Precious Metals Investing Tips, Advice and How To…

Today we present another article in our non-fiction writing contestPenrod

I am not an expert on precious metals nor an investment adviser, but in researching the topic I have come across some useful articles. If you are interested in the topic, I am including links to some I found worthwhile. There are a lot more out there, and I hope readers will contribute links to some.

I like junk silver US coins, US Silver Eagles, and one ounce US gold bullion coins, the latter two generally bought from major dealers who buy direct from distributors. That minimizes the chances of fakes…so long as the dealers are honest about where they get their inventory. You can look for reviews of dealers online, and Googling a company name plus the word ‘scam’ may find something negative. None of the dealers will be 100% perfect: what counts is how they deal with dissatisfied customers.

To my mind, silver and gold have related but different purposes. Both are a concentrated store of wealth, but gold is far more concentrated. As I write this, gold is about 74 times as valuable per ounce as silver. That ratio changes with the market prices, but you get the idea.

For my purposes, silver is for small exchanges during a crisis so serious that people don’t want currency, while gold is for getting some wealth through the crisis and out the other side. Therefore, silver must be highly divisible.

Given that, large bars of silver do not fit my plan because they are not divisible enough. Junk silver coins and US Silver Eagles work just fine. One can use them to buy food, small necessities, and possibly lodging, without needing the seller to admit they can make change. As has been said by others, you don’t want to give a $400 gold piece for a chicken when a 50 cent piece would have worked.

Gold is for much bigger items during the crisis, but mostly for holding on to if at all possible. Like the Vietnamese Boat People who turned everything they could into gold, then used the gold to pay for escaping the country, gold might be used for major costs of fleeing, and when one gets to one’s destination.

If one envisions the possibility of fleeing the country, there might be some use for gold coins of less than one ounce for expenses greater than silver would be convenient for but still much smaller than one ounce would require. However, given the bigger premium per ounce, I think one should limit the number of smaller coins. I’m not sure that for our purposes 1/10 oz coins are worthwhile, but a few 1/4 and 1/2 ounce Gold Eagles might be very useful.

Since the vast majority of Americans are not familiar with the private mints of rounds and bars, I avoid them: the small difference between the premiums on junk silver coins and Silver Eagles vs rounds from private mints could very easily be lost when selling to someone who doesn’t recognize even the big mints’ products. Still, there is a big market for them, and I would much rather have them than nothing.

The recent discussions here about precious metals inspired me to re-read some short essays by Philip Diehl, the retired 35th Director of the US Mint. In his blog, which seems not to have been updated since 2014, he discusses the role of gold as wealth insurance. He emphasizes that the role of gold is not to make money, it is to preserve wealth. Just like paying for fire insurance for 30 years without ever suffering a fire, one should not rue having paid the insurance premiums, nor should one be sorry for putting money into gold.

Here are a couple links, and you can pursue Diehl’s other essays from there:

There are some things to consider before buying PMs, and when actually doing so. Here is a CoinQuest article which covers 21 of them, including the difference between buying bullion and collecting numismatic coins: ‘How to avoid rip-offs when investing in gold and silver.’

If you are interested in gold, another article I think is worth reading is Greg Reynolds’ 2012 Coin Week article, ‘Coin Rarities & Related Topics: The Proper Value of Generic U.S. gold coins’ .

There is apparently a small seasonal difference in gold prices, and if one has a regular buying schedule, it might make some sense to take advantage of the price dips one can reasonably expect over the course of a year. This article includes a graph of gold price trends January-December based on market fluctuations from 1994-2014. Of course political/economic events can change price trends in any given year, but it is worth knowing the long term seasonal trends:

Here is a long article on counterfeits, which covers mostly numismatic coins, with a number of useful links at the end, including one on fake silver dollars from China. It should give anyone pause about dealing with unknown sellers.

If you are going to hold PM coins, including modern bullion coins, it is important to take care of them. All coin holders are not alike, even some which look identical. Here is a summary of the different types, their pros and cons.

One possibility is using bullion coins as jewelry. I like it, but others may not. My thinking is that if one is going to have silver and/or gold anyway, one can have some very nice jewelry for the relatively small additional cost of bezels and a gold or silver chain necklace. You can easily get either gold filled or 14 carat gold bezels for any of the common gold coins, and sterling bezels for silver coins and Silver Eagles. When Roosevelt called in gold during the Depression, gold jewelry was exempted.

