A common theme in the survivalist community is that post-TEOTWAWKI gold, and especially silver, will quickly become prominent forms of currency. This notion is propagated by popular survivalists as well as a good portion of survival fiction. Usually the focus is on pre-1965 U.S. silver coins, which are 90% silver, with gold being reserved for really big purchases such as property or perhaps bribes (e.g., buying passage out of a dangerous area).
Some also call for stockpiling current U.S. nickels since the metal value is worth more than face value, and at least one survivalists blogger recommended stocking up on U.S. copper pennies (not the current mostly zinc circulation) to make change for silver coinage after TSHTF.
I’m not saying these metals will be useless, but I’ve come to the conclusion that their value post-TEOTWAWKI has been grossly overestimated, at least soon after full collapse. A few others agree with this line of thought.
While gold and silver have been valued as far back as we’ve recorded history and almost surely will retain value in the future, timing is everything. A few scenarios;
- Fast Collapse: Whatever the reason – EMP, super pandemic, etc. – after a fast collapse I don’t think either gold or silver will be worth much. People may still loot and hoard it, but I just don’t see most people wanting to sell a weapon or food for a gold coin or many silver ones. In such a situation food, security, weapons, ammunition, and other practical things will be worth far more. This scenario means a large die off in the U.S., perhaps 60-80% or more. A year after the crash, gold and silver jewelry (and coins) will be laying around empty homes for looters and scavengers to take; I’m not promoting the idea, just pointing out the obvious. There will be no logical reason to want nickel, and copper wiring and pipes in building the dead don’t use will make copper pennies worthless as well. In the aftermath of a fast collapse, precious metals are not needed.
- Slow Collapse: In my opinion, a collapse may start out slow in America but will eventually trigger a fast one – there will be no Kunstler-type slow collapse, it’s just not feasible. But that’s a topic for another post. At any rate, a slow collapse, unlike the fast one, probably would provide those with gold and silver the opportunity to cash in if they do so in time, and change those precious metals for many more goods, property, and so on that they might buy today. Gold and silver can act as a hedge against inflation. While the markets still exits it would also be a good time to cash in on any nickel or copper that’s been stockpiled. But once the breaking point is reached, a fast collapse is likely to begin and the value will be lost for some time.
- Recovery: Gold and silver have been world currencies for as long as trade has existed and this is where gold and silver will start to see their value again – when society and civilization begin to reform and barter commerce starts getting impractical. I don’t think this will happen quickly as some predict, it will need to wait for some sort of recovery, even if localized. The exception might be those who are well prepared now with vast stockpiles of barter goods, who barter for precious metals in expectation of the new market to eventually emerge (though I wonder how much of that trade would be in the jewelry of the dead). In a total, hard collapse (EMP, world financial collapse, etc.), I doubt recovery could occur before the excess population – the portion that cannot be fed – dies off, or at least a year.
Like anything else, I could be completely wrong. But I don’t think so – the logic behind a gold and silver market during TEOTWAWKI is just not sound. Before, if the timing is right and long after, but not during.
So, should you have any gold or silver? If you have excess income and all your other preps are in place, why not, it can’t hurt. Someone in that position could take advantage of the likely precious metals prices increases in the next few years and during a slow collapse (which are probably the same thing) to obtain an even more advantageous position for when the big collapse comes. Again, these metals can act as a hedge during inflation. If a fast collapse occurs, however, you won’t be able to cash in for many months, or perhaps more likely years, but again no big loss if all other preps are in place.
If you’re struggling to get squared away like most people, I would skip the precious metals, especially gold. If you feel you must, purchase a few silver dollars, quarters, and dimes, but don’t break the bank. A little may go a long way in a world where the vast majority have no silver coins. Secure more important items first, like a years worth of food, the survival weapons right for you, other items for your retreat, equipping your BoV, and so on.
Look at it like this; you can purchase a brick of U.S. manufactured bulk .22 LR ammunition (550 rounds) at Wal-Mart for about the same price as an American Silver Eagle dollar. If you purchased one of these items a month, after a year you’d have either 12 silver dollars, or 6,600 rounds of ammunition; what do you think will be worth more when our fragile civilization finally gives way?
I like your last paragraph – makes total sense
.
I do not believe that silver or gold will have any value at all in the early stages after a collapse. Not for barter or otherwise.
I don’t think gold or silver will hold any value after a sub-1000 DOW as they are now ‘valued’ by paper trading prices on the Comex and multiple ETFs. Metals now track the DOW when before they went opposite; this happens because now that the posted ‘value’ or spot is based on paper trades, fear and confidence in the stability of the paper fluctuate just as stock in Toyota might fluctuate.
