Author Topic: Gold & Silver in an Emergency  (Read 29765 times)

joer1212

  • Bristles
  • ***
  • Posts: 392
Gold & Silver in an Emergency
« on: July 20, 2015, 03:04:09 PM »
I am thinking of purchasing a couple of thousand dollars worth of gold and silver coins, which I would keep safeguarded in my home. They would come in handy in the unlikely event of a Greek-style situation or other temporary crisis, when people tend to honor things that have inherent value. 
But even if Armageddon never occurs, gold and silver are a good investment. They increase in value at roughly the rate of inflation in the long run. This is about 3% annually. That's a lot more than what my savings account is yielding, so, it makes sense to keep at least a portion of my liquid assets in these metals.*

My questions are:

1. First of all, is owning coins the best way to hold precious metals? Are there other forms that are better (bars, plates, jewelry, etc.)? Pardon the pun, but what is the gold standard for gold and silver?

2. Is the U.S. mint the best place to buy gold and silver (coins)?
(Some preppers and conspiracy theorists claim that purchasing gold online from the U.S. mint would result in Uncle Sam kicking your door down and confiscating your coins during a crisis. They say it's better to purchase coins with cash from a local dealer, so that the transaction is secret. This sounds a bit far-fetched to me (but who knows?). I would worry more about being ripped off by a shady local dealer than anything else.

3. Let's say that, for whatever reason, I wanted to cash out some or all of my coins at some point. Where would I sell them, and how much of a financial loss would I incur by doing this? I'm assuming I wouldn't be able to cash out my coins at the going price per ounce of gold and silver. The person or institution buying my coins would have to make a profit on the transaction, and thus would offer me less than what my coins are worth. 

I figured that many of you Mustachians can think outside the box, and would be knowledgeable about alternative investments.

Thoughts?




*I already own a diversified investment portfolio of stocks and bonds


P.S. These are the coins I am considering purchasing:

http://catalog.usmint.gov/2015-american-eagle-one-tenth-ounce-gold-proof-coin-PM4.html?cm_mmc=Google-_-PLA+-+Everything+Else-_--_-&mkwid=sxnbmFI2x&crid=81775672273&mp_kw=&mp_mt=&pdv=c&gclid=CILhgs_J6sYCFQoTHwod4LwIhw

http://catalog.usmint.gov/american-eagle-2015-one-ounce-silver-proof-coin-ES6.html?cm_mmc=Google-_-PLA+-+Everything+Else-_--_-&mkwid=sCjL9GkZh&crid=81775487713&mp_kw=&mp_mt=&pdv=c&gclid=CNHa2-rJ6sYCFYiPHwodidMNhQ
« Last Edit: July 22, 2015, 03:27:35 PM by joer1212 »

nobodyspecial

  • Handlebar Stache
  • *****
  • Posts: 1468
  • Location: Land above the land of the free
Re: Gold & Silver in an Emergency
« Reply #1 on: July 20, 2015, 03:07:46 PM »
What sort of emergency would make the US$ worthless and yet leave a market willing and able to trade large denomination gold coins?


forummm

  • Walrus Stache
  • *******
  • Posts: 7379
  • Senior Mustachian
Re: Gold & Silver in an Emergency
« Reply #2 on: July 20, 2015, 04:12:39 PM »
A Greek style situation is impossible here. We have our own currency. And holding lots of metal is a theft risk and will lose value relative to bonds or equities.

maizefolk

  • Walrus Stache
  • *******
  • Posts: 6334
Re: Gold & Silver in an Emergency
« Reply #3 on: July 20, 2015, 07:54:42 PM »
Everything else aside that's a really really bad price for gold! (Edit: for me at least, the link in the original post shows a price of $170 per 1/10th oz gold coin.)

Gold is currently trading at ~$1,100/oz and 1/10th oz gold coins can be easily found from reputable dealers for prices between $125 and $135. So building 1/10th oz gold American Eagles from the US mint means overpaying by ~30% relative to other 1/10th oz coins and overpaying by 54% above the spot price.
« Last Edit: July 20, 2015, 07:57:04 PM by maizeman »

Retire-Canada

  • Walrus Stache
  • *******
  • Posts: 8206
Re: Gold & Silver in an Emergency
« Reply #4 on: July 20, 2015, 08:39:15 PM »
I figured that many of you Mustachians can think outside the box, and would be knowledgeable about alternative investments.

Thoughts?

That sounds like a crazy plan.

If you were stock piling shotguns and chainsaws I'd be more supportive.

If banks run out of cash who is buying your coins and with what?

joer1212

  • Bristles
  • ***
  • Posts: 392
Re: Gold & Silver in an Emergency
« Reply #5 on: July 21, 2015, 01:36:06 AM »
Everything else aside that's a really really bad price for gold! (Edit: for me at least, the link in the original post shows a price of $170 per 1/10th oz gold coin.)

Gold is currently trading at ~$1,100/oz and 1/10th oz gold coins can be easily found from reputable dealers for prices between $125 and $135. So building 1/10th oz gold American Eagles from the US mint means overpaying by ~30% relative to other 1/10th oz coins and overpaying by 54% above the spot price.

