Gold/silver overrated?

I was having an argument with someone who is something of a survivalist about why I think gold is overrated. She has a friend who is putting a very large portion of their income into gold and silver presuming a breakdown scenario.

While I recognize the intrinsic value of precious metals, the reason why I think this is a poor strategy is because their value assumes the existence of a meaningful market economy in a societal breakdown. This may very well be valid in some scenarios, but I can see how it wouldn't be in others.

But here's the situation I gave. Let's pretend I'm a farmer. If someone comes and offers me silver for a share of my crops, and assuming my crops are limited to a point where I don't have excess to trade, I have to wonder what immediate value silver would have. Trading it later might sound like a good idea, but in a breakdown, I think people will be more apt to hole up than trade, and therefore if trades happen, they'll be on an immediate barter basis, because people won't trust to trade for silver, gold or anything else because 1) most wouldn't be qualified to tell what was real anyway and 2) it lacks any immediate value.

Guns, ammunition, food stuffs, manufactured items, all these things seem inherently more valuable as something to use as opposed to just having something with which to buy this theoretical stuff.

In fairness, her argument was the economy would continue in cities, which would maybe fit better, but I know with my own planning, I put so much greater emphasis on items that allow me to be self-sufficient, not baubles worthy of trade.

Cigarettes, Alcohol would be a currency I believe. Some people cannot function without those items but yeah you are correct in that sense that anyone would take an item of value over a bit of useless metal.

You're probably right. Just how coffeehouses became the insurance companies, I wouldn't be surprised if the tobacco dealers who can self-supply cigarettes and more don't become the new heavies.

It sounds like this friends friend is only preparing for the recovery and not the fall of the dollar or global economy. That is kinda backwards. She should be preparing to deal with the situation itself, limiting its impact on her life. Self sufficiency is best, but having barter items would be good if you needed to interact in pseudo-economy for the duration of any situation-x. Gold, even silver will be useless.

I addressed this type of thinking regarding gold in a recent thread of mine, The Gold Delusion.

When it comes to currency, the idea of using gold or basing a currency off of gold, or anything really, is just pointless. The problems with the Federal Reserve Banking system has lead to a host of problems and caused the false security in Gold.

yes but also think of afterwards. gold is going to still hold a high value once the essentials are available again

now if your friend is talking about only buying gold and nothing else... well that's silly

reply to post by Wolf321


It was an interesting thread you wrote, and I enjoyed reading it. Like you, I thought about gold as the basis for currency because the current fiat currency unsettles me, but I agree with your argument.

I've often thought the eventual value of currency should be measured in energy. It sounds odd to say at first, but considering how power always has value, I think being paid in units that have a basis in a medium that has as close to universal use as I can imagine is the logical end step if we don't have a fiat currency.

I wonder what would be precious that isn't immediately obvious.

reply to post by cassandranova


I recall reading once about a time based currency. I don't remember the exact details of it, and it may have only been intended for a small scale economy. Basically every item or service requires time and that time can essentially be banked. In a way, I guess that would be considered energy.

I think gold can serve a place in prepping and investing. However, considering what seems to be the most l likely future or situation developing, getting the tools and resources to increase ones self-reliance is the most important thing. Unless you already have everything you need to be self-sufficient, or are basically one of the elite, I would be putting off any investing that isn't in tangible, useable resources. I someone did insist on investing in precious metals or stocks etc, I would personally limit that to no more than 5-10% of the money you have to invest total.

ETA: As per my previous thread, ***NOTICE*** I am not a financial advisor. Any information or suggestions related to investing are my own opinion and I am not responsible for anyone’s fiscal behavior or actions.

reply to post by Wolf321


Time banks are really clever, and work great for collapsed economies and in micro-societies. Basically, to encourage trading where there is no need for exchange, what happens is you assess the value of a product according to its labor, trading tit for tat in the absence of a paper or specie backed currency where barter is inefficient.

As a fun aside, there are actually ways to do it here that avoid the IRS, though you have to gift the service, which requires a hell of a lot of trust, but it can work in close-knit communities.

I don't have enough disposable income for either solution, frankly, though I'm working with more speed at getting out to the country and setting up something where self-sufficiency will be much better. As for my friend, who was really talking about her friend, I get the impression he's the wannabe Rambo type.

In my school economy book it said that the reason we have used gold for millennia was it does not expire. If you wanted to trade fish for say and you could not sell it quickly the food would be useless. Using gold took over bartering because it has a specific weight and can be easily used as a way to pay for a good or service.

Considering I remember gold at roughly 350 an ounce and now it is 16-1700 an ounce...
You cannot build a house to shelter your family on your pile of gold, you cannot plant your food in a pile of gold, you can however make 24K gold shot for your shells, but you will have to supply the powder, shell, wadding, primer, and the shotgun to use em in!
Would it not be better to just buy land and guns with your fiat, and then buy implements, tools, Etc. for your land?
Then after you are set, if you want buy some of that terribly overinflated gold!
Precious metals are only precious when they are a wedding ring or you are a fool.
Otherwise the only metal I truly consider precious is lead with a bit of tin and antimony added.
Yeah, gold and silver are waaaay overrated.

reply to post by BigBruddah


Wholeheartedly agree with you there.
Any vice item will be worth more than it's weight in gold whether legal or illegal.
I is a cranky boy if there's no coffee in the pot in the mornin!

If it really does hit the fan I would venture to say that food, booze, and 22 bullets will be worth way more than gold are silver. People are hard wired now to think in terms of money, which in this case is all that sliver and gold are. But in a world gone stone age all of what is valued now will be turned up side down. What bank are you going to cash it into?