Here’s what I think: (and my opinion is worth exactly what you paid for it…)
I think paper money is not safe through a collapse. I think paper is not safe held in a 401k or IRA during a collapse. I think that paper invested in the stock market or kept in a bank is not safe during a collapse. If all banks close, what good is the FDIC check?
Here’s what I know:
I know that our supply of USD is growing rapidly as the Fed attempts to print our way out of debt. I know that prices of most necessary goods are going up. I know that the gold I bought at $300/oz not too many years ago and the silver I bought at $4/oz not too many years ago have nearly or tripled in the ‘price’ I paid.
I have a good job and have money budgeted for my future. I have 20% of my income earmarked for investments. I am not one of those who romanticize a collapse as some great reset button on the population. I pray it never happens as I’m quite used to the ease I can function as well as the ready supply of goods, food and other items I can lay my hands on or click a mouse to purchase. The money I want to invest for my future, family and retirement has few options that I consider viable and trustworthy these days.
That’s where gold and silver come into play for me. What can hold value and stay with me through the reverse bell curve of a collapse? How can I squirrel away some of my meager wealth for my children in these uncertain economic times? What can I hold onto if the 1s and 0s on the computer screens stop showing that they’re my ones and zeros? Paper? lol, how much is a $1000 Confederate note worth today- $5?
I never suggest that anyone new to preps start with gold or silver. I think food is primary albeit not too sexy. It bothers me that most of this new generation of survivalists focus primarily on firepower- future looters is what they will become with nothing else. I’ve been at this for the past 15 years and so now, to me, extra monies I have slotted for investment rainy days do go into gold and silver. I like the comfort of having my ‘money’ with me. A guy I know is fond of saying that “if you don’t hold it, you don’t own it” and I think that is true on so many levels.
I agree with your simple calculation of a silver dollar or a box of 22LR and that’s wise advice for someone who needs to stock up on goods and hard tack now. I would, however, point out that the last time I needed some paper money to make a large purchase, my gold was turned into cash in a matter of minutes as I walked up to the counter of my local dealer. How fast can you unload a box of 22LR for equal or greater than what you paid for it?
Just my .02
melbo
http://www.survivalmonkey.com/forum
The type of collapse is what’s important.
If there is a true TEOTWAWKI collapse – ala “One Second After” or “Book of Eli”, gold and silver will just be shiny metal.
If the collapse is more along the lines of those we have already witnessed – Weimar Republic or our own Great Depression or the current Argentinian situation – then having gold and silver will provide a great deal of value and wealth.
Which do you think is more likely to occur?
Wendy,
Thank you. If you find any .22 sales it’s even better!
Melbo,
I think we’re pretty much in agreement that gold and silver are a hedge that will allow you to preserve wealth during severe economic difficulties and while society is still functioning, but the metals won’t be of much use WTSHTF. The question of how long gold and silver will be of limited uses after TEOTWAWKI remains and is really difficult to peg due to so many variables. Of course I also agree that gold is a lot more readily convertible right now. My main argument is against the idea that gold/silver will be of value after a hard crash; some notable survivalist seem to believe that the population (which is for the most part ignorant of what coins are silver, etc.) will somehow work that out within weeks of collapse (again, not speaking of a slow collapse).
Chief,
I’d consider the examples you give to be along the lines of a slow collapse, and in that case gold/silver are almost certainly a good way to preserve some wealth. The problem with a slow collapse, IMO, is that it won’t last long and will only trigger a fast one (I’ll post on this within a few weeks). On which one is more likely, it’s impossible to predict, but if someone doesn’t decide for us (EMP, etc.), the slow collapse I believe we’re already in will eventually get much worse – debt, demographics, resources all practically guarantee this.
I agree – we’re in the middle of a slow collapse, which I believe has a real possibility of turning into a full-blown economic disaster. I think gold/silver are one of the only reliable source of wealth in that scenario.
As you have noted, it is a hedge. If/when the economic decline continues, more and more of my personal assets will be diverted to gold/silver as all economies eventually recover, and I want to be positioned for it.
If we get the EMP or some other event which essentially destroys our social fabric to the core, then it will be a very long time before gold regains its sparkle! All bets are off! That’s when my stores of beans, bullets and band-aids (another type of hedge) become incredibly valuable.
@ Chief Instructor
I call this phase the ‘Slow Burn’. We’re heading sown the slope but most don’t realize it yet.
Glad to see someone argue against the hype surrounding precious metals. I would not feel safe investing in an item whose value is driven by psychology rather than utility.