Of course, wearing coins will subject them to wear, which may well reduce their value somewhat, so if you are going to do that it is important to buy coins which are already worn, or as it is called, ‘jewelry grade’. Jewelry, especially gold, can be a form of every day carry for a small amount of wealth, and it can be worn under the clothes so not to attract attention.
Buying precious metal may not be for you, but it is an interesting subject, and worth doing some reading on.

Prizes for this round (ends October 11 2015 ) in our non fiction writing contest include…

  1. First place winner will receive –  Two Just In Case… Essential Assortment Buckets courtesy of LPC Survival a $147 value, a  Wonder Junior Deluxe Hand Grain Mill courtesy of FoodPrepper.com a $219 value, and a gift certificate for $150 off of  Rifle Ammunition courtesy of LuckyGunner Ammo… Total first place prize value over $516 dollars.
  2. Second Place Winner will receive – A case of Sopakco Sure-Pak MRE – 12 Meals and a Lifestraw Family Unit courtesy of Camping Survival.com, and a One Month Food Pack courtesy of Augason Farms.com
  3. Third place winner will receive –  $50 cash.

Comments

  1. JP in MT says:

    I like “junk silver” for it’s small denomination versatility. It’s just hard to come by locally right now.

    For “mid-term” trade ability/wealth preservation I like Silver Eagles and 1 oz silver rounds. I usually get brand name rounds.

    Fort long term wealth storage I like 10 oz silver bars and gold coins (Eagles, Maples, Philharmonics, or Krugerrands) in less than 1 oz sizes. The smaller coins cost a premium but again I like the versatility.

    • Hi JP, “The smaller coins cost a premium but again I like the versatility.”

      I think there is a very good argument for smaller coins for exactly that reason. My understanding is that some British flyers during WWII sewed French roosters (gold coins with c.18% of an ounce gold) into their clothes in case they got shot down over Europe.

      Divisibility is definitely worth a premium. One might buy silver, then gold, and start with smaller gold coins. Then move into one ounce coins.

      There are many ways to go about it, and no one correct way. Different people, different situations, different approaches.

      If one’s circumstances change, one might re-evaluate and make some changes in preps, including precious metals. Many years ago…probably late 1970s or ’80s, I was interested in silver, and bought some used Franklin Mint one ounce bars. I’m glad I bought them used, as Franklin Mint put a huge premium on them new. The resale market valued them as bullion, so while the first buyers from the mint took a big beating when they sold them, buying them second hand from dealers had a very small mark up.

      Today I prefer junk silver coins for silver, but the Franklin Mint bars are still knocking around somewhere. Not worth the cost of disposing of them and then buying junk silver coins.

      For those who aren’t familiar with the term, ‘junk silver’ refers to government issued silver coins which are not in good enough condition to interest coin collectors. They may actually be in nice condition, just not collectible condition. It is important to distinguish between collecting coins and accumulating bullion. Both are good, but there is a huge difference in purpose. Diehl talks about that.

      • Martin Armstrong has a very different view on gold. It is well worth considering in your financial planning.

        http://www.armstrongeconomics.com/archives/35465

        • Sierra Grey says:

          Armstrong is also pointing to the major discovery of large deposits of gold in Sudan that will serve to push gold down. Add that to the fact that he does not believe that gold-based monetary systems work. But he doesn’t write off gold as recovering–AFTER the current political system fails.

          • the big players DO NOT like competition (J D Rockefeller: competition is a sin…) Hence they will manipulate markets as best they can, often employing lawyers, politicians & unscrupulous thugs -but I repeat myself- to do their bidding. There are stores of diamonds (& other gemstones ) already mined & vaulted to keep supply low & prices high…. they know where values lie (commodities, property & NEW skill sets -patents or copyrights) hence they want it all…..so do communists want everything owned by the state, no competition & a bunch of yes men….

      • Early on in a grid down world your local grain elevator would likely sell you about a ton of wheat for $200- in silver. Network now. No truck or trailer? Barter for their delivery or make a plywood chute and fill your cars. Remind the owners that the Central Planners may “need ” their grains, beans,etc. and leave them with an I.O.U. Ditto for a small owner grocery,gas station, etc. Just keep trying.

  2. PrepperDoc says:

    Great collection of wisdom. Thanks for assembling it. You put the insurance aspects of precious metals much better explained. I read one of Diehl’s articles and the one on holders. Keep on stackin’!

