This is going to be a different type of article. Different in that this gedankenexperiment will undoubtedly provoke many readers who will want to disagree with me- and that is fine! In fact, that is sort of what I am wanting. I am looking for others to explain to me what I am missing, and therefore make me a more informed, prepared, and hopefully secure individual.
This article you are reading is going to be about gold. Specifically, how I just cannot agree with all the hype (my word choice perhaps not the best) and advertisements you hear on the radio and Internet, even television pitches from people like Alex Trebek or Pat Boone. Go to a search engine and type in “prepper gold” and see over 1,020,000 results. Over the last few years, I have come to really enjoy SurvivalBlog site and definitively respect the opinions of its founder, Mr., James Wesley, Rawles. I think that some articles ore references in the past at least are going to be in contradiction to the points I am going to lay out here. I have many of the books the site founder has written, and totally respect all of the situations outlined in those books and this website. Except, there is still this ongoing struggle that the whole ‘buy gold’ thing is just not the best idea for the average prepper. Maybe as an investment strategy just like a mutual fund or something, but even that has some concerns. Here are some extracts from some gold broker websites. I do not want to link to any specific sites as not trying to promote one over the other:
Precious metals, and especially gold and silver, have done an amazing job at retaining their value over the years. “Generation after generation, irrespective of which politicians are in power at the moment, gold and silver have proven themselves as stable stores of value and the ultimate form of money”….and…”Physical investment grade god can be purchases at spot price, Physical gold can be liquidated in the unlikely event of a total economic collapse”.
So SurvivalBlog community – read on and see if you agree with me, or have some counterpoints that will help me. I expect some good feedback and want it – like said before I just need to get some questions figured out.
It is important to stress that I am not opposing precious metals as an investment strategy, like any other stock or mutual fund. After all, I note that in 2008 the price of gold was as low as $720 an ounce, and went to $1854.40 an ounce in 2011. The price of gold as of the time of writing this is $1512.45 an ounce.
This is the mindset that I do not like – that when the world really goes dark then all money will be worthless, and by golly if you don’t have gold you are done for. My thought is primarily that if all you have is a ledger somewhere without your hands actually on the precious metals, when that event happens do not expect, ever, to have your investment back. One strange concept I have seen is buying gold focused exchange traded funds (ETFs) or future contracts to buy gold at a future time, at a predetermined price. These are traded on an exchange and the buyer never has claim to the physical gold itself. This would not be for me.
Now, let me say I agree with James’s thoughts on tangibles. My situation is that I never have had enough money to properly look at where I want to be. I live in Jacksonville, Florida, so many years ago sitting in my home riding out a hurricane, had the revelation of “what if”? I was totally unprepared for anything really bad to go down, no way to care for my family. That night began my sort of casual quest for what we call “preparedness”. After three international adoptions, raising the kids, then college tuitions, then a wedding…I am just now starting to see the proverbial light in the tunnel with respect to having any sort of extra income to really make a factor in improving my “preparedness”. All the while, tangibles has really made sense.
Now if the world situation gets bad, I mean really bad, FEMA Camp for the everyone type bad, then I am going to look at the actual things I can hold in my hands that is going to be useful. Example, I have some food rotating, (not much maybe two month for the family if stretched) and some basic stuff: radios, water filter, flashlights, Baofeng handi-talkies, Goal Zero items, candles, batteries, full ammo can etc. I want to be able to invest my little resources into things I can immediately use when again, it gets bad and really bad. This year in 2020 I am attempting to get much better at gardening and have spent some of those precious few dollars in garden stakes and fencing for the backyard and half dozen blueberry bushes, some lumber for raised garden beds that sort of thing.
I cannot imagine ever getting to the point where my tangible list is satisfied to the point where I will want to invest in gold. Here is an extreme example I thought of one day, if things get totally off the chain here in the USA and we become a target for invasion or large criminal militia, and the call for the muster is made to rally to a point to counter offensive, I do not want to be there with my simple Ruger 9mm and be wishing “Boy I wish that I had spent that one thousand on some sort of battle rifle instead of it sitting in some ledger account at some gold broker that I will never see.”
So this brings me to the whole gold investment thing. Let’s break it down into maybe 3 different levels of investment so I can be clear, as different people are going to have different abilities.
One. Thousand dollars or less. My previous paragraphs sort of address this. I would rather purchase things I can use immediately when it gets bad. Again, not thinking of investments that can act like a day trader, sell when price is right; but the concept we all see in books online. As example, if the USA is down and out, and all you can depend on is what you own.
Two. Five Thousand dollar or less. In this scenario the world has become unhinged for take your pick of whatever disaster scenario. I myself think we would be impacted by a successive wave of one thing causing big disruption, which is causing other stresses downstream. Like New Madrid coming apart, causing grid problems, causing transportation problems, causing severe economic problems, thus causing a crazy 3rd world leader to think now is the time to deal with their enemy USA etc… I know this is to exaggerate to a great extent, but in the world of let’s pretend say we have actually in our hands a bunch of gold/silver coins. How is that going to help me?
I cannot likely just go down to the local Dollar Store, if anything is even still there, and expect them to know what value my coins are. I cannot expect to go to the farmer’s market that may fortunately spring up in the community and expect them to what, make change? I am not too convinced that many people are going to be ready to trade for the gold/silver I may possess. Maybe people will correct me with what has happened other places in the world in similar situations, I hope so and want to learn from the best – you SurvivalBlog readers. Who is going set an exchange rate? I am struggling to see how holding a lot of coins are going to be better than those “tangibles”.
Three. Anything about five thousand dollars. Let’s assume you have been able to stock a great extent of supplies and provisions and also have a lot of precious metals. I was thinking in this scenario, we would assume that after a really bad period that some point of trading post or something is going to be established. I cannot imagine a bank being open in this extreme scenario. Let’s even go further and assume that we know of a specific place that is set up to make the trade for gold to whatever. You know this place and everybody else also knows about this place. Your challenge is going to be how can you get there safely and depart with whatever was traded for. I think of all those old western television shows where the old grizzled miner heads to the surveyor office and is ambushed by the guys in the black hats. Every criminal in a mile radius is going to be looking at whoever is coming up the road. Just my thought…I am not prepared to make that kind of trip. What kind of safety and backup arrangements must be made to travel with that kind of valuables? Are you following me back to my home/farm/camp etc.?
If I had a trunk full of gold bars, I would be so scared about how to get there. Then when I looked at a few web sites realized I would never be able to afford a single gold bar…one coin itself can go for over one thousand dollars. So the overall concern is that in many instances, even if I did have the actual gold in hand, is it realistic to be of value for trade? Then I begin to think that after the event, maybe (years) later some form of standard must exist to begin to establish a meaningful currency backed by something ‘tangible’. Maybe it would be good for that scenario. So please readers, help me make sense of why so many people promote holding gold as a tenet of preparedness.