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Re: Let's talk about GOLD or other precious metals 

By: De_Composed in 6TH POPE | Recommend this post (1)
Fri, 23 Aug 24 4:31 PM | 24 view(s)
Boardmark this board | 6th Edition Pope Board 		Msg. 57069 of 58510
(This msg. is a reply to 57065 by De_Composed)
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micro:

Re: “Ya go to a store and give them a gold piece and are they going to have change for ya?” This question also warrants a response.

You're right. Gold coins probably won't be as helpful for making day-to-day purchases as, say, silver. And if it's a silver dollar, you may still have a problem. Silver dollars represent about $30 of value. If you're trying to buy a dozen eggs, a silver dollar won't be too convenient.

I have some sterling silverware for this reason. A typical sterling spoon represents about $10 of value. For anyone with a scale, sterling silverware should be easier to spend than coins. Perhaps instead of a dozen eggs, I'd have to buy FOUR dozen eggs. That wouldn't be the end of the world (pun intended!)

The exception is old dimes. They're just about perfect. A pre-1965 dime contains 2.25 grams of silver. At today's spot price for silver, its inherent worth is about $2.13 - just about right for a dozen eggs if eggs remain plentiful.

I sure wish I had some. Tulving used to sell sacks of "junk dimes" and it seemed as if nobody wanted them. Relative to every other coin Tulving sold, dimes were really cheap. I was dumb though, not realizing that they'd be about the best type of PM to have in the scenarios I find most likely. I was probably thinking about the difficulty of selling them back. At today's prices, if I had a $2,500 krugerrand, I'm sure I could find a buyer who would give me almost that much for it. But if I had $2,500 in 1960-something dimes, I might struggle to get much more than their face value for them - about $119. That would really suck!

Again, PM is mostly for after a crisis, not during or before. During the crisis, you might wish you instead had a garden, some sacks of rice or some cans of coffee. Those would provide more direct assistance to you and your family and could be helpful in a black market situation where you need to barter.

Finally, I'll note that there are some TEOTWAWKI situations in which mankind gets knocked back to the stone age. Recovery wouldn't come for generations if at all. If that happens, gold and silver will truly have no value as there would be no "after the crisis" to look forward to. But there's no point in worrying about that. If humanity ever gets hammered that way, I doubt very much that I'll be alive long enough to worry about my silverware, my ammunition or my dining room oxen. That's probably true for you too.















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The above is a reply to the following message:
Re: Let's talk about GOLD or other precious metals
By: De_Composed in 6TH POPE
Fri, 23 Aug 24 3:35 PM 		Msg. 57065 of 58510

micro:

Re: “If you're the only one with gold coins trying to buy something and things are in dire straights, I am not sure anyone else should know you are sitting on gold coins..”Great topic! I'll start with an analogy I've used before. You have a bunch of gold in your pockets and you're in the middle of the Sahara desert dying of thirst. Is your gold going to help you? No. You need water. You can't drink gold.

You bump into someone else who has a little water. Can you buy it off of him? Absolutely not. He values his water and only his water for the same reason you do. If he's only got enough for himself, he'd be foolish to trade it for your gold.

So that's the first lesson. Gold is of little value in a crisis except to those who have more than they need of the things you want: Food, water, shelter, security, medicines. Those are the usual essentials for life, and the most obvious things you'll value during a crisis. Nobody being washed away by a tidal wave has ever thought, "Gee. I wish I had some gold!"

Had you instead run into someone who owned an oasis, might he have sold you some water in exchange for your gold? Yes, he might have. Probably even a lot of water. That's the second lesson: The value of *anything* is relative.

Can you think of an asset that's generically better than gold? I think you'll find that to be a challenge - because whatever you pick, I guarantee you I can come up with a TEOTWAWKI scenario in which you'd have been wrong. If you stockpile money, I'll give you a hyperinflating economy. If you stockpile medicine, I'll give you a famine. If you stockpile beans, I'll give you a disaster that doesn't happen until your beans have spoiled. Ditto for medicines. If you stockpile oil or farmland, I'll give you a disaster in which you have to flee. If you stockpile electrical or gasoline powered tools, I'll give you a disaster in which gas and electricity are unavailable. If you stockpile hand tools and oxen, I'll just laugh. Maybe the disaster DOESN'T involve a shortage of oil or electricity. And what if it doesn't happen for five years? You're really going to load up your house with hand tools and oxen?? Good luck keeping your wife!! That's the third lesson: Figuring out beforehand what people will most value in a disaster of TEOTWAWKI magnitude is a fool's errand. It depends on the nature and timing of the disaster. You don't know what that might be. A prepper should plan differently for tyranny, shortages, war, plague or comet strike. The need presented by the disaster might be short term. It might be long.

So, what makes gold and silver ownership prudent? It's because while they have little utility (true of gold, not silver) and may not be valued during a crisis, they are portable, durable, unspoiling, rare (which means that a small amount packs a lot of punch), concealable, recognizable (again, true of gold, not silver), pretty and have a history that ensures that once crises pass - which, for populations, they always do - they will be valued again.

In a crisis, gold may not help. But after? It will. Gold's "utility" comes from being the best long-term store of value in almost any situation. Even masterpiece paintings are useless if you have no means of smuggling them out of a country gone full-Nazi. The case for gold hasn't changed for thousands of years. After a crisis ends, you'll be glad to have some... and it may even put you in a better financial position than you're in today. Think of it as insurance - a poor "investment" if calamity doesn't happen but potentially invaluable if it does. (Assuming you survive the calamity, of course.) In fact, gold isn't an "investment" at all. Investments are expected to grow, while gold just stays the same. If it grows in value, that's more a matter of luck than it is of rational expectation.

In conclusion, nobody should put everything they've got into gold . . . or into anything else. We don't know the nature and timing of the hard times to come, and we still have to live our lives in these Times-of-Plenty. IMO, the wisest course of action is to diversify for disaster. Store some food, some medicine, some firearms, some hand tools, some liquor, some land, some cash, some gas and some water. For AFTER the disaster, store some precious metal. If you're real lucky, you'll never actually need any of them.

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