Why gold?

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Romeosierra616

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I never understood why having gold would be such a big deal if SHTF, if there is no economy why would Gold have any value?

wouldn't stuff like food and ammo make more sense to trade? What would Gold be used for that makes it better than actual useful resources?

If the economy collapsed tomorrow who the hell would need Gold? You can't eat it, you can't shoot it, so why buy it for when SHTF?
 
If the economy collapsed tomorrow who the hell would need Gold? You can't eat it, you can't shoot it, so why buy it for when SHTF?
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Many people feel that the chances someone would accept gold in a transaction is much greater than acceptance of currently from a failed nation state. It would take a super-SHTF for that to happen, as in "Limited SHTF scenarios" (LSHTF) (flood, pestilence, earthquakes) where the electronic fund system (ATM, checks, check verification and clearing, etc.) breaks down, cash in the form of US currency remains king. Just try using a credit card or check to buy supplies when all the seller can do is accept the media and "hope it clears" once the grid goes back up. Sure, it may work with vendors you know - but is useless when there is a run on every supplier in the county the enemy (others competing for scarce supplies) are lining up with cash.

One can even argue that currency is better than gold in a LSHTF scenarios as the few gas stations with power and fuel, supermarkets, etc.that are open will probably take cash and not even have a procedure for valuing and accepting gold.

Gold's attractiveness is that is historically a self-contained store of value that does not deteriorate, packs a lot of value in a small space, and does not rely on "the system" to (hopefully) cause the value keep pace with inflation. Take gold off the grid, and it still gains (or loses) current market value. Take cash off the grid and it starts to depreciate in real value.

There are a lot of senior citizens facing medicare spendown who probably wish they had a decent chunk of their savings in off grid assets like gold and silver.

There are downsides including storage, brokerage fees, lack of capital gains treatment (something I have NEVER seen a gold dealer or gold advocate mention).
 
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But if theirs no economy, and theirs no value , Gold becomes a useful as paper money would be, wouldn't it? I mean with the economy intact it makes sense to have gold, but if S*** REALLY hits the fan, like complete collapse, then gold would be as valuable as dirt. Right? I mean I could see lead having more value due to bullets being made from it. Brass too due to casing made out of it.

hell, I guess I mean in a real collapse of the country/government. Like REAL bad S***.
 
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This question was raised awhile ago on this forum, possibly by myself. Despite all the explanations, I'm with the OP.
 
Romeosierra616 said:
But if theirs no economy, and theirs no value , Gold becomes a useful as paper money would be, wouldn't it? I mean with the economy intact it makes sense to have gold, but if S*** REALLY hits the fan, like complete collapse, then gold would be as valuable as dirt. Right? I mean I could see lead having more value due to bullets being made from it. Brass too due to casing made out of it.

hell, I guess I mean in a real collapse of the country/government. Like REAL bad S***.
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In immediate Post-SHTF direct barter is likely to be the case, so ammo, food, etc would in fact have great barter value. Soon, however, as local economies begin to form, a medium of exchange becomes valuable. Gold, and probably even more-so silver, have almost universally filled the role well.

As far as a store of value in non-SHTF, but turbulent times, think of the dollar value of metals not as the price of the metals, but rather as the value of the currency against a more stable commodity.

In 1960, a 1960 quarter would buy you a gallon of gas. Today a 1960 quarter (contains about .179 troy oz of silver) would still buy you a gallon of gas, and you'd get $1.50 or so in change. So you could say that the price of silver hasn't gone up; the value of the dollar has gone down.

Looked at from that perspective, precious metals have historically been a good store of purchasing power (wealth, value) over the long term.
 
Think of it as insurance. Why not buy a few silver coins so that if fiat money ever did start breaking down, you'd have something to bargain with. Gold and silver can both be extremely volatile, but notice how the broke piigs in Europe won't offer their gold reserves as collateral for loans. Gold and silver are the ULTIMATE form of money. Central banks around the world are currently trading paper for gold. We are the Saudi Arabia of gold if we can ever audit it no shenanigans have occurred.

If you're interested in PM's, keep doing your own research on them. If you invest in them, DCA (dollar cost average) as the spot price can wildly fluctuate in FDR's (federal reserve notes.)

