Gold and silver in SHTF revisited:
About a month and a half ago I raised a question that had occurred to me regarding gold and silver in a true SHTF situation, where the normal financial system simply did not exist, and we were all on some sort of make-up-the-rules-as-we-go system. I said,
This is just my own relatively recent conjecture, and frankly I hope someone can shoot it out of the water – because I don’t like the looks of it. But I can’t figure out a way that precious metals, even in recognizable form (“junk” pre-1965 silver coins, Silver or Gold Eagles, Krugerrands, Maple Leafs, etc.) would really have any quantifiable value ….
I seemed to be a lone voice with an unjustified concern at the time. Just by luck, when looking for something entirely different for a friend, and to point him to the SHTF blog, I ran across this by Selco:
No, gold and silver was not like second money, or second value during SHTF, it was not even worth like in normal times … . If you had for example 1000 gold coins, and let s say that one coin worth 150 USD in normal times, you could think that you are rich in shtf.
But in reality it was hard to find someone who give you some food or battery or whatever useful for one coin. Gold coin was not useful for 90 percent of people, what they could use it for? Eat it? Start fire with that?
Selco finished up with this:
So in short instead of getting gold and silver to preserve your wealth you might consider getting useful stuff and if you like gold there is always option to get it from unprepared people in exchange for useful stuff if you think you need this for times after.
That was real world experience, and exactly what I was thinking about. How would it be valued? Where could it be traded in for “real money” when a “real money” system no longer exists? And other related questions that don’t seem to have easy answers. So I’m back to where I was 1½ months ago, thinking that gold and silver aren’t quite the perfect answer so many people might think they are. They would probably be great if a “real” economy of some sort later re-emerged, as Selco also pointed out at the end of the article, but in the short- to intermediate-term, functional commodities and services would seem to be the most useful form of trade in a post-SHTF situation. The entire blog post is at:
An advantage I DO see for gold and silver would be in a hyper-inflation situation that might precede a full-blown SHTF, assuming we don’t immediately go into SHTF due to a significant nuclear attack, or particularly an massive EMP situation that wipes out everything electronic for many years (which would destroy the financial system immediately when even the digits would have been figuratively fried). But if there’s a lead-up to full-blown SHTF, Zimbabwe style in the early 2000s, having a quantity of gold and/or silver would be very useful for somewhat keeping up with the hyper-inflation, and would potentially allow conversion back to the inflated money long enough to still go out and buy things that otherwise would no longer be affordable. The metals, particularly if in very recognizable and verifiable form (such as Krugerrands, Maple Leafs, Gold and Silver Eagles, as well as pre-1965 U.S. “junk” silver) would be a means of at least preserving some value as opposed to a bunch of worthless paper that had been inflated out of any value.
A former editor of a now defunct precious metals newsletter once said he was converting literally almost all of his liquid and semi-liquid assets to hard currency (mostly gold) – he was that sure that the $US was about to go down the tubes (like his newsletter ended up doing). I remember thinking at the time that betting all of one’s assets on one scenario was contrary to a fundamentally basic rule of investment: diversification. Plus, it just seemed all too risky at a gut level. (He should have stuck to just his excellent picking of gold and silver mining companies for investment in today’s economy, and left the SHTF preps to those experts. <grin> )
There are too many different SHTF scenarios that would each require different strategies. My thought at the time was that if I had a big enough storage facility, I’d almost rather have 100,000 rolls of toilet paper or a massive excess of food storage for trade, than $100,000 in gold coins if I was wealthy enough now to make that choice. Selco’s real world experience would seem to support that thinking. There’s a place for gold and/or silver, a place for food, and a place for toilet paper, which comes back to that investment fundamental: diversify, diversify, diversify. Be prepared for as many different scenarios as you can think of – and then try to think of more.