You can’t eat it. You can’t wipe your tail with it. You can’t plant it and watch it grow. It won’t keep the rain, snow, or heat off of you. It has no “utility” whatsoever, leaving its value to be “what someone will pay/trade you for it”, same as with anything in a free and open marketplace setting. What would someone part with in exchange for a hunk of shiny refined metal?
Junk silver, sheesh this old chestnut has been around almost as long as I have. Junk silver is just that, junk, and it has been for nearly 50 years now. To the average ‘murkan on the street, there is zero difference between a 1962 quarter and a 1972 one. They look, sound, weigh, taste, and feel identical. Face value is identical, 25 cents, and always will be. If you offered 100 people on the street the choice of two 1978 quarters or one 1962 quarter, all 100 would take the two 1978 quarters, despite silver prices today being nearly four times what they were in 1962 ($17 oz vs. $5/ounce). Something is only worth what another recognizes and accepts it to be worth. In this regard, junk silver fails the basic “money” test. It is not recognizeable as valuable, beyond its face value.
The silver content of the 1962 version is inseparable from the copper alloy that it is melted with (such is the affinity of silver for copper), which is the only reason junk silver hasn’t already been melted down to recover the silver content from them already. Most are in terrible condition, with dates that are barely readable. Junk silver has no visible weight or purity, and it is the PM wealth preservation equivalent of buying cheap gold plated jewelry or sterling silver (which actually has as much silver, by content, yet is dirt cheap by comparison). The wealthy do not bother with junk silver for a reason, they’re storing reputable and immediately obvious 99.99+ pure silver ingots, rounds, and gold coins, not old adulterated part-silver heavily circulated slugs that look like the base metal ones already in their pockets.
Some junk silver aficionados claim that will one day change, but I seriously doubt it, and hopeful purchasers/customers/buyers will never be in a position to “educate” sellers regarding just how supposedly “valuable” their junk silver being offered is. It has to speak for itself, and does not outside of coin collector circles.
How much for this Buffalo nickel? =P
I totally agree that during a total collapse silver and gold will be worthless, at least until regular trade resumes, probably many years later.
Where I think they do have value is as a hedge currently, to protect against hyperinflation. The trick would be to unload before total collapse.
Probably the number of people with knowledge of silver coins varies by region and especially by age. Where I’m originally from it’s not exactly common knowledge, but not a secret either. A lot of people would opt for the silver quarter.
The other thing about “junk” silver is that although it contains only 90% silver, it’s easily recognized as being genuine and as being silver, while ingots may be suspected as fakes.
http://www.cmi-gold-silver.com/small-survival-gold-silver-coins.html
I agree that in a fast collapse, gold and silver will be of little value at least initially; in that scenario, water, food and weapons will be of paramount value, along with medical supplies, esp. trauma management equipment (bandages, antibiotics, splints, etc).
In a very slow collapse, like what we’re in, a collapse into a third world state, precious metals will go up in value as the government tries to print money to solve its problems (sound familiar?). This causes hyperinflation eventually and that will yield a rise in the price of gold and silver; in the Weimar years, especially in 1923 a one ounce gold coin could buy a whole apartment complex (not just one apartment) in Berlin. Now that’s useful!!!
So, it boils down to the odds of various scenarios, as to whether one should put more or less resources into precious metals.
Personally I expect a slow inflationary collapse that accelerates into hyperinflation at which point precious metals will be highly valuable, but THEN, at some trigger point, civilization will break down, social supports (e.g. police, highway maintenance, transport of fuel and food) will collapse and then the chaos is then on, BIG TIME. Precious metals will be of little if any value at that time; what will be of value is power via weapons and their use, along with adequate supplies of food and water. We’ll have an early middle ages type situation until a feudal state develops around the production of food and the protection of those involved in such. Whether precious metals will be valuable then is a coin toss.
Wardoc
Thank you for writing this. In a recent discussion among friends, I wasn’t able to sell them the idea of the worthlessness of gold in a TEOTWAWKI situation, so I came looking around for ideas to support my argument, and found your article.
Immediately after a collapse, and in the extremely long run (recovering from pre-TEOTWAWKI society), gold may be useful, but for day to day survival, gold is next to worthless. As cash devalues immediately after an apocalyptic scenario, gold and silver would be used as an alternative currency. However, when people realize that the situation may never get better in the long term, and possibly not within their own lifespan, they’ll start realizing that having essentials, like a couple kilograms of rice and flour, would be much more useful that a horde of gold. Once the mass of people start living worrying about the next meal, or how to survive the next winter, the utility of tangible goods, both as an essential, and a barter item becomes enormous.
Looking at survival accounts from war refugees and POWs, it becomes clear that tangibles, such as flour, seasoning, tea, cigarettes and weapons emerge as the de facto currency for bartering.
