Silver and Gold
We haven’t spoken about silver and gold for a while. I thought it would make a good discussion for today. At Prepper Recon, we believe silver and gold have a place in prepping and also in asset diversification. Silver and gold have many advantages as well as some disadvantages. We will go over some fundamental advantages first, then we will look at some of the limitations of gold and silver.
I think the best reason to own gold is that it has never had a currency crisis. Right now, we can look around the world and see fiat currencies in crisis. The latest story is out of Iran. The Iranian Rial has lost 80 percent of its value over the past year. It has lost 17 percent in recent weeks. Protesters and police in Iran have had major clashes with tear gas and several arrests. We have also seen the effects of panic over the thought of a currency crisis in Spain in recent months. Spanish depositors have withdrawn euros en mass as they fear leaving or being pushed out of the euro. In the event that their currency were to be converted back to the peseta, banks would close and deposits would be frozen until the conversion was complete. Once banks open, the peseta would likely lose value immediately as the government would seek to debase it in order to reduce its own debt. This fear is what the Greeks have been dealing with for years now. This same scenario is also possible in the US if there were to be a collapse of the dollar.
Gold has been considered a store of wealth since the beginning of time. In Genesis 13:2, we read that Abraham was rich in cattle, silver and gold. The concept of “outsmarting” a commodity based currency system is relatively new. Paper money has only been around in western cultures since the 17th century. The Chinese experimented with it in the 9th century but eventually abandoned it. Ancient Rome devalued their coin from precious and semi-precious metals to alloys. We all know how well that turned out. It was the beginning of the end for Rome.
Gold and silver have maintained their value throughout time. In contrast, the dollar hasn’t fared quite so well. In 1960, a new home cost $12,700. Now, median price for a new home is $256,900. That is a 1922% increase, or inversely, a 1922% loss in the value of the dollar. Cheerios were $.25 a box in 1960, now they run $6. A loss of 10,391% for the dollar. Here is a great link to look at prices from 50 years ago and see how well the dollar has done. Let’s see how well gold has done in the same period for the same items. In 1960 it took 343 ounces of gold for the new house. Now it takes only 143 ounces for the new house, that is a 140% increase for gold in new home terms. An ounce of gold would have bought 148 boxes of Cheerios in 1960. Now, an ounce will buy 298 boxes. That is roughly a 100% increase in Cheerios. In terms of dollars, gold has gone from $37 in 1960 to over $1,700 today. That is a gain for gold of 4,500% in dollar terms. We could go on and on with examples like these and the results will be similar. The dollar has done very poorly over time and gold has done quite well.
Gold and silver do have some limitations. Gold should be thought of as a store of wealth rather than an investment. While it can do well in some periods, it does not produce a cash flow. We must always remember that there is a precedent for the government to outlaw gold. In 1933 FDR issued Executive order 6102 which outlawed monetary gold ownership. If this were to happen again, it would become very hard to liquidate. It would retain its value on the black market, but you would lose your ability to convert it to cash.
I recommend buying gold and silver American Eagles and Canadian Maple Leaves. With gold, you may want to include some 1/10 ounce, 1/4 ounce or 1/2 ounce coins as the 1 ounce coins are going to be hard to get change for in a collapse scenario. I have had nothing but good experiences when dealing with APMEX for precious metals. You will wait about 10 days for your check to clear unless you pay by credit card which has a higher rate. I recently bought from JM Bullion. Their prices were cheaper than APMEX across the board. The shipping was about $5 cheaper. All the gold coins were a few dollars cheaper and silver coins were $.83 cheaper per coin. If you buy 30 or 40 silver coins, that will add up fast. They will take about 10 days to ship from the time they receive your check as well. The website doesn’t say so, but they also take personal checks. Like APMEX, they take credit cards but charge a higher price. JM Bullion has a smaller selection of coins, but they have the items I purchase. I stick with Eagles and Maple Leaves because they are easily recognized. My first experience with JM Bullion was great and I will most likely use them from now on. Their prices are hard to beat.
Don’t go crazy, but owning a little gold and silver is a prudent step in preparedness. Start small and spread out your purchases. This is called dollar cost averaging. It protects you from buying at the top price. To learn more about how gold and silver can fit into your preparedness plan, read our 7 Step Preparedness Plan. Make sure you have your beans, bullets and band aids squared away before you start thinking about silver and gold. First things first!
Happy Prepping!