Thanks.
I wasn't going to actually purchase these without first doing my homework about the going rate for gold. But, now that you mention that these coins are overpriced, I will look elsewhere.
It appears as if the U.S. Mint is charging a premium due to the designer appeal of these coins. Is there a cheaper, more efficient way to hold gold? Perhaps small, plain gold bars that have less sex appeal than coins, and thus a more reasonable price tag?

joer1212

  • Bristles
  • ***
  • Posts: 392
Re: Gold & Silver in an Emergency
« Reply #6 on: July 21, 2015, 01:50:40 AM »
Quote
That sounds like a crazy plan.

If you were stock piling shotguns and chainsaws I'd be more supportive.

If banks run out of cash who is buying your coins and with what?


If SHTF, it would come down to a barter economy (at least temporarily).

I'm aware that my plan sounds crazy, but I bet the same thing was said about the likelihood of the Cretan government confiscating people's bank deposits. Having some physical precious metals in that situation would definitely not hurt.
 
« Last Edit: July 21, 2015, 02:07:08 AM by joer1212 »

mrpercentage

  • Handlebar Stache
  • *****
  • Posts: 1236
  • Location: PHX, AZ
Re: Gold & Silver in an Emergency
« Reply #7 on: July 21, 2015, 01:55:24 AM »
I have debated this and am not sure it would help.

Can you really imagine going to the grocery store and buying some food with silver. Would the cashier care? Would the manager of a corporate store except anything other than dollars?

You might be able to trade some for the hyper inflated money still being accepted.

If anything if you want to prepare for an emergency of epic proportions then food (not gold) would be the best idea. I bet you can buy enough spaghetti noodles and sauce cans to feed yourself for a month under a hundred bucks. Sure, it might suck, but you won't be starving. Hell, you might be trading some spaghetti for gold. Imagine that.

When society starts falling valuing goes in human needs. Clean water, food, shelter-- then the rest.

joer1212

  • Bristles
  • ***
  • Posts: 392
Re: Gold & Silver in an Emergency
« Reply #8 on: July 21, 2015, 02:06:24 AM »
A Greek style situation is impossible here. We have our own currency. And holding lots of metal is a theft risk and will lose value relative to bonds or equities.

I already have the lion's share of my net worth in equities and bonds. Gold and silver would be for liquidity and accessibility, not to compete with stocks & bonds. That's not their purpose. It's the same principle for holding cash-- it doesn't have nearly the return of equities, but it definitely has a place in your investment portfolio.

joer1212

  • Bristles
  • ***
  • Posts: 392
Re: Gold & Silver in an Emergency
« Reply #9 on: July 21, 2015, 02:20:04 AM »
I have debated this and am not sure it would help.

Can you really imagine going to the grocery store and buying some food with silver. Would the cashier care? Would the manager of a corporate store except anything other than dollars?

You might be able to trade some for the hyper inflated money still being accepted.

If anything if you want to prepare for an emergency of epic proportions then food (not gold) would be the best idea. I bet you can buy enough spaghetti noodles and sauce cans to feed yourself for a month under a hundred bucks. Sure, it might suck, but you won't be starving. Hell, you might be trading some spaghetti for gold. Imagine that.

When society starts falling valuing goes in human needs. Clean water, food, shelter-- then the rest.

Aside from any doomsday scenario, I still think a small allocation to physical precious metals makes sense.
As I mentioned in my original post, gold & silver appreciates by roughly 3% annually over the long term. That's not bad for a cash-like asset. This pretty much matches the returns of a stable value fund.
I should also point out that I would be purchasing precious metals with cash that would otherwise just be sitting in my checking account earning virtually nothing. I would not be cashing out from stocks or bonds in order to buy gold & silver. My equities & bonds would remain intact. Therefore, you should judge the merit of holding precious metals in lieu of cash (I would convert about 15%-20% of cash into precious metals).
« Last Edit: July 21, 2015, 02:27:50 AM by joer1212 »

seattlecyclone

  • Walrus Stache
  • *******
  • Posts: 6374
  • Age: 37
  • Location: Seattle, WA
    • My blog
Re: Gold & Silver in an Emergency
« Reply #10 on: July 21, 2015, 02:29:49 AM »
In the extremely unlikely event that our currency becomes worthless and we start trading precious metals for goods and services, I would much rather hold silver than gold. An ounce of gold is worth over $1,000, while an ounce of silver is worth more like $15. I don't know about you, but I spend $15 a lot more often than I spend $1,000. Silver would be more useful as a medium of exchange for everyday purchases. You can get tenth-ounce gold coins like the ones you linked above, but you should be aware that they're really small (slightly smaller than a dime)! Way too easy to lose.

Also you should consider that while silver and gold have historically tracked inflation pretty well, they've gone way up over the past few years and have not yet reverted to the mean. By buying now, you may be setting yourself up for some price declines. Or maybe not! Nobody knows.

kaposzta

  • 5 O'Clock Shadow
  • *
  • Posts: 90
  • Age: 37
  • Location: Hungary
    • Years Until FIRE Calculator
Re: Gold & Silver in an Emergency
« Reply #11 on: July 21, 2015, 03:22:37 AM »
Actually, it's not a bad idea to start gathering precious metals in physical form, especially silver. It can be a great investment in 15-20 years, as silver supplies run out in 2029.

Can you pay with silver or gold coins in the US?