  3. Thomas The Tinker says:

    Penrod: Thank your sir for the posting. I too like JUNK silver and minted gold coin. I thank you for the affirmation as to it’s long term ‘store’ of wealth. We are lucky here in NWOhio to have a couple of dealers with ethics. We have ‘spread’ our ‘stash’ around quite some bit so as not to worry about a total loss in the “Event Of”. I still use the same change bucket in the office to fund purchases and it is half full now and the silver price is….. nice.

    I know I am not alone in thinking that PMs are a prepper grade way to assure being able to ‘deal’ well in a paper collapse and reset… among other nasty-er possibilities.

    As there is less silver above ground now than gold …. I’d take the ETF/spot paper price of Silver and the gold/silver price ratio as a multiplier of Silver’s true…. ( well true-er value at present cause a worthless paper conversion is used ). At 1gld to 76slv… I see silver with a true value of $1140+/- actual. I buy silver based on this disconnected difference. When SLV attains parity with GLD….. or even 50% of that………. I’m going to buy Southern Ohio…. or at least a few hundred acres down by the Ohio River.

    • kybelboy says:

      “When SLV attains parity with GLD….. or even 50% of that………. I’m going to buy Southern Ohio…. or at least a few hundred acres down by the Ohio River.”
      Now your talking!

  4. Thomas The Tinker says:

    Ah…. update… Kitco p.m. Silver spot at $14.68 X 76 =$1115.68 per oz.

  5. Sierra Grey says:

    Can never read about gold and silver too much! Thanks.

    I’ve been doing some time revisiting barter and trade, and looking at real world examples from actual collapses of economies. I am wanting to assess how important or useful gold and silver have been. It seems that use of gold, and less so, silver, after an economic or government collapse follows a pattern. It has been useful immediately in a broader sense, and useful for bribes of government officials, etc, to escape an area. Afterwards it has seemed to fall to the wayside as whatever currencies are restored appear. At that point, over the long haul, it was limited to a good trade in large quantities with the right people who are not necessarily local. That’s not what I wanted to find. I wanted to find that junk silver and small gold coins would appear in common barter. Apparently, they are simply in too small of a supply to be recognized and accepted. That would be likely different in countries like India and China, where gold possession is much more common among the people, either in forms of jewelry or coins. In the US, we are particularly ignorant of gold and silver (Google Mark Dice and the silver bar or gold coin offer he made to common folks on the street. They weren’t willing to cough up $20 for a 1 oz Maple Leaf, and took a large chocolate bar rather than a 10 oz silver bar). It suggests that the medium of trade will be useful stuff, as we see in the “gray” markets that already exist among welfare recipients, who trade small bottles of Tide, cigarettes, etc. like cash.

    It points to the need to have CASH. US cash. Yes, at some point it may be near worthless, but it may be the only thing going during some periods of time. People just aren’t going to recognize the value of my junk silver the way I do.

    Over the long haul, of course, nobody knows. In the event of a Mad Max world, all bets are off.

    Gold and silver are still incredible prepper possessions, however. As a long term store of wealth, the can’t be beat. We just have to anticipate that trading them for currency or other goods may be very limited and require considerable quantities and travel to a different location. IOW, there my be a guy interested in trading for many ounces but not a guy who cares about a couple of coins.

    What I was excited to find is that in some circumstances the possession of gold gave people an incredible chance to buy things of great value, for very little. In Austria and Germany, for example, after the collapse of the German Weimar Republic, some people picked up real estate for small amounts of gold. But they were the exception, and that’s why they stand out.

    My own thoughts about gold have to do with wealth preservation, not investing. Like Gerald Celente, I consider gold to be for my golden years. Yes, I’d like to see it skyrocket in dollar value, but in the long run, that just means that the dollars aren’t worth as much. Gold’s value is its purchasing power.

    I once thought copper and other metals were good to have, but like silver, cooper and nickel are extremely bulky. But if you have the place to store them, they are stores of value. You might need a forklift to move them, though.

    For prepping, it seems that 1/10 ounce gold coins have the most usefulness. They are easy to sew into clothing or insert between the parts of shoes. The only disadvantage to smaller coins is the that you will pay more premium up front.

    One thing that has come to my mind is that there will be a prepper market that is now growing. That is, amongst those who are survivalists, the value of gold and silver is recognized. For those who live in the Redoubt, for example, there may even be enough to have a limited trade market. Those that are reading this and own metals are potential trade partners, too. We will all be bound by reality, of course. If we cannot procure things we need in the larger market with gold and silver, we will be less likely to accept it in trade from other preppers, except for the items that we have on excess supply, which is likely to be very little.