If you have three pounds of rice and some one offers you a thousand dollars for it, but there are no longer stores to purchase things from what value is the money. All the sliver will be worth is bullets if we have a werewolf apocalypse

Originally posted by cassandranova
But here's the situation I gave. Let's pretend I'm a farmer. If someone comes and offers me silver for a share of my crops, and assuming my crops are limited to a point where I don't have excess to trade, I have to wonder what immediate value silver would have.

You can't eat gold.

The viability of precious metals, presupposes that there is going to be someone else around who considers them to have value, but the only real value of said metal is just that; its' perceived value in the eyes of someone else. Said metal is not going to inherently do anything, by itself, to increase your chances of survival. As mentioned, you can't eat it, wear it, burn it to keep warm, or live under it.

If you assume that civilisation will continue to exist in some form, then keeping a certain amount of your money in gold might seem like a good idea; but then again, that might be an unrealistic assumption.

I have already seen evidence that in the future, the most valuable form of capital will be social. Being in a community; being with other people who can help you, is what will ensure your survival. Holing yourself up somewhere with guns is not going to, because apart from anything else, you most likely aren't going to be able to store enough food for more than six months at the most, anyway.

I consider the primary value of Survivalism to be its' emphasis on learning potentially useful skills. Apocalypticism, however, is not valuable at all. Having a skillset is very important, but expecting paranoia to save your life, is not IMHO realistic. No matter how well you prepare, there always remains the possibility of a situation which you can't account for, which could take everything from you.

reply to post by cassandranova


You can't eat gold or silver and if you have some at home, you need to protect it. If it is in a bank vault or and gold trader's vault (good luck that it is even there if you could get to it) you have nothing tangible to put your hands on if trouble comes.

Currently, a silver dime (before cladding) is worth about three bucks as bullion. In practical terms, that three bucks can go into a kitty for bullets, MREs, etc. Not much, but a practical step for survival.

In my estimation, it is too late to think about investing in expensive metals. buying them is a trap...assumed safety in playing the market!!!!. That is a job for the very wealthy that have money to throw around, not for the salt-ot-the-earth person that sees survival as a few basic needs being necessary/met.

If tough times comes, they will gladly trade a pocket full of silver for one MRE. (Meal Ready to Eat used by military and available to consumers.) ...And you may not want to trade.

Diversify the portfolio: have gold and food.

If society doesnt break down the food may eventually spoil, while the gold will stay stable.

reply to post by cassandranova


I would agree, precious metals will be valuable only to people who are stuck in the old ways. These folks will die out pretty quickly.

The things you will need for barter in a complete systemic breakdown (in order of worth): cigarettes, alcohol, salt, sugar, coffee, aspirin.

But, that's just my opinion.

I agree with you to some degree. In a post SHTF situation, precious metals don't mean much, people are just trying to survive.

BUT in the case of a general economic collapse, something similar to the Great Depression, then precious metals are a great idea. All currencies have been backed by physical metal and always will be.

Gold/Silver have hundreds of years of proven track record of keeping their value. Right now, countries around the world are trying to get their gold back, like Germany and Switzerland. Venezuela just got their gold back and China is buying up all the gold and silver that they can. That should tell you something....

Gold is a hard game to get into with it being around $1,800 for one ounce but Silver is called "the poor mans gold" as you can buy an ounce for under $40 dollars still, that won't last long...

If you are interested, check some of these sites -
www.brotherjohnf.com...
bobchapman.blogspot.com...
sgtreport.com...
www.silver-investor.com...

I look at it like this - most of us realize that paper money is fake, it's an illusion but we let it sit in our bank accounts all day long devaluing every second. Trading your paper money for something like Gold or Silver that has real value makes sense in the long run. Technically, you are not buying it, just upgrading for something with real value....

So I agree, you should have cigarettes, food, toilet paper, etc all that stuff is good. I prepare this way as well but I'm think it's good to have precious metals too. Diversify, then you are as prepared as you can be in most cases anyways....

My 2 cents...Good luck!

I seriously just posted this on someone elses thread...

I do not follow the idea with Gold as it is a completely worthless metal to invest in and people are completely stupid to invest in it. In SHTF scenerio you will get much higher prices/Trade for Coffee, Cigarettes and Booze than a pound of something nobody can do anything with...

I think a real conspiracy is those who own Gold and Silver who come on these type boards to spread fear and panic to raise those prices. In a true and complete SHTF situation look to those current black markets (Ghettos, Prisons, Cities under siege or destroyed by Natural disasters) as proof to what will become wanted and valuable.

Show a Syrian Gold or Medical supplies, show an Earthquake refuge an ounce of silver or a few bottles of safe drinking water, and see what they choose...

Supply and Demand will dictate what is worthless and what is valued not a metal that has percieved worth in a modern society.

reply to post by cassandranova


Things that will feed you and increase your chances of survival are the best currency. Gold/silver was not important to a starving cave man. Sure, go ahead and try to trade me shiny rocks when I haven't eaten in a week. Ya got any FOOD man? I'm huuuungry!

Gold is useful for an ECONOMIC collapse. much like what is happening in the u.s. now and what happened during the great depression. those that held gold before the depression were rich. Those that had gold ten years ago, just saw their worth increase 4x. They can use that to trade for much more gear now.

in a teowawki, if there is no food left to trade or no extra food then gold quickly becomes worthless compared to tools that can get you food. (guns, ammo, seeds, gas, shovels). its only when theres nothing left to trade that gold becomes useless.

if you want to be well prepped your ganna go with both.