In Hungary (and in theory), all silver and gold coins issued by the national bank are legal tender. I can't even imagine the face of the cashier in a grocery store if I would pay with a silver coin like this: http://penzvero.hu/content/prodpics/front/1128.jpg :D

brotatochip

  • 5 O'Clock Shadow
  • *
  • Posts: 99
Re: Gold & Silver in an Emergency
« Reply #12 on: July 21, 2015, 04:09:53 AM »
Jmbullion.com
This is the best place to buy silver and gold trust me!  I own several hundred ounces of silver bullion and this site has the best prices.  Silver is so cheap so start stacking

money_bunny

  • Stubble
  • **
  • Posts: 114
Re: Gold & Silver in an Emergency
« Reply #13 on: July 21, 2015, 05:07:15 AM »
You can use gold to buy stuff once. Then someone is going to come to your house with guns and take the rest of it from you.

There are people who keep gold jewellery and watches on-hand so if the USA becomes hostile to them they can get on a plane and rebuild elsewhere wearing some of their wealth out of the country. 

Food, water, basic medicines, a 30 day supply is a better choice if you are worried about a Greek style crisis. Not needing gasoline every 3 days to 1 week like after Sandy would help also.

kpd905

  • Handlebar Stache
  • *****
  • Posts: 1934
Re: Gold & Silver in an Emergency
« Reply #14 on: July 21, 2015, 05:14:29 AM »
Imagine that this crisis goes on and everyone around you is hungry.  Would they rather have a pile of gold coins ($10,000 worth) or one loaf of bread?

boarder42

  • Walrus Stache
  • *******
  • Posts: 9157
Re: Gold & Silver in an Emergency
« Reply #15 on: July 21, 2015, 06:13:47 AM »
WTF is up with all the armaggedon threads recently.  There is one over in ask a mustacian too.  for the life of me i do not understand this irrational fear.  I me if life as we know it ends for any reason stock market crash, hit by a large space object, aliens.  etc. gold isnt going to help you.  if its anything but the first one who the hell cares to stay alive.  Why live out your days in an underground bunker.  I dont quite understand how you can have a logical thought and understand FIRE.  But are so illogical in these disaster ideas.  if you live in a place common to typical natural disasters i could see being prepared for these but to prepare for something so astronomically small in possiblity just seems dumb to me.

Live life save money retire early.

Lets do a scenario involving said doomsday in the market  - 2025

OP:  - bought gold coins/ silver - Pushed retirement to 2030
OP2: invested money in smart index funds - retires in 2020

OP now has tons of worthless gold b/c no one wants it bc food is more important.  and has been living in fear of colapse for 15 years
OP2 enjoyed 5 years of retirement and had a happy life leading up to it. 

Post crash op and op2 are likely in similar places still.

which would you rather be. 

I'm a red panda

  • Walrus Stache
  • *******
  • Posts: 8197
  • Location: United States
Re: Gold & Silver in an Emergency
« Reply #16 on: July 21, 2015, 06:51:08 AM »
All I know is that I have some of my Roth IRA in Gold/Silver funds and OMG, the value of them makes me want to cry.  We have a "sell" price in mind (still just a fraction of its value at its highest point), and now I wonder if it will ever get that high again.

So now sure seems like a good time to buy; but I wouldn't recommend it as an investment, just way too volatile.

mrpercentage

  • Handlebar Stache
  • *****
  • Posts: 1236
  • Location: PHX, AZ
Re: Gold & Silver in an Emergency
« Reply #17 on: July 21, 2015, 07:29:43 AM »
WTF is up with all the armaggedon threads recently.  There is one over in ask a mustacian too.  for the life of me i do not understand this irrational fear.  I me if life as we know it ends for any reason stock market crash, hit by a large space object, aliens.  etc. gold isnt going to help you.  if its anything but the first one who the hell cares to stay alive.  Why live out your days in an underground bunker.  I dont quite understand how you can have a logical thought and understand FIRE.  But are so illogical in these disaster ideas.  if you live in a place common to typical natural disasters i could see being prepared for these but to prepare for something so astronomically small in possiblity just seems dumb to me

There is nothing dumb about reasonable preparation.
$100 of cheap long term storage food is reasonable. Imagine if the U.S. froze all bank transactions and ATM withdrawals for 2 weeks. Would you be cool? Or would you be saying WTF how do I eat? How do I buy gas to get to work? It's a good idea to have $300 stored somewhere in your house too. It's not like people are breaking in left and right is it? New Orleans, LA Riots, earthquakes, gas rationing, shit happens. A little silver or gold can be a good investment when threat of inflation looms near. We do have a strong dollar and we buy low right? Depends on what you want the silver for. If it's for disaster buy food and store cash

FLBiker

  • Handlebar Stache
  • *****
  • Posts: 1441
  • Age: 45
  • Location: Canada
    • Chop Wood Carry FIRE
Re: Gold & Silver in an Emergency
« Reply #18 on: July 21, 2015, 07:53:35 AM »
I used to be pretty doomsday, but I was never interested in precious metals.  If the SHTF, I don't want silver or gold, I want canned goods, water, sewing needles, etc.  To me, it would make more sense to stockpile a grand or two of stuff like that.

That said, I've gotten a lot less doomsday over the last couple of years (which I attribute more to meditation than to any changes in the geo-political landscape).