The founding fathers used paper money and hard species. They stipulated that dollars be gold and silver for a reason -they saw the follies of paper currencies first hand. Again, the best I can say is do your own research, and have a little insurance on hand.
 
Why would precious metals be the immediate first thought for a medium of exchange? Wouldn't water or something useful be a better item? I'm with OP on this. When the SHTF and shortly after I'd rather have $30 worth of ammo than 1oz of silver, unless there are werewolves...
 
From a SHTF perspective, once you have your beans, bullets, and band-aids squared away, THEN you invest in Silver, then Gold. Silver would probably end up being better for bartering because it holds less "value" per unit.

From a general perspective, it never hurts to diversify your portfolio.

For example, pick any year in recent history and consider the following conversation that has never happened:

Guy 1: Hey man, remember when you bought all that gold and silver 10 years ago? How's that going?
Guy 2: Worst move I ever made.
Guy 1: Sorry man.
 
The number of insanely stupid people in preparedness world is directly proportional to the number of insanely stupid people in the regular population.

Just as your typical idiots would assume spend $50k-100k on a wedding or 20k on a vacation when they have credit card bills up the ass and no down payment for a house, your average idiot prepper who hasn't funded more immediate needs starts stacking up the gold.

You can't eat it, you can't burn it, it doesn't preform any tasks. It is a store of value so long as an economy exists, but for these reasons is really silly as a prepper item. It's only place is as an investment once all your other self-sufficiency bases are covered.
 
Gold! Gold! Gold! Gold!
Bright and yellow, hard and cold
Molten, graven, hammered and rolled,
Heavy to get and light to hold,
Hoarded, bartered, bought and sold,
Stolen, borrowed, squandered, doled,
Spurned by young, but hung by old
To the verge of a church yard mold;
Price of many a crime untold.
Gold! Gold! Gold! Gold!
Good or bad a thousand fold!
How widely it agencies vary,
To save - to ruin - to curse - to bless -
As even its minted coins express :
Now stamped with the image of Queen Bess,
And now of a bloody Mary.

Thomas Hood
 
The prepper fantasy of no government or economy is just that – FANTASY. As soon as a man was able to produce in a day more food than he could consume, other men wanted to lead and control him, whether voluntary or through force. And as long as there are limited resources, there is an economy. The nature of SHTF is immaterial, be it nuclear war, worldwide pandemic, major volcano eruption, economic collapse, etc., there will be government. It might not be the same size, type or have the same reach, but there will be a government.

Now that we hopefully on the same page and are talking about real rather than imaginary world, we can address topic of money. Through history man experimented with numerous items as money. Grain, beer, land, cattle – just to name a few. Unfortunately, all but gold failed. To serve as money an item must have certain attributes. Among them: 1) Stability of supply growth. Preferably close to population growth. Meaning scarcity and predictable mining/creation rates. The subsections of 1 are: 1a) No arbitrage, which means it cannot be created without equivalent effort/cost. The ratio does not need be 1:1, but it has to be close. E.g. US nickel would pass this criterion, but $100 would fail big time. 1b) Not consumable. Although thanks to petrodollar we are living high on the hog, oil is consumable and thus should not be money. In the modern world consumption is one of the main obstacles for silver to be money. Of course silver cannot be consumed via destruction like oil, but it is put into too many products in too small of a quantity making its pragmatic value too great to function as money. 2) It has to be available across the world. Palladium cannot be money because it’s mainly located in Russia. Thus they control world’s supply and that cannot work. 3) Fungibility. Diamonds are unique and thus they cannot be money. 4) Portability. Try to carry some land across the country. 5) Divisibility. Lack thereof is one of the main failures of pure barter system. 6) Durability. Gold has been known to be periodically relocated to the bottom of the ocean by misfortunate owners, but even so, it’s really indestructible. 7) Easily identifiable, hard to counterfeit, easy to store and anonymity are plus. There is a reason gold has been used as money for thousands of years. There is simply nothing better currently known to man to serve as money. Although fiat can be forced onto the subjects, it cannot be forced on to the sovereigns. That is why central banks settle debt in gold the only real money.