    Think of it this way–if the ATM’s stop working tomorrow and you can’t get cash from the banks, you will need US cash. It’s wise to have 1 to 3 months of your current expenses in US dollars. Cash is in very short supply, with only a fraction of the actual amount of money in circulation being paper–most is digital.

    Another real possibility is that rulers will institute a digital currency system, trying to make paper cash obsolete or illegal. But the limits of that system are already in place–visit the poorer areas of my own city on any Saturday night and food vendors and flea market dealers line the street, doing their entire business in cash. That will be hard to squash. Already it is estimated that 1/4 of the business in some parts of LA, for example, are off system–they only deal goods and labor for cash, and they don’t pay taxes.

    • Hi Sierra,

      Your analysis of real-world scenarios involving the use of gold and silver in economic collapse I think highlights three important points:

      1.) Barter “super goods” will be much more commonplace, and incidentally, seem more valuable, in an SHTF/TEOTWAWKI scenario.

      2.) I think (this is totally my supposition) that the concept of “modern society” explains the phenomena you describe of people picking the chocolate bar over precious metal. I believe that in the modern world, most people just don’t see money if it’s not in the form of a paper bill or an electronic card. This will probably be one of the hardest things for non-preppers to adjust to.

      3.) Your comments about needing cash in economic collapse as opposed to a “Mad Max world” I think highlights a paradigm awareness that I believe most preppers miss: SHTF vs. TEOTWAWKI. While most speak/write about these two as a single issue, I believe that they are different. To phrase it in the terms of another member here (I think his name is Sid), SHTF would be a Level 1 to 3 in terms of the likelihood of happening, whereas TEOTWAWKI would be a Level 4+. SHTF in my mind is like an economic collapse or a regional natural disaster. Things will be rough for a time, but they will return to “normal” in a relatively short amount of time, in my mind between 1-6 months. Chaos will reign for a while, but government control will not ultimately be lost. TEOTWAWKI on the other hand, to me, is like a global disaster, natural or man-made, lasting 1 to several years and with governmental control as we know it being lost or fractured greatly and time being needed to develop any sort of centralized government again, local warlords vying for control in the interim. I’m inclined to think that preppers by and large tend to prepare for TEOTWAWKI versus SHTF, as well as many prepper experts writing about a TEOTWAWKI environment rather than an SHTF environment. Just my thoughts.

      • Hi Andy, “SHTF vs. TEOTWAWKI”

        I think that is a really good distinction, and you are right, we rarely make that distinction.

        The stagflation of the late 1970s, followed by the major recession was SHTF for a lot of people. Lenders -including especially mortgage lenders in fixed rate mortgages- saw the value of their savings seriously reduced by inflation. A lot of businesses saw their economic models destroyed by deregulation -which was in the long run a very good thing for the country but came at major cost to a lot of good people who were operating just fine in a regulatory environment which they had not made.

        At the same time, a lot of people who had big fixed rate mortgages made out like bandits as inflation reduced the value of what they owed: as long as their income kept up with inflation so they could keep making the monthly payments, they were way ahead on their real estate allocation of their investments.

        A lot of businesses could not adapt, and a lot of people lost their jobs, their businesses, their homes. I think we could call that period a SHTF period, but it was far from the collapse of civilization.

        During the Second World War in much of Europe, Korea, the Philippines, much of China, the Soviet Union, places like those for practical purposes saw TEOTWAWKI. Ditto much of Europe during the First World War, the Ukraine during the Soviet collectivization of the farms, Lebanon during their civil war. The list is endless if one does not require a major collapse to be world wide to categorize it as TEOTWAWKI.

        The fact that it is endless should in fact give us some reason to consider what the likelier possibilities are for us today, and to consider reasonable responses.

        If one thinks we are likely to see some meaningful inflation, a certain amount of fixed rate debt -like a home mortgage- might be a very good idea so long as one is confident of being able to make the payments. Since the dollar price of gold would probably rise during an inflation as people flee into hard assets, one way of ensuring that might be to buy gold sufficient to be liquidated month by month for what would surely be ever higher numbers of dollars with which to make the mortgage payments. One would not need enough gold at today’s prices to pay off the entire mortgage, just enough to get one through a bad period without losing the house.

        Another way of dealing with inflation is to buy stock in good solid companies which produce things consumer must buy frequently: stuff like laundry detergent, toilet paper, basic food. Those companies tend to do all right even during tough times because people need their products.