Scandium

  • Handlebar Stache
  • *****
  • Posts: 2383
  • Location: EastCoast
Re: Gold & Silver in an Emergency
« Reply #19 on: July 21, 2015, 10:36:51 AM »
Food, water, basic medicines, a 30 day supply is a better choice if you are worried about a Greek style crisis. Not needing gasoline every 3 days to 1 week like after Sandy would help also.

The Greece situation seems to be a nice poster boy for the gold/prepper crowd. "OMG look; they closed the banks!" Yeah, for all of three weeks, and the EU was already discussing humanitarian aid to Greece. And greece has been a well-known basket case for half a decade. Plenty of time to prepare. I really don't see that as a great reason to hoard either gold, guns or canned food (beyond 72 hrs or so of foood and water).

If I have a basement full of spaghetti Os and you come with your $10,000 gold bar I'll laugh in your face. 

joer1212

  • Bristles
  • ***
  • Posts: 392
Re: Gold & Silver in an Emergency
« Reply #20 on: July 21, 2015, 10:43:51 AM »
Imagine that this crisis goes on and everyone around you is hungry.  Would they rather have a pile of gold coins ($10,000 worth) or one loaf of bread?

True, but the same can be said for pieces of paper with dead presidents on them. They have virtually no inherent value. We choose to assign value to currency for convenience. In a crisis, Gold & silver would become the new proxy for value, just like money is now, though I doubt this would ever happen.
« Last Edit: July 21, 2015, 11:02:30 AM by joer1212 »

joer1212

  • Bristles
  • ***
  • Posts: 392
Re: Gold & Silver in an Emergency
« Reply #21 on: July 21, 2015, 10:57:04 AM »
WTF is up with all the armaggedon threads recently.  There is one over in ask a mustacian too.  for the life of me i do not understand this irrational fear.  I me if life as we know it ends for any reason stock market crash, hit by a large space object, aliens.  etc. gold isnt going to help you.  if its anything but the first one who the hell cares to stay alive.  Why live out your days in an underground bunker.  I dont quite understand how you can have a logical thought and understand FIRE.  But are so illogical in these disaster ideas.  if you live in a place common to typical natural disasters i could see being prepared for these but to prepare for something so astronomically small in possiblity just seems dumb to me.

Live life save money retire early.

Lets do a scenario involving said doomsday in the market  - 2025

OP:  - bought gold coins/ silver - Pushed retirement to 2030
OP2: invested money in smart index funds - retires in 2020

OP now has tons of worthless gold b/c no one wants it bc food is more important.  and has been living in fear of colapse for 15 years
OP2 enjoyed 5 years of retirement and had a happy life leading up to it. 

Post crash op and op2 are likely in similar places still.

which would you rather be.

I actually agree that a doomsday scenario is very unlikely in America. A temporary disruption (similar to Greece or Crete) is more plausible.
But that's not the primary reason for holding physical precious metals. I think they would add excellent diversification in one's portfolio. Keep in mind that PM would replace a portion of one's cash allocation. You would not buy PM in lieu of equities and bonds, but in addition to them.
For example, if you have 10% of your portfolio in cash (savings/checking account, CD's, etc.), gold & silver could replace a portion of this (e.g. 2%-5% PM).
If I recall correctly, Harry Browne's Permanent Portfolio calls for a 25% allocation in physical gold, though that may be a bit high, IMO.
« Last Edit: July 21, 2015, 11:00:46 AM by joer1212 »

2Birds1Stone

  • Walrus Stache
  • *******
  • Posts: 6749
  • Age: 1
  • Location: Earth
  • K Thnx Bye
Re: Gold & Silver in an Emergency
« Reply #22 on: July 21, 2015, 10:57:33 AM »
Actually, it's not a bad idea to start gathering precious metals in physical form, especially silver. It can be a great investment in 15-20 years, as silver supplies run out in 2029.

Can you pay with silver or gold coins in the US?

In Hungary (and in theory), all silver and gold coins issued by the national bank are legal tender. I can't even imagine the face of the cashier in a grocery store if I would pay with a silver coin like this: http://penzvero.hu/content/prodpics/front/1128.jpg :D

LOL, silver is not "running out" any time soon. It is predominantly a byproduct of mining other metals. That being said, I have a huge physical position myself. But for different reasons. 

joer1212

  • Bristles
  • ***
  • Posts: 392
Re: Gold & Silver in an Emergency
« Reply #23 on: July 21, 2015, 11:08:09 AM »
You can use gold to buy stuff once. Then someone is going to come to your house with guns and take the rest of it from you.

There are people who keep gold jewellery and watches on-hand so if the USA becomes hostile to them they can get on a plane and rebuild elsewhere wearing some of their wealth out of the country. 

Food, water, basic medicines, a 30 day supply is a better choice if you are worried about a Greek style crisis. Not needing gasoline every 3 days to 1 week like after Sandy would help also.

I agree. In a crisis, those that have the means to enforce their will will thrive. The guy with the gun makes the rules, not the guy with the gold!
That said, I am well prepared for this possibility.

Scandium

  • Handlebar Stache
  • *****
  • Posts: 2383
  • Location: EastCoast
Re: Gold & Silver in an Emergency
« Reply #24 on: July 21, 2015, 11:14:24 AM »
Imagine that this crisis goes on and everyone around you is hungry.  Would they rather have a pile of gold coins ($10,000 worth) or one loaf of bread?