Your last paragraph nailed the point in perfectly.
I have been saying the same thing for a long time. It is infinitely more likely that some other small but more useful items, such as bullets, will be adopted as a currency in the immediate aftermath of a very bad collapse.
One must also consider the possibility that society will never get back to the level it is now, as the majority of useful energy-producing resources are gone. With a catastrophic collapse, many people have pointed out that it will never be possible to return to a modern society with the resources that remain on Earth.
In this case, it is doubtful that gold or silver will ever be worth anything again. What can a normal person do with these materials? Nothing.
The author is in no way 100% wrong. Neither is he correct.
Any essay or theory is presented based on the authors knowledge of a subject. Where the author goes wrong is in his perception of the uses for precious metals.
How often do all of us do this? Even with internet access and the ability to take advantage of centuries of research and the labor of experts at our fingertips, we often choose to ignore this tool chest.
I am not going to tell you everything I know about PM’s here. Just Google or Bing or dogpile or whatever your favorite search engine is and research Uses for precious metals. .
In other words, Do your own research before you “assume” someone else has.
If you don’t have Silver, you had better own a drugstore.
tommy,
“You’re wrong, search the net,” isn’t really good form. Please enlighten us with your superior knowledge. Thanks.
There has been no mention of portability of precious metals. At the start of any big collapse there will be lots of folk who decide to move … and if the cause is climate change then the USA can expect something like 90% of the population to have to move to places with water. All those heavy and bulky prep goods cannot be transported – the very first stuff to run out will be gasoline – so folks will be trying to sell such things, and their property, for gold and silver in the hope that when they get to their planned location they can use the metals as barter to get food etc
I apologize for saying “Search the web” . I should have elaborated. I will attempt to do so now.
First of all, I do not intend to change your mind. I have heard all the arguments before, and some of them have merit.
Gold is a way of keeping score-just like paper money. It is of no importance, that you don’t want it. What is important is who will. Your idea that there will be mountains of jewelry laying around is true. It will be true for two or three days while it is collected by gangs or mobs. Then it will be the same as it is now. All the wealth will be in the hands of a few Warlords, whose army of minions will gladly accept pretty shiny things as payment for their services.
The system of weights and measures we use, has been figured out already. Why should it be changed? Coins are portable and of a consistent size. You are correct in your assessment that copper pipes will be laying around. So what? Take a copper pipe to the store haul it around in your shopping cart, then when you are finished checking out, offer it to the cashier as payment. When the manager arrives you can tell him about how that piece of pipe costs $40.00 at the hardware down the street. I could run through a lot of scenarios here, but I think you get my point. You would need to take your pipe to a scrap yard ,where using a system of weights and measures, the scrap dealer will offer you an amount of money considerably south of $40.00. But, whatever you get, the cashier will accept as payment.
In a shtf world, you might be on foot. How far will you have to schlep that copper pipe to get to a scrap dealer? Why would you want to spend all that time salvaging pipe? Who would stand guard for you while you wrestled with it?
Inflation, which we all fear, as one of the things that will cause the collapse has happened before. In Weimar Germany (The name given to the Parliamentary government that replaced the Imperial Kaiser in 1919) when it took a wheelbarrow full of money to buy a loaf of bread as inflation grew and grew, a U.S. $20.00 bill would have bought an entire apartment building, or a car. Why? Because it was backed by gold.
Gold is magical. FDR took us off the gold standard and confiscated (Bought it at a bargain price) all the bullion in circulation. The money was still backed by Gold, but the Government had all the gold.
Gold has caused people to commit murder, and all manor of mayhem throughout history. You and I grew up in a paper money world. I think I am a little older though, and I remember when No one could buy gold bullion. I was there when JFK tried to get us back on a silver standard with Silver Certificates. There is anecdotal evidence that the reason for his demise was this plan. Silver Certificates disappeared when JFk was shot.
Seven years after Kennedy was assassinated, The French wanted us to pay our debt to them in Gold. Nixon took us off the gold standard at that point. The reasons are complex. But Gold was to valuable to pay debts with, and since it had been backing money since 1779 Nixon’s bosses told him what to do.
So, now we have a situation, where all that loose jewelry has been policed up, Only scrap dealers (Working for the Warlord) who have the ability to get the copper to the smelter will buy your pipe-at whatever pittance they choose to pay, and you need something… Lets say medicine. an antibiotic, to save your childs life. What are you gonna trade for some expired anti-biotics that someone wants?
If you had some Silver, you would have an antibiotic. Giving the kid a spoon to suck on would help. Putting a silver coin on a wound or dog bite or sore would sufficate the bacteria. There is a drugstore in every ounce.
