survive against the threat(s) you are facing in your survival situation. You and those in the group who are better prepared or who have the right skills are the cadre needed to get organized and do what is needed. The rest of the neighborhood are your foot soldiers and do’ers. My philosophy is to lead and organize but that charity starts with those who are willing to help themselves and help the group in the survival situation. In a survival situation, your first challenges are to assess the hazards/priorities/immediate needs, organize the group, secure the neighborhood, and scrounge/barter/trade for needed resources.

Be a leader. There are many things you can do to help develop your neighborhood group of family, friends, neighbors, and fellow church members and increase the odds of the neighborhood surviving:

  • Get to know them.
  • Have potluck dinners.
  • Help them wake up and prepare.
  • Start a garden club to help start victory gardens.
  • Start a community watch program for your neighborhood.
  • Give them a copy of Chris Martenson’s Crash Course on the economy DVD. I bought a case of 30 and gave them as 2008 Christmas gifts.
  • Give copies of Holly Deyo’s book Dare to Prepare as gifts. I bought a case of 8 and gave them as 2008 Christmas gifts to family and several neighbors who got it and were starting to prep.
  • Store extra preps for charity and be prepared to give when it is needed for survival.
  • Learn about their skills, backgrounds, and interests – on my street we have a former Navy Corpsman/LEO/M16 Instructor/master scrounger/contractor/award winning barbeque chef who “gets it” and is starting to prepare, two nurses, a master gardener, an agricultural engineer / head of the 800-home neighborhood HOA, a Mormon family that does food storage, and six members of the neighborhood garden club run by our master gardener.
  • Buy tools that would be useful that could be shared like tillers.
  • Buy extra seed such as a seven year supply of Survival Seeds and be prepared to provide seeds for neighbors
  • Build a survival library of books and skills that you can use to train them when they need survival skills.
  • Buy several extra surplus rifles such as the Russian Mosin-Nagant or SKS rifles and stock extra ammunition to equip your “community watch” patrols.
  • Invite them to go to a shooting range with you.
  • Be prepared to give honest evaluations of whether individuals should relocate once a survival situation begins to relative’s homes or even public shelters if that is the best option for them.

You will be pleasantly surprised how many of your family, friends, neighbors, and fellow church members that are starting to wake up and realize the reality and danger of our current position. This number is increasing every week. Don’t simply assume that they are all clueless sheep – many simply need some education and a leader to show them the way.