        Stock in luxury product companies like perfume, fine wine, luxury clothing, vacation cruise lines? They have tough times in tough times because those are the sorts of things people in financial trouble -or who want to avoid financial trouble- stop buying from in bad times. Tough times are actually the time to be buying their stock because it tends to fall in price as profits tank. Sell them in good time when they are making big profits.

        So for PMs, I think the ideal time to buy is during good times because people confident about the future ignore PMs then, and the price falls. The cost of holding PMs is like an insurance premium on a policy one hopes never to need. When people get scared, they bid up the price as the values of other assets go down.

        • Hi Penrod,

          You are quite correct in your presumption…..TEOTWAWKI is really just as it sounds, “The End Of The World As We Know It.” That doesn’t necessarily indicate a worldwide collapse…merely that life changes so dramatically for a given group of people that it reverts the “normal” process of living for an extended period of time and causes a complete change of perspective on how life needs to be lived amongst that population.

      • Sierra Grey says:

        Andy, I like your breakdown of the SHTF vs. the TEOTWAWKI. And the difference in terms of how it will affect both the preppers and the world. I guess my own preps, due to limitations, are for somewhere between SHTF and TEOTWAWKI. I figure if the S hits the fan hard enough and bad enough, it will be some version of a very different world. Were I younger and healthier, my desire would be to be in the Redoubt and trying to make my living off of skills that would serve right now and during bad times, and trying to be more self-sufficient (I don’t think it’s possible or even desirable to be try to be profoundly self-sufficient).

        As for now, I’m just hoping my preps will carry me through long enough to allow an easier transition into the world that is to come.

        • Hi Sierra,
          “I don’t think it’s possible or even desirable to try to be profoundly self-sufficient.”

          I quite agree. I think ordinarily people in good times like to stay connected to “modern society” at least in some small facet. Even beyond that, there are very few people who are in a place geographically to have EVERYTHING they need to be entirely self-sufficient without the aid of modern conveniences. The best thing to do, as you say, is work to continually grow and hone one’s skills in order to be serviceable in good times and bad.

          • Sierra Grey says:

            Andy, good points. I think I came to my conclusion after meeting enough people from the hippie days that tried very hard to be very self-sufficient, from growing their own grain to their own chickens, etc. They found the entire effort to be impossible. Division of labor is the beauty of economics. It multiplies the wealth for all.

            • Hi Sierra grey, “Division of labor is the beauty of economics. It multiplies the wealth for all.”

              I agree. Self sufficiency is possible in some places, at some times, but it is a prescription for poverty. FAR better to to allow those who are best at one thing do so, and those better at another do that in turn.

  6. CountryGirl says:

    I have bought and sold and own today more PM’s then I can carry. In my opinion junk silver may be the best investment because it is U.S. legal tender and someday down the road the government may make the ownership of PMs illegal. However I own no junk silver because of the higher markup to buy it. I also own no U.S. or Canadian mint silver rounds and again because of the high markup (cost). I only own 1 oz rounds of silver. My reasons are: it’s cheaper then other forms of silver. It’s a small value for possible barter or direct purchase use after SHTF. And because while it is probable that gold will be delegalized and confiscated after SHTF it is probable that silver will not. My goal/intent is asset protection in the event of economic collapse and secondarily for a source of “money” to survive. In other words I want to come out the other side of this with most of my assets protected and I do believe there will be another side where things more or less return to normal.

    • Sierra Grey says:

      CountryGirl, you certainly seem wise to invest in PM. As for the junk silver, I found that it costs me less than any other form of silver, in terms of premium over spot. Of course, buyers need to keep in mind the conversions factors for 90% silver coins in terms of face value vs. silver amount. It’s not as pretty as silver rounds, but it at least carries with it an actual face value. And, it has the lowest risk of counterfeiting, not that I’ve run into any of that. I like the government-minted coins, also, for the reason of recognition. I guess we really won’t know how important that will be until the time comes. Since your primary goal is asset protection, it’s not a real issue for that. And as you point, out, it’s potential for use as barter may not justify the premium in the minds of many.

      Right now the price of silver is so low that premiums don’t bite into the buyer as much. Sounds like you have become a true silver stacker!