True, but the same can be said for pieces of paper with dead presidents on them. They have virtually no inherent value. We choose to assign value to currency for convenience. In a crisis, Gold & silver would become the new proxy for value, just like money is now, though I doubt this would ever happen.
[citation needed]

joer1212

  • Bristles
  • ***
  • Posts: 392
Re: Gold & Silver in an Emergency
« Reply #25 on: July 21, 2015, 11:15:33 AM »
In the extremely unlikely event that our currency becomes worthless and we start trading precious metals for goods and services, I would much rather hold silver than gold. An ounce of gold is worth over $1,000, while an ounce of silver is worth more like $15. I don't know about you, but I spend $15 a lot more often than I spend $1,000. Silver would be more useful as a medium of exchange for everyday purchases. You can get tenth-ounce gold coins like the ones you linked above, but you should be aware that they're really small (slightly smaller than a dime)! Way too easy to lose.

Also you should consider that while silver and gold have historically tracked inflation pretty well, they've gone way up over the past few years and have not yet reverted to the mean. By buying now, you may be setting yourself up for some price declines. Or maybe not! Nobody knows.

Interesting point, and one that I've heard mentioned before by at least one prepper.
He also mentioned that silver would rise much more than gold when equities are beaten down, which means it would be an excellent portfolio diversifier.
« Last Edit: July 21, 2015, 11:18:13 AM by joer1212 »

joer1212

  • Bristles
  • ***
  • Posts: 392
Re: Gold & Silver in an Emergency
« Reply #26 on: July 21, 2015, 11:17:14 AM »
Imagine that this crisis goes on and everyone around you is hungry.  Would they rather have a pile of gold coins ($10,000 worth) or one loaf of bread?

True, but the same can be said for pieces of paper with dead presidents on them. They have virtually no inherent value. We choose to assign value to currency for convenience. In a crisis, Gold & silver would become the new proxy for value, just like money is now, though I doubt this would ever happen.
[citation needed]

OK, I concede that I should have said gold and silver could become the new proxy for value.

Scandium

  • Handlebar Stache
  • *****
  • Posts: 2383
  • Location: EastCoast
Re: Gold & Silver in an Emergency
« Reply #27 on: July 21, 2015, 11:25:13 AM »
Imagine that this crisis goes on and everyone around you is hungry.  Would they rather have a pile of gold coins ($10,000 worth) or one loaf of bread?

True, but the same can be said for pieces of paper with dead presidents on them. They have virtually no inherent value. We choose to assign value to currency for convenience. In a crisis, Gold & silver would become the new proxy for value, just like money is now, though I doubt this would ever happen.
[citation needed]

OK, I concede that I should have said gold and silver could become the new proxy for value.

I've watched The Road, Waterworld and Mad Max, I don't remember any talk of gold in any of them (?). Personally, I think bottle caps will become the currency, time to start stocking up!

nobodyspecial

  • Handlebar Stache
  • *****
  • Posts: 1468
  • Location: Land above the land of the free
Re: Gold & Silver in an Emergency
« Reply #28 on: July 21, 2015, 11:30:45 AM »
I've watched The Road, Waterworld and Mad Max, I don't remember any talk of gold in any of them (?).
Also strange that Mad Max didn't feature more bicycles if the oil had run out

Jack

  • Magnum Stache
  • ******
  • Posts: 4725
  • Location: Atlanta, GA
Re: Gold & Silver in an Emergency
« Reply #29 on: July 21, 2015, 12:03:10 PM »
I've watched The Road, Waterworld and Mad Max, I don't remember any talk of gold in any of them (?).
Also strange that Mad Max didn't feature more bicycles if the oil had run out

The first Mad Max movie wasn't post-apocalyptic. No idea why there aren't more bikes in the sequels, though.

Scandium

  • Handlebar Stache
  • *****
  • Posts: 2383
  • Location: EastCoast
Re: Gold & Silver in an Emergency
« Reply #30 on: July 21, 2015, 12:09:24 PM »
I've watched The Road, Waterworld and Mad Max, I don't remember any talk of gold in any of them (?).
Also strange that Mad Max didn't feature more bicycles if the oil had run out

The first Mad Max movie wasn't post-apocalyptic. No idea why there aren't more bikes in the sequels, though.

yeah, something like this for example:


GreenPen

  • Stubble
  • **
  • Posts: 114
Re: Gold & Silver in an Emergency
« Reply #31 on: July 21, 2015, 12:19:41 PM »
I am thinking of purchasing a couple of thousand dollars worth of gold and silver coins, which I would keep safeguarded in my home. They would come in handy in the unlikely event of a Greek-style situation or other temporary crisis, when people tend to honor things that have inherent value.

True, but the same can be said for pieces of paper with dead presidents on them. They have virtually no inherent value. We choose to assign value to currency for convenience. In a crisis, Gold & silver would become the new proxy for value, just like money is now, though I doubt this would ever happen.