Hence, your real question is “why money?”. If you are starting out in life and other things are more valuable to you – buy them. But at some point you should start saving. It is generally accepted that a balance portfolio should contain 5-10% in cash and 0-5% in foreign currency and 0-10% in commodities. Remember gold is both money (cash) and commodity, and FRN can be and should be viewed as foreign currency. So depending on world and market condition you could arguably keep up to 25% of your portfolio in gold – although usually only up to 15% is recommended.
 
OPM said:
Hence, your real question is “why money?”. If you are starting out in life and other things are more valuable to you – buy them. But at some point you should start saving. It is generally accepted that a balance portfolio should contain 5-10% in cash and 0-5% in foreign currency and 0-10% in commodities. Remember gold is both money (cash) and commodity, and FRN can be and should be viewed as foreign currency. So depending on world and market condition you could arguably keep up to 25% of your portfolio in gold – although usually only up to 15% is recommended.
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Everything you stated before this paragraph was the most well thought out, articulated, and sane thing I have ever encountered on a web forum on the subject. Though I still take many issues with it... they are relatively minor details not particularly worth noting for the purposes of this discussion.

The concept of a portfolio, in all but rare cases, is mostly asinine.

- Basic preparedness does require money on hand. For things such as brief to prolonged joblessness, a boiler shitting the bed, a car shitting the bed, multiple days of IV treatments at the ER (a recent example for me). Gold does not fit this bill... at least not until there is a service that instantly converts debit transactions from gold to dollars and is also not cost prohibitive. We have a functioning economy, and as it is you can't go trade gold for basic services in most cases. Access to a place of conversion is not always practical or even possible. Not to mention the costs associated with doing so.

- If cash, both foreign and domestic are part of this "portfolio".. and gold and other commodities are another small part... that indicates paper assets. If you are relying on paper assets, then you are banking on everything remaining as normal, no? You aren't doing anything special, you are betting on the status quo to remain the status quo... just like everyone else. With this, you have the same negative exposure to gold without the benefit of it actually being in your physical possession should you need it. Wouldn't looking at it like this mean you are just having a traditional portfolio with gold as an aside prep?

- I've maybe only met one or two people in my life that actually should have a "portfolio". As a prepper, unless you have all your basic needs provided for for the rest of your life, you have no business deferring the value of currency of any kind, except in limited amounts as a type of insurance.

I think we'd all agree these bases need to be covered for, if not TEOTWAWKI, a self sufficient lifestyle not dependent on the fragility of the system.

- Shelter, including the supplies and knowledge to maintain it for healthful livability, in perpetuity. Including handling of wastes. (Mortgage paid off? Septic in good shape?)
- Adequate parcel of arable land for food production, or a lifetime supply of food stores.. or combination thereof to provide healthful nutritional requirements.
- Energy self sufficiency either by production equipment or lifetime fossil fuel stores plus conversion, also the supplies, spare parts, and knowledge to keep said systems functional in perpetuity.
- Year round water supply access or harvesting system, for both agricultural and domestic needs, including mechanism for purification and maintenance for such systems.

I doubt anyone here has all of this covered. If you do, when does your book come out? I boil my argument down to, get your A's to C's covered before you worry about your A-U. (see what I did there? [smile])
 
mike01824 said:
Why would precious metals be the immediate first thought for a medium of exchange? Wouldn't water or something useful be a better item? I'm with OP on this. When the SHTF and shortly after I'd rather have $30 worth of ammo than 1oz of silver, unless there are werewolves...
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Precious metals aren't meant to be an immediate medium of exchange after the SHTF. You can't eat cash money, either; or, at least it's not very nutritious. Neither is ammo, but that's going to be a helluva immediate trading medium.

Personally, I'd invest in toilet paper and feminine hygiene products if I wanted things that were really worth something two months into the apocalypse. A six month supply would be worth more than gold.

That said: like someone else already mentioned, any currency, barter, or medium of exchange is just a way to translate your labor into goods. You can raise more berries and corn than you need, and trade them for meat and milk, which works just fine in your local community. If you need salt to preserve that meat and live far from the sea or any salt mines, you need an intermediate medium of exchange.

Over the centuries, silver and gold have served well for that. They're not exclusive means of trade, and never have been. Fiat currencies fill that role, albeit poorly, and if you think metals are worthless after a crash, wait until a wheelbarrow full of cash fuels the oven that bakes the bread that is actually worth something in trade.
 