      • Sierra Grey says:

        Country girl:

        I forgot to mention that I share some of your thinking on the possible use of silver for use as barter/exchange. The more I read about other nations that have been through such things, the more I think that we shouldn’t depend on it as a guaranteed trade item. Any form of money, be it paper, metal, or anything else, has to be something that those exchanging it will find value in. Bartering is not really the use of money, but goods. Money comes into play as a store of value that is easily stored, transported, and can be divided to make change. In a SHTF scenario that is extended, if consumer goods are hard to come by, people will be reluctant to trade for anything other than a needed item, or money that they can trust. Just because you and I have silver doesn’t mean that the guy when want to “buy” something from is going to find it valuable enough to trade for. If it isn’t already recognized as “money” it will have less value than a consumer good that he might be willing to trade something for. I guess it’s all the more reason to be diversified, and to do, as you have done, designate your silver FIRST as your own long-term store of wealth, and realizing that it may require significant stabilization in society to make it something easily sold.

        • Hi Sierra Grey, “I guess it’s all the more reason to be diversified”

          Exactly. It is important to spread one’s bets out in the hope that events which push down the value of one will push up the price of another.

          When interest rates are high, people tend to stay out of gold because of the opportunity cost of holding something which does not pay interest, dividends, or rent. They therefore prefer to buy bonds.

          When interest rates are very low, there is less opportunity cost to owning gold, or even art, for that matter. People are inclined also to put money into stocks which pay dividends. That drives the prices up.

          Our beloved government has seen fit for quite a few years now to shovel new money out the door in hopes that people will do two things: buy stock in order to avoid effective zero interest rates on savings accounts and bonds -thereby driving up share prices owned by both rich Democrats and rich Republicans, and use cheap mortgages to prop up the prices of housing, which also props up profits by people who own bank stocks.

          What will happen if/when interest rates go back up? At least two things: People will seek the safety of bonds and savings accounts for more of their savings, which will put downward pressure on stocks as they move money from stocks to bonds and savings accounts, and the opportunity cost of holding gold will increase, so people will be less likely to want gold. That will put downward pressure on gold prices.

          However, the government will have a lot of trouble raising interest rates very much because doing so will mean they have to pay much higher interest when borrowing money, and they can’t afford to do that.

          Significantly increased interest can’t be easily covered with more taxes, so my guess is that what has been a deflationary environment may become a significantly inflationary one. Which would be bad for the dollar but good for gold.

          There are LOTS of maybes and might bes and possibilities, and even professional money managers know they get it wrong often enough that they spread out their bets.

          Precious metals are only one of many places to put one’s savings, and for some people may not be appropriate at all.

          If one looks at a graph of the ten year price fluctuations of gold, it is currently c.$1100/ounce, way below the ten year peak of over $1800/ounce. Sounds like a good time to buy? Well, gold is also more than twice the ten year low of around $435.

          So, good time to buy or bad? I don’t know. Sure is better today than when it was $1800. Sure is a lousy time if it goes back to its ten year low. If the Chinese and Russian governments are out of the gold market, instead of buying hundreds of tons a year, prices may well keep falling. If the Chinese economy does well over the next decade (their stock market is melting down recently..not good) a billion ever more affluent Chinese individuals will likely be buying gold for themselves. More demand: higher price.

          The upshot is that I don’t know what will happen with gold prices over the next decade. I think cautious optimism suggests buying small amounts regularly over several years, not putting a big wad of money into it at $1100/ounce and hoping it will zoom. It could easily fall considerably.

          One way of going about buying gold or silver -and stocks, for that matter- is to budget a specific amount of money to buying regularly. If the price of what you are buying goes up, you buy less of it. If the price goes down, the same amount of money buys more of it.

          Importantly, one mustn’t put more money into an investment or into PMs than one can afford to lose.

          • Sierra Grey says:

            penrod–well said and predicted. All of the scenarios you lay out are very possible. I enjoyed and appreciated your comments.

            I think the most important thing that I gleaned from your post is the overall plan that one should have. PM’s for the average person (not Ron Paul, for example) should be to have PM as part of their overall plan. Not some goal of becoming rich. Thankfully I’ve always had the desire of accumulation and hedge. When my $270 per ounce metal approached $2K I got a little smug. But that got tempered with the contrived market. For years I simply applied the dollar cost averaging approach of purchasing at market price. Hasn’t been so kind to me with silver. Again, got to think of the goal–accumulation for preservation of my purchasing power and funding of my golden years, and as hedge.

            While acknowledging that if it’s not in your hands, you don’t own it, I am a fan of off-shore private vaults. Have tempered that a bit as I have become too old, sick and poor to travel with any hopes of having a nest egg elsewhere but it is a nice way to diversify the real risk of physical gold–where to put it and keep it safe.

