A Practical Perspective on Gold and Silver

Last Wednesday our Self-Reliance Revolution Radio Show was based on the numerous reasons and evidences that I felt a financial collapse was imminent and what we can do to insulate ourselves from it. (To be forthright, the solutions were rushed at the end due to the fact that I ran out of time—which I always seem to do when I really prepare and research a particular topic. *Sigh* Maybe one of these days I’ll get this whole timing thing down.) Anyway, I’ve received literally hundreds of e-mails since that show, and have been asked for clarification as to why I believe investing in gold and silver is NOT a viable solution right now.  So, since I didn’t really get to do the subject justice on the show, I thought I’d take a little bit more time here and address it.

To be clear, my position on the matter of investing in gold and silver is that it is NOT the answer that so many would be led to believe. I base my opinion on this for several different reasons, not the least of which is the fact that Financial Preparedness is the second to the last in priority among the Ten Principles of Preparedness. In other words, before you get hit in the face with the reality of the financial consequences that MIGHT be suitably addressed with the possession of gold or silver you will be confronted with EIGHT other aspects of preparedness that will demand greater prioritization, attention, and resources.  As such, I feel that folks erroneously put investing in gold and silver ahead of more vital aspects of preparedness. I’ll address some other considerations which might give you pause to think twice about spending the money on gold and silver at present.

Keep in mind that we’re all about self-reliance here and yet the value of gold/silver puts a great deal of stock in the actions of someone else. When one invests in gold/silver one is assuming that someone, somewhere, at some point in the future will successfully bring about a financial rebound in which a person can exchange their metal assets for currency at a gain in profit. But consider this…who will make the decision which establishes that value and is it wise to rely on that person?  Who gets to pull the strings and officially inform the world that our economy is good again and thus the gold value can be lowered?

Who are the persons which have designated a value to gold and silver today?  I find it a bit unsettling that we’re denoting the value of these hard assets in terms of U.S. dollars—an “asset” that is quickly losing its own value. In other words, I find the fact that gold and silver being valued in terms of U.S. dollars is similar to Bernie Madoff telling me which investments are viable. You see, it’s all very relative and not even predictably so. While my example here is a very simplistic one, it’s still true at it’s base.  The value assigned to these metals is not based on an irrefutable law of physics or biology. On the contrary, it’s manipulated primarily by the powers that be.

When a scenario arrives in which commodities are in short supply, it won’t matter one bit that Wall Street says that an ounce of gold is worth $1,500 dollars when you’re needing to exchange it for essentials such as medical supplies, shelter, or food.  Any numerical value established by some pencil pusher will always be trumped by the person who has that which you need to obtain to survive.  At which point the gold will only be worth whatever the seller of goods says it is and no Wall Street Journal article or even the President of the U.S. will be able to influence it otherwise.

Anytime that you’re investing in something with the hope that it will gain in value, that’s a risk. I don’t think today’s economic environment is ideal for risks. While I realize that some aren’t actually “investing” in precious metals, I feel that it’s an important point to bring up for those who are. The time to actually invest in gold an silver was several years ago, in my opinion. To me it makes no sense spending today’s worthless dollars for metal that is evaluated in terms of worthless dollars. It might as well be Monopoly money if you can’t do much with it. Remember, even $1,500 ounces times zero is still zero.

I also feel that some are overestimating the amount of time they will have to actually benefit from the use of gold and silver.  I’m telling you folks, once the currency fiasco hits the fan, you will have only a matter of days, perhaps weeks before your precious metals will be deemed worthless as well because the focus will be on the essentials, not on the “someday luxuries.” Once things get settled after a major collapse (in terms of years, not months or days) then it may be beneficial to have some on hand. But frankly, I’m not expecting this next patch of difficulty to be a part of Act I scene 2. I’m expecting it to be the final Act in which case there’s a whole lot of overestimating going on again. It’s for this reason that I feel very cautious in taking history too much for granted as a barometer of what to expect. Yes, I believe that we’ve got a whole lot of “dress rehearsal” scenarios to learn from, but they will still be markedly different than the real thing. So yes, while we can look to how such and such a civilization made do with gold and silver when this currency went belly-up, I think there’s only so far we can take that lesson before we realize that what’s in store for us may be a bit more inconvenient.

To the person who would say “gold and silver takes up less space than wheat and water” I say “What an absolute fool.”  That’s assuming a heck of a lot; primarily that someone else will have what you need.  I would never dream of giving someone else that much power or influence over me, nor would I support leaving my survival/comfort or that of my family at the mercy of whether or not someone else prepared appropriately. I mean really, does that make any sense? You didn’t see fit to take the time and the work to put together real essentials, but you’re going to expect others to do so? I’m telling you right now, when that time comes and I’ve got what someone else needs, it won’t be gold I’ll be taking for it; it will be hard work, plain and simple.

Another faulty logic on the whole gold and silver premise is the assumption that the recipients of your commerce transactions will be established in such a way that you could actually USE the gold and silver as payment. Is your utility company set up to accept gold as payment right now from you?  Do you think they will actually have time or the inclination to do so when the fit hits the shan?  “Sure, she says sarcastically, let me just flip the switch and now the ATM machines will spit out gold and silver.” That kind of infrastructure and value system takes a while to establish. What will you do in the meantime?

So if you can’t use it to take care of your financial obligations, and there’s not much in the form or essentials that you can buy with it, what sense did it make to purchase it at such a high price in the first place? Precious metals are useless assets unless they can be easily converted into an established form of currency that already has the infrastructure to accept it at fairly determined values. Keep in mind that even gold and silver can get watered down in an economy that is flush with precious metals, but not enough essential commodities to actually purchase.  The whole “stabilizing my purchasing power” concept is a great concept, but not very practical when you actually mentally go through the logistics of using it. Person to person you might do OK with bartering with precious metals, but on such a small level you’re also more likely to run into supply and demand issues for the essentials you’ll need as well.

So, if not gold and silver, then what? As I always say, go back to your Ten Principles of Preparedness. I’ve heard some folks say that they are investing in gold and silver because they already have enough food and water.  That’s great, but how are you for all of the other, more prioritized areas such as medical supplies, self-defense systems, clothing and shelter?  I’m sure it’s possible, but every time I turn around I think of one more thing that I could obtain that would come in handy. Having said that though, if you do find yourself with money burning a hole in your pocket, then I’d invest in dirt instead of gold and silver. Invest in land on which you can provide a spot for permanent sustainability.  I’d also give the same advice to anyone who has any retirement funds or savings that they aren’t sure what to do with. Take care of the Ten Principles of Preparedness first, including eliminating ALL of your debt, and then take your preparedness a step further by finding a place where you can garden, raise flocks, pump your own water, and generate your own solar energy.

So, what’s my plan? Totally eliminating any possible debt. Paying all utilities and other monthly expenses a full year in advance. (Yes, they will be happy to take your money from you.) Be fully stocked on every imaginable need. Have a small amount of cash on hand for that 72 hours in which I can still make use of cash—but even then nothing bigger than a $10 bill, preferably in $5’s only. And then after all that we’ll be taking the next step of investing in land, free and clear (so that it can be considered Private property, not residential property); and then continue to build on it from there so that I may be able to help others along the way. Like they say, all that glitters is not gold. While the commercials and financial logic may sound enticing at first, when you actually try to plug gold and silver into a real life crisis scenario, you’ll find that it’s not as cut and dry as you might have thought. And if you’re really wanting to invest in some bright shiny objects after all of that, at least make sure you’re including some copper and lead in that acquisition. *grin*