I’m going to refer you to Wikipedia at this point. search for Medicinal Silver, and be prepared to be amazed. en.wikipedia.org/wiki/Medical_uses_of_silver -
Oh, and those nickels people are saving… think rust proofing and galvanizing.
I don’t have superior knowledge, only insatiable curiosity.
Tommy
According to Peter Hickson, the global commodities strategist for gold-focused Swiss Bank, UBS, in a report by Bloomberg, Chinese gold demand hit no less than 200 tonnes in the first two months of the current year.
If that trend continues, Chinese consumers will own 50% of the above ground gold in the World.
Who will decide the worth of something? The ragged dregs of a collapsed American society, Or those who Rule the world?
Silver broke through $35.00 an ounce today.
Tommy
Dear survivalists,
I keep hearing posters say that history shows us that precious metals lose value in a collapse when in fact the opposite is true. Did the Nazi’s escape germany with deutschmarks or gold? Did Roman citizens avoid the debasing of the denarius by hoarding food or gold? History shows us that government fall and debase money on their way down. It is precious metals or other stronger currencies that preserve wealth in these situations.
The U.S. dollar is not going to be worth its weight in food if the world totally collapses like you think it must. In fact a collapse of the monetary system that causes damage to the other systems is more likely. Why would the economy completely stop. People still need food and fuel and they will continue to be produced in exchange for things that still hold value. I assure you gold and silver will continue to hold value and increase in real terms.
Learn some history before you completely dismiss gold and silver as having no value during collapse.
P.S. to fallout11, junk silver is now worth 27 times its face value. Also, it can be seperated into copper and silver in any modern refinery.
Nick,
You’re comparing apples to oranges. If/when the U.S. collapses completely (which is the context here), it won’t be like those other slow or limited collapse scenarios. In a slow collapse, PM will keep their value and act as a hedge against inflation. However for some time after a fast collapse, PM will be next to worthless. Think about it; a couple hundred million starving, you want food or gold? After the couple hundred million die and things normalize, PMs will recover but it will take a long time.
As I have stated above, I agree with Nick. Pretty Shiny things will always be worth something. But a person would be extremly foolish to rely on only ONE barter item. I have some Precious metals, but I agree with SS not everyone will find a use for it.
I also have tobacco, coffee, small half pints of booze, food I don’t like to eat, matches, candles, salt, sugar, spices and bleach for purifying water and DRY clothing that I can offer for trade.
What would I trade for? I don’t know yet. Perhaps a little bottle of booze will get me through a check point. A guy who can negotiate the gangs or other obstacles, get to the river, then bring me back some water will be rewarded with his choice of one of the items I mentioned.
A good salesman should be able to convince people to take gold or copper even if he has to tell lies to do it. “Hey, the Government is coming back! The National Guard is in (the next town)Ohio City!” An honest man with the knowledge of Silver and its wonderful healing properties could either be a respected healer, or convince others of it’s uses.
If we are wise we will talk up Silver NOW, so that, when there is no more medicine the honest man will be greeted with “I’ve heard that about Silver.” or Thank God you are here, my child is sick!”
Just as it would be foolish not to prepare, it is doubly foolish to ignore a tool that may save your own life or the life of a loved one. Silver just may turn out to be the most precious metal of all time.
Let’s look at historys true survivalists, they lived in the jungles, frozen lands of the polar regions, or in the deserts. They were often nomadic tribes that knew how to survive off the land in their own little corner of the world. Things of value in their cultures had practical uses. Many a conquistador found the primitives had little use for the precious metals except to make ornaments.
It is large societies with government that provides the security to establish a monetary system. If that government fails so does its money.
I remember the Y2K hype. I asked a guy I was working with if he was ready for the Y2K. He said yea, he bought a couple of frozen turkeys and some groceries. But his daughter stocked up on gold kugerans, and cautioned him to do the same. He replied that if the SHTF he would be having turkey for dinner and she would be having gold kugerans. I went to the grocery store.
It would be nice to have gold AND supplies but I don’t think a lot of people have the financial option. So given the choice I am going to play it safe and be well supplied. If all is well in our future then I havent wasted anything, I’m going to use my supplies eventually. But if everything goes south……well gold is great for making bullets, and you can put a dime over the bullet hole.
I bought silver, gold, and some platinum for a few years, and I sold all of them at a good profit when the price went up. And you know what? Yes I made a profit, but eventually, the money you make is gone. No one addresses this–the fact that you aren’t going to have a lifetime supply of income off of your silver and gold! You’ll run out of money after a month or 1 year or 5 years…..then what?