            The markets are in uncharted territory. Capitalism by any definition is dead–monetarism centered on debt and credit is the new world. And nobody can no where this will lead. All the more reason that your conservative advise is valuable. And your advice about not putting more into PM than you can afford to lose.

            I’m a strong believer in real estate and precious metals. I was, with some regret, not one who got into gold miners, but for some good reasoning–I simply was not familiar enough with that area and didn’t have the money to risk, at the time. Of course, investing in rental units, real estate otherwise, and PM’s is not the typical thinking of today’s world.

            I was blessed, not by wisdom, but by the pure grace of God, to have made some money in the past 30 years in more conventional investments. For the most part investing in foreign currency CD’s, foreign stocks and bonds, and US instruments was good to me, although I suffered some losses. What really helped me over the years was simply recognizing the negatives of debt and the positives of frugality and savings. If I have any wisdom at this point (and too late to be of as much use) it is that somebody has to lose money for someone to make money in most investments. i.e., you make your real investment returns by buying something that grossly depreciated. Buying when other people think that you are crazy to buy something so battered and beat up. 2008 brought some real losses to real estate. I think the same opportunities may present themselves again.

            I think we are of like mind in many ways. It’s the grand plan that is important. Any attempts I have made that have been driven by greed and the desire for a quick and big profit ended up burning me. In the end I have finally figured out that the best formula is working hard, spending as little as possible, saving, and then putting the money to work in the things that our great-grandparents knew and trusted.

            If I see any mistake in my children and relatives, it is the same mistake I have made in the past–not thinking long, long term. It results in people living beyond their means, using debt as a “normal” tool, and then suffering for it. Debt interest is a killer. And in this economy, a real killer.

            My hope for my children is that they will finally figure out that capital accumulation can only come from what you are earning. And the only way to tap into that capital is to live like a pauper. Not in misery–but with all seriousness. My wife is from an asian country. Grew up in a wartime and post-wartime world. Without electricity or running water. She and her generation in that country taught me a lot. I thought I was frugal!!

            Of course, I still struggle with not being frugal enough for my own good. Have spent far too much money over the years on things not needed. Nickled and dimed myself. Not that anyone who knows me would agree. But I know. I don’t “need” most of what I buy.

            Thanks for the long and informative post.

          • PrepperDoc says:

            Wise advice. *IF* interest rates rise, money will LEAVE bond mutual funds, possibly faster than money ENTERS new bonds. Didn’t Bernanke say interest rates would not rise significantly “in his lifetime”? The government is in a pickle, if they go up more than a tiny bit, I will be very very surprised…..

            My plan is diversification + a considerable amount of “dry powder” (some of which is in physical metals).

            • Sierra Grey says:

              PrepperDoc:– good plan. If history is a tutor, interest rates have to eventually rise. When? Nobody can say in this new world. I’m counting on the long term–there is going to be deflation of the serious kind in conventional assets like stocks. And because of the interest rates going up, bonds are going to suffer, perhaps catastrophically. And if deflation is not the killer, it seems there is always the real possibility of hyperinflation. Even if short-lived, major deflation and hyperinflation are going create disasters. I figure the best thing is to (1) try not to have any debt when it all hits, (2) try to have as much of your wealth in things you can touch and will not lose all their value, and if you are fortunate, (3) use those times to put to use any cash you have while it is ‘king’. Not everyone suffers during an economic tragedy to the same degree. Some actually gain ground.

              • PrepperDoc says:

                I agree 100%

                • PrepperDoc says:

                  But I must point out that i have huge holdings in both kinds: property & paper.

                  For the last 20 years I made way more in Paper than in land or houses….

                  But I have SOME OF EVERYTHING.

                  • Sierra Grey says:

                    Great to hear that you have done so well. I can’t say that I have much, but it is more than I deserve. I can say that what small amount I have, it’s debt free, and there is some comfort in that.

                    One thing that I know is that it could all disappear over night. Its in God’s hands. He gave it and he can take it. And, the older I get the more I am realizing that I should have started saving a whole lot earlier. Younger folks can fall back on their youth and health to work, where us older ones will have to hope we have enough put away. Of course, our ultimate and only provision is from God.

                    There is nothing wrong with paper investments, per se. But I have found that 95% of folks don’t do well sticking with conventional wisdom, e.g., the mutual fund advisors at the company they work for, traditional IRA/401/403, etc. The older I get and the more folks I meet that have been able to grow their net worth to a great degree, the more I notice they shared some common traits–they worked hard, spent less than they made, saved with a passion, started businesses, bought rental properties, or otherwise learned enough to manage their own paper investments. And they shared a patient attitude. (I should mention that they were blessed by God. All it would have taken is a serious illness or business loss to have changed the outcome)

                    • PrepperDoc says:

                      Just like managing a rental house, you can manage your own investments.