We've had this discussion here before.

Gold is a foreign currency and should be invested in as such. It's just a foreign currency without a country and with out a government who can intentionally devalue it by creating more. Rather than being intrinsically linked to the economoy and political decisions of one country, it's linked to the economy and political decisions of the world as a whole.

World production of gold is about 3,000 tonne per year.
World stockpiles of gold in recoverable form is about 180 million tonne
1,200 tonne of the world production of gold is sold for jewelry production (with 810 tonne in India alone)
1,500 tonne of the world production of gold is sold for investment vehicle production (coins, bars, etc)

Gold is an effective hedge against local social-economic issues. As long as foregin markets survive, the market for gold will continue to survive and those who are able to trade outside the affected area will continue to value it.

Gold is not an effective hedge against gobal economic issues because its demand is so heavily tied to its sentimental worth and if the vast majority of the world is just trying to scrape by, very few people will be interested in aquiring gold. Unfortunately, so much of the world demand for gold has become concentrated in India, that the value of gold is becoming linked to the Indian economy. Economic collapse in India or open war between India and Pakistan would wreck havoc on the gold market today.

If you're preparing for economic collapse, gold is a small part of that strategy. Its unfortunate that, in far too many circles, gold is a large part of people's strategy.
 
Just as your typical idiots would assume spend $50k-100k on a wedding or 20k on a vacation when they have credit card bills up the ass and no down payment for a house
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Weddings can easily delay the entry of a new couple into the housing market by years. Must be some sort of cultural conspiracy.

My plan is to tell my kid "There are $X dollars on the table ($X depending on how the family is doing at the time). Spend any part of it you want on the wedding; anything leftover you get to keep for a house down payment".
 
The real value of gold as Shade pointed out is that it can always be traded for other currencies. This property protects you from a high/hyperinflation scenario. It protects wealth from being printed away. It is of no immediate use in any shtf scenario other than fleeing a country in economic collapse for another country with a stable currency. The key of course is that you need physical gold on hand, not investments.

There are a lot of things you should have on hand before gold. Food, firearms, gas, cash, etc, etc. Gold is a small piece of the puzzle, not all of it.
 
Rob Boudrie said:
Weddings can easily delay the entry of a new couple into the housing market by years. Must be some sort of cultural conspiracy.
My plan is to tell my kid "There are $X dollars on the table ($X depending on how the family is doing at the time). Spend any part of it you want on the wedding; anything leftover you get to keep for a house down payment".
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Better to give him the money and say, "Here's the money for a down-payment on a house. If you want to use some of it for a wedding, that's your choice, but you're taking it out of the house fund"

I know it's the same idea, but slightly different mentality. A wedding can be had for under $100 (meet at JP at town Hall with your parents). You can't make a down-payment on an appartment for $100.
 
Gold/Silver is a good hedge against inflation where the printing presses are running wild and debt ceilings keep moving upward. Also, gold and silver are universal. While diffent countries print different pretty little pictures on their paper, gold and silver are recognized across the globe.

Furthermore, what are your other options right now? Invest in the stock market? Sure, let me buy some of that Facebook stock. I can see that having real value in 10 or 20 years [thinking].

Or maybe cold hard cash? As long as the printing presses are running, the value of those paper bills are going down everyday. Food and ammo are good calls, but you don't want to put all your savings into those things, right?
 
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Now somebody may chastise me for referencing a video game but, here's an example that roughly fits my scenario: Ther's a series of games called Fallout, and the Story goes something like the US and China went into an all out Nuclear exchange with each other, most every developed country between the two got either involved or hit in the confusion.

Sure it's a Sci-Fi game, but looking past the Sci-Fi plots in the game, it has a fairly accurate representation of the world after a full on Nuclear Conflict, fairly desolate, no large scale Gov't left, and the survivors have clumped together in small, makeshift communities.

Imagine that as what has happened, would Gold still be the currency? Especially if the only economy to speak of is individual to each community?

please understand my continued questions are not any argument, because there have been some very good, strong points made. I'm just very interested and admittedly still somewhat confused.
 
Romeosierra616 said:
Now somebody may chastise me for referencing a video game but, here's an example that roughly fits my scenario: Ther's a series of games called Fallout, and the Story goes something like the US and China went into an all out Nuclear exchange with each other, most every developed country between the two got either involved or hit in the confusion.