I really can't make sense of this "inherent value" talk about gold. Since when does gold have inherent value? We assign value to gold, just like we do with other currencies that you mention.

seattlecyclone

  • Walrus Stache
  • *******
  • Posts: 6374
  • Age: 37
  • Location: Seattle, WA
    • My blog
Re: Gold & Silver in an Emergency
« Reply #32 on: July 21, 2015, 12:44:43 PM »
I really can't make sense of this "inherent value" talk about gold. Since when does gold have inherent value? We assign value to gold, just like we do with other currencies that you mention.

Gold has some inherent value due to some really nice properties (high conductivity, no corrosion in air) that make it ideal for certain industrial applications. The current "ooh, shiny" value far eclipses this inherent industrial value however.

hodedofome

  • Handlebar Stache
  • *****
  • Posts: 1456
  • Age: 41
  • Location: Texas
Re: Gold & Silver in an Emergency
« Reply #33 on: July 21, 2015, 02:20:21 PM »
Precious jewels like diamonds/rubies/emeralds/sapphires, stuff like that, is much easier to transport than metal. It is much, much smaller per $ and you can stuff thousands, maybe even tens of thousands of $$$ in your shoes without even walking funny. If a giant war broke out in the US and I had to take off to another country in a hurry, and take only what I could carry with me, jewels would be my choice.

I'm not doing this FYI. And I can't see me realistically doing it unless I was worth millions. But yeah, you'll see me running to the train with rings on each finger, diamonds in my pockets, wearing a big fur coat in July. Plus a few packs of cigarettes to bribe any military guys at a checkpoint.
« Last Edit: July 21, 2015, 02:22:47 PM by hodedofome »

markbike528CBX

  • Handlebar Stache
  • *****
  • Posts: 1727
  • Location: the Everbrown part of the Evergreen State (WA)
Re: Gold & Silver in an Emergency
« Reply #34 on: July 21, 2015, 02:59:22 PM »
Aside from any doomsday scenario........
I should also point out that I would be purchasing precious metals with cash that would otherwise just. Therefore, you should judge the merit of holding precious metals in lieu of cash (I would convert about 15%-20% of cash into precious metals).

I've done this for what otherwise would be long-term cash holdings.

the downside is that there are significant transaction costs to gold/silver
I  pay 3% for each transaction, I'd have to see 6% gain, just to break even.
If it were cash, it would lose 3%/year.   
so my gold/silver would have to gain 6% AND be held greater than 2 years (my plan is more than 5years or indefinitely).


I've watched The Road, Waterworld and Mad Max, I don't remember any talk of gold in any of them (?). Personally, I think bottle caps will become the currency, time to start stocking up!

? used beer bottle caps??   Whooooho, I'm Rich!! Ready to FIRE :-)

tomsang

  • Handlebar Stache
  • *****
  • Posts: 1085
Re: Gold & Silver in an Emergency
« Reply #35 on: July 21, 2015, 03:00:21 PM »
I think it is comical that people think that Gold or Silver will get them out of a jam if the Shit Hits the Fan.  Do you trade an ounce of gold for a loaf of bread or a candy bar?  What is the value?  What is the going rate for gold when the world is coming to an end?  I could understand if you feel that the world is going to come to an end that you might stockpile a water purifier, food, gun, and tools but would you really rather have a pile of gold and silver?  That seems crazy. 

Last week, you may have seen the guy giving either a free 10 oz silver bar($150 value) or a free refrigerated jumbo candy bar($2?).  It is pretty indicative of what people will do if you are waving around an ounce of gold or silver for some valuable food.  They will probably laugh at you.  If you stockpile food, you could probably trade it for tons of gold if you think the world will come back online and they are desperate.

Silver for Candy Bar Video
https://www.youtube.com/watch?v=bYhTFz_SGw0

Video on the same guy trying to sell an ounce gold coin($1,500 at the time $1,100 today) for $25.
https://www.youtube.com/watch?v=ndshbH3qZ6Y

I think if you are considering purchasing silver or gold to help during a disaster then you should first see these videos.  When the world is great, and the choice is $25 or $2 chocolate bar, people are seeing more value in those vs. $1,500 gold coin or $25 silver coin. You can extrapolate what they would be worth if you are trying to get medicine, food, shelter, guns, etc. 

« Last Edit: July 21, 2015, 03:05:36 PM by tomsang »

Jack

  • Magnum Stache
  • ******
  • Posts: 4725
  • Location: Atlanta, GA
Re: Gold & Silver in an Emergency
« Reply #36 on: July 21, 2015, 05:39:09 PM »
I think it is comical that people think that Gold or Silver will get them out of a jam if the Shit Hits the Fan.  Do you trade an ounce of gold for a loaf of bread or a candy bar?  What is the value?  What is the going rate for gold when the world is coming to an end?  I could understand if you feel that the world is going to come to an end that you might stockpile a water purifier, food, gun, and tools but would you really rather have a pile of gold and silver?  That seems crazy.

Not to mention, if I stockpile weapons and you stockpile gold... then I end up with the weapons and the gold!

joer1212

  • Bristles
  • ***
  • Posts: 392
Re: Gold & Silver in an Emergency
« Reply #37 on: July 21, 2015, 09:20:50 PM »
I think it is comical that people think that Gold or Silver will get them out of a jam if the Shit Hits the Fan.  Do you trade an ounce of gold for a loaf of bread or a candy bar?  What is the value?  What is the going rate for gold when the world is coming to an end?

If the civilized world is "coming to an end", nothing could save us, unless you are willing to live a primitive life of self-reliance in the wilderness. Gold and/or silver would only tide you over until things get back to normal (like in Greece). In the meantime, gold would still have some kind of quantifiable value, and you would barter it just like you currently barter money for goods and services.
« Last Edit: July 21, 2015, 09:32:35 PM by joer1212 »

joer1212

  • Bristles
  • ***
  • Posts: 392
Re: Gold & Silver in an Emergency
« Reply #38 on: July 21, 2015, 09:30:07 PM »
I've done this for what otherwise would be long-term cash holdings.
the downside is that there are significant transaction costs to gold/silver
I  pay 3% for each transaction, I'd have to see 6% gain, just to break even.
If it were cash, it would lose 3%/year.   
so my gold/silver would have to gain 6% AND be held greater than 2 years (my plan is more than 5years or indefinitely).

You raise a very valid point regarding the feasibility of keeping gold & silver as a store of value. In fact, the only reason I have not already purchased these metals is precisely because of the potential transaction costs of buying and redeeming them. However, like you said, if you purchase gold and silver and hold on to them for some time (minimum 5-10 years, IMO), I can't see how this could be a bad investment compared to cash.

« Last Edit: July 21, 2015, 09:31:54 PM by joer1212 »

nobodyspecial

  • Handlebar Stache
  • *****
  • Posts: 1468
  • Location: Land above the land of the free
Re: Gold & Silver in an Emergency
« Reply #39 on: July 21, 2015, 09:50:56 PM »

tomsang

  • Handlebar Stache
  • *****
  • Posts: 1085
Re: Gold & Silver in an Emergency
« Reply #40 on: July 21, 2015, 10:31:10 PM »
I think it is comical that people think that Gold or Silver will get them out of a jam if the Shit Hits the Fan.  Do you trade an ounce of gold for a loaf of bread or a candy bar?  What is the value?  What is the going rate for gold when the world is coming to an end?

If the civilized world is "coming to an end", nothing could save us, unless you are willing to live a primitive life of self-reliance in the wilderness. Gold and/or silver would only tide you over until things get back to normal (like in Greece). In the meantime, gold would still have some kind of quantifiable value, and you would barter it just like you currently barter money for goods and services.

Did you watch the videos that I linked? In a calm environment people weren't willing to give up a candy bar for 10 ounces of silver. They weren't willing to give up their drink for a $1,500 gold coin. The US owns its own currency. So a Greece can not happen. People recognize the dollar. I am confident that they would have taken a $20 bill vs a candy bar or fifteen $100 bills for $25. Neither the dollar nor gold have any true value in an emergency. At least people understand what a dollar was worth at one point in time. Flashing a gold coin not so much. YMMV

joer1212

  • Bristles
  • ***
  • Posts: 392
Re: Gold & Silver in an Emergency
« Reply #41 on: July 22, 2015, 12:38:41 AM »
I can't see how this could be a bad investment compared to cash.

http://www.economist.com/blogs/economist-explains/2015/07/economist-explains-17

I am by no means a gold bug, but let's face the facts. There is simply no way in heaven or earth that gold will not keep pace with inflation in the long run. It has been increasing in value for thousands of years. If it didn't, gold would be nearly worthless by now. Obviously, that didn't happen. So, I would take this article's negative tone towards gold with a grain of salt.
Also, the writer of this article repeats the same fallacy that I hear from many other gold critics-- that by purchasing gold, you are somehow missing out on the returns of stocks or bonds.
Actually, gold should be purchased in place of cash, not in place of bonds or stocks. In other words, if you have 10% of your net worth in cash, and 90% in stocks and bonds, you would purchase gold with part of that 10%, and leave the 90% intact. You would not reduce your stock and bond allocations in order to purchase gold.
Therefore, you would not be buying PM with the expectation that it will match or exceed the returns of stocks and bonds. That would be foolish. You are purchasing gold because you expect it to match or exceed the return of cash, which it does handsomely in the long run.
« Last Edit: July 22, 2015, 01:42:28 AM by joer1212 »

joer1212

  • Bristles
  • ***
  • Posts: 392
Re: Gold & Silver in an Emergency
« Reply #42 on: July 22, 2015, 01:39:25 AM »
I think it is comical that people think that Gold or Silver will get them out of a jam if the Shit Hits the Fan.  Do you trade an ounce of gold for a loaf of bread or a candy bar?  What is the value?  What is the going rate for gold when the world is coming to an end?

If the civilized world is "coming to an end", nothing could save us, unless you are willing to live a primitive life of self-reliance in the wilderness. Gold and/or silver would only tide you over until things get back to normal (like in Greece). In the meantime, gold would still have some kind of quantifiable value, and you would barter it just like you currently barter money for goods and services.

Did you watch the videos that I linked? In a calm environment people weren't willing to give up a candy bar for 10 ounces of silver. They weren't willing to give up their drink for a $1,500 gold coin. The US owns its own currency. So a Greece can not happen. People recognize the dollar. I am confident that they would have taken a $20 bill vs a candy bar or fifteen $100 bills for $25. Neither the dollar nor gold have any true value in an emergency. At least people understand what a dollar was worth at one point in time. Flashing a gold coin not so much. YMMV

Watched the videos.