Sure it's a Sci-Fi game, but looking past the Sci-Fi plots in the game, it has a fairly accurate representation of the world after a full on Nuclear Conflict, fairly desolate, no large scale Gov't left, and the survivors have clumped together in small, makeshift communities.

Imagine that as what has happened, would Gold still be the currency? Especially if the only economy to speak of is individual to each community?

please understand my continued questions are not any argument, because there have been some very good, strong points made. I'm just very interested and admittedly still somewhat confused.
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How would gold compare to paper money in that hypothetical situation?
 
Romeosierra616 said:
Now somebody may chastise me for referencing a video game but, here's an example that roughly fits my scenario: Ther's a series of games called Fallout, and the Story goes something like the US and China went into an all out Nuclear exchange with each other, most every developed country between the two got either involved or hit in the confusion.

Sure it's a Sci-Fi game, but looking past the Sci-Fi plots in the game, it has a fairly accurate representation of the world after a full on Nuclear Conflict, fairly desolate, no large scale Gov't left, and the survivors have clumped together in small, makeshift communities.

Imagine that as what has happened, would Gold still be the currency? Especially if the only economy to speak of is individual to each community?

please understand my continued questions are not any argument, because there have been some very good, strong points made. I'm just very interested and admittedly still somewhat confused.
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As far back as recorded history goes, gold has always been valued. It is worth more now than it ever has been and I believe that no matter how bad things get, (short of total worldwide collapse like Mad Max, The Road, etc) it will always be worth something to someone. Food, SHelter, Guns and ammo are going to be necessities, but if you have any gold, on top of your other preps, you will be ahead of the game. I can't afford gold, but I do have some silver that I keep as a prep, NOT as an investment.
 
So from what I understand, the only "true" value gold has is circumstantial and dependent on what somebody claims it is? It's only valuable if people accept it as such? Very interesting...

I mean, it makes total sense, if the majority accepts that Gold valuable, then it is, but if they don't accept it, it's nothing more than shiny metal.

I mean, hypothetically speaking, if you could convince enough people that Bottle caps(again taking reference from Fallout, obviously it's farfetched) are valuable, then they become so. Based on the fact that people accept them as such.
 
Romeosierra616 said:
So from what I understand, the only "true" value gold has is circumstantial and dependent on what somebody claims it is? It's only valuable if people accept it as such? Very interesting...

I mean, it makes total sense, if the majority accepts that Gold valuable, then it is, but if they don't accept it, it's nothing more than shiny metal.

I mean, hypothetically speaking, if you could convince enough people that Bottle caps(again taking reference from Fallout, obviously it's farfetched) are valuable, then they become so. Based on the fact that people accept them as such.
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As has been said, gold has been treated as currency for thousands of years. All currencies have flaws of some kind with them, but mankind keeps coming back to gold in one form or another for some reason. You might want to spend some time researching and figuring out why they go back to gold instead of bottlecaps if you're legitimately interested.
 
Romeosierra616 said:
I mean, it makes total sense, if the majority accepts that Gold valuable, then it is, but if they don't accept it, it's nothing more than shiny metal.
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Earlier in the thread it was mentioned that a 1960 quarter could buy you a gallon of gas because of the silver content and you'd still have change left over. Fact is, a 1960 quarter could get you exactly $.25 worth of gas, because gas station's don't give a crap about precious metals.
 
new guy said:
As has been said, gold has been treated as currency for thousands of years. All currencies have flaws of some kind with them, but mankind keeps coming back to gold in one form or another for some reason. You might want to spend some time researching and figuring out why they go back to gold instead of bottlecaps if you're legitimately interested.
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The flaw with currency is that it's just that... currency. And mankind hasn't always gone to gold... The Aztecs (or was it Inca's? whatever) for example found it useless because it was in abundance... that's how I think it will be post SHTF. A bunch of jackasses running around with gold and silver coins when they don't even have a box of matches or a bar of soap.

Fact: Soap doesn't have an expiration date
Fact: Soap prices increase with inflation
Fact: Soap is a high input product
Fact: Soap is something everyone needs all the time

Soap will be the new currency.. stock up on your Irish Spring now. Soap is money.
 

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