I agree that in an end-of-the-world scenario, gold would most likely be useless. But in a less extreme situation, for example, in a currency devaluation or hyperinflationary climate, gold would be....er.....golden.

I'm a red panda

  • Walrus Stache
  • *******
  • Posts: 8197
  • Location: United States
Re: Gold & Silver in an Emergency
« Reply #43 on: July 22, 2015, 07:55:05 AM »

Silver for Candy Bar Video
https://www.youtube.com/watch?v=bYhTFz_SGw0

Video on the same guy trying to sell an ounce gold coin($1,500 at the time $1,100 today) for $25.
https://www.youtube.com/watch?v=ndshbH3qZ6Y


Maybe I'd take the candy bar deal, not much to lose; but no way I would have gone with the gold for $25.  A deal like that- clearly you are getting a fake.  Wouldn't MOST people be skeptical they are being scammed out of $25?

Iron Mike Sharpe

  • Bristles
  • ***
  • Posts: 397
Re: Gold & Silver in an Emergency
« Reply #44 on: July 22, 2015, 08:13:52 AM »
Um, yeah, this isn't Dungeons & Dragons.  I can think of no situation where I would ever accept gold or silver pieces for a good or service.

ginklord

  • 5 O'Clock Shadow
  • *
  • Posts: 56
  • Location: Rochester, NY
Re: Gold & Silver in an Emergency
« Reply #45 on: July 22, 2015, 09:12:05 AM »
I can't see how this could be a bad investment compared to cash.

http://www.economist.com/blogs/economist-explains/2015/07/economist-explains-17

I am by no means a gold bug, but let's face the facts. There is simply no way in heaven or earth that gold will not keep pace with inflation in the long run. It has been increasing in value for thousands of years. If it didn't, gold would be nearly worthless by now. Obviously, that didn't happen. So, I would take this article's negative tone towards gold with a grain of salt.
Also, the writer of this article repeats the same fallacy that I hear from many other gold critics-- that by purchasing gold, you are somehow missing out on the returns of stocks or bonds.
Actually, gold should be purchased in place of cash, not in place of bonds or stocks. In other words, if you have 10% of your net worth in cash, and 90% in stocks and bonds, you would purchase gold with part of that 10%, and leave the 90% intact. You would not reduce your stock and bond allocations in order to purchase gold.
Therefore, you would not be buying PM with the expectation that it will match or exceed the returns of stocks and bonds. That would be foolish. You are purchasing gold because you expect it to match or exceed the return of cash, which it does handsomely in the long run.

That's why I don't purchase gold or silver - my cash is only there for emergencies and cash flow, not to appreciate in value. I need it as liquid as possible, and cash beats gold or silver there. Also, less risk thanks to FDIC insurance. Keeping 10% in cash seems like a waste, when it could be invested in the stock market for higher returns than gold or silver.

Scandium

  • Handlebar Stache
  • *****
  • Posts: 2383
  • Location: EastCoast
Re: Gold & Silver in an Emergency
« Reply #46 on: July 22, 2015, 09:40:31 AM »
I don't know, historically gold doesn't look like that great of an investment to me. If you bought in colonial america, you'd still be waiting to break even, 300 years later!



from
http://www.zerohedge.com/news/charting-price-gold-all-way-back-1265

tomsang

  • Handlebar Stache
  • *****
  • Posts: 1085
Re: Gold & Silver in an Emergency
« Reply #47 on: July 22, 2015, 10:39:26 AM »

Silver for Candy Bar Video
https://www.youtube.com/watch?v=bYhTFz_SGw0

Video on the same guy trying to sell an ounce gold coin($1,500 at the time $1,100 today) for $25.
https://www.youtube.com/watch?v=ndshbH3qZ6Y


Maybe I'd take the candy bar deal, not much to lose; but no way I would have gone with the gold for $25.  A deal like that- clearly you are getting a fake.  Wouldn't MOST people be skeptical they are being scammed out of $25?

And how would that be different if there was an emergency?  BTW he offered people to go get it authenticated at the local coin shop.  Everyone thought they were going to get scammed, which I think would be the same if there was an emergency.  The belief that you would just trade it in your gold or silver for food, water, shelter, medicine, supplies seems very far fetched when you look at these videos.  People were not willing to do it in the best of times.  In the worst of times, I think it would be more challenging. 

I'm a red panda

  • Walrus Stache
  • *******
  • Posts: 8197
  • Location: United States
Re: Gold & Silver in an Emergency
« Reply #48 on: July 22, 2015, 11:02:36 AM »

And how would that be different if there was an emergency? 

Point taken. 

joer1212

  • Bristles
  • ***
  • Posts: 392
Re: Gold & Silver in an Emergency
« Reply #49 on: July 22, 2015, 12:10:58 PM »
That's why I don't purchase gold or silver - my cash is only there for emergencies and cash flow, not to appreciate in value. I need it as liquid as possible, and cash beats gold or silver there. Also, less risk thanks to FDIC insurance. Keeping 10% in cash seems like a waste, when it could be invested in the stock market for higher returns than gold or silver.

Don't get too caught up with the percentages I mentioned. I used 10% only as an example. I myself do not keep 10% of my net worth in cash. It's more like 3%. So, in my case, I would purchase gold & silver with a portion of this 3%. That would amount to only 2-3k. We're not talking about a lot of money here.