                      I had a manager for my rental house, he ended up getting all the profits. The same can happen with the stock advisor!

                      I appreciate all your wise points!

                    • Sierra Grey says:

                      PrepperDoc–
                      I would really like to move from having properties that I am financing for the buyer, to rentals that are owned without debt. But the real estate market in California is crazy. The only affordable homes are way overpriced. At my age I need the income, not the appreciation. Since the market was prohibitive, I decided to float the notes on the property that I sold. It’s not as good as a rental, but having the loan backed by the property offers some protection from default of the buyer. In California you can begin repossession actions after 2 months of missed payments or tax arrears. So far, the buyers have been able to make the payments. One of them I expect will be the first to have trouble with any moderate collapse of the economy. The only thing I really have to be careful with is not spending all the income, recognizing that part of it is the principle.

                      Something I stumbled upon was the way that guys like Warren Buffet avoid paying income taxes like the rest of us. By having a very low level of actual earned income, there are no long term federal capital gains when you make a sale! No wonder he and other rich guys are always calling for higher income tax rates. It won’t affect them at all, just the average Joe!

            • Thanks, PrepperDoc. I don’t see how the feds can raise interest rates much: they would then be crushed by interest payments on the national debt as old bonds come due and they have to issue new ones at higher interest rates.

              • Sierra Grey says:

                Penrod– Agreed. Despite all their blather, the FED knows they are in a pickle. Can’t raise rates at this point without dire consequences. They’ve waited too long. Now they can’t use the power of lowering rates, either. Methinks they will end up only raising them when it is too late to help and then send them through the roof, ala the Germans in the 20’s. Time will tell. These are interesting times.

        • Just adding my two cents to the “PM’s as long-term wealth holders but not that useful in a barter/trade society.” In the history of the development of money, PM’s as money came about because of the need to standardize prices more efficiently than the barter system allowed. Given that, I believe PM’s would serve a greater purpose in a TEOTWAWKI environment rather than an SHTF environment because in order for PM’s to be truely seen as “money” again, national currency and governmental of that currency would need to disappear.

  7. mom of three says:

    What should I do with my children’s bank account they are not traditional savings accounts, but not CD’s either. My mother in law, had it so the kid’s can’t nickle and dime it to death. We can pull some money out but we have to show what it’s going to like a computer for school, and things of that nature. Could buying PM’s, showing as an investment work? I don’t want what happened in 2008, when my mother in law, did not watch the stock market and almost lost everything.

    • Sierra Grey says:

      mom of three: The last thing anyone here should give you is financial advice specific to your situation (I could be wrong, but I don’t think any of us should list ourselves as professional financial advisors).

      It sounds like the account is set up as a trust which wisely imposes limits on withdrawals. You will need to check with the bank to find out more as to that status. If it is a trust who is the trustee, and what are the limits. You may also need to consult an attorney, once you have a copy of the appropriate documents concerning the trust. You may have some options as to what it is invested in, even if you limits on the withdrawals.

      The risks of having cash in the bank are not, right now, as great as having an investment in the stock market, if indeed the cash is in some sort of bank deposit account. Sorry to hear about your mother-in-law’s losses in 2008. I fear there will be a lot of very sorry people very soon.

      If your children’s account has a substantial amount of money in it, I certainly wouldn’t seek the advise of an investment advisor who makes a commission off of the future investment. So many scheister’s out there. If you can find a trusted attorney in your area who is familiar with estates, it may be worth your money and time to first explore all the options.

      • Chuck Findlay says:

        I would not tell anyone how they should invest their money. But I don’t see it as good to trust professional financial advisers as they base almost all their advice on the stock market and it’s continued expansion seemingly till the end of time.

        With that said, what has been working for me is buying and storing hard assets, zero debt, and expanding my skills that pay me now and will likely do so post SHTF.

    • CountryGirl says:

      Here’s my two cents: If your mother in law is still around you should allow her input to this. It’s not worth creating family disharmony even if your intentions are good. If there is no one who can veto or disapprove of your decision then you would still need to at least discuss it with the kids assuming they are old enough. We manage assets for an incarcerated relative and he approved some risky investments and some PMs. But we make sure there is a record or track of every investment decision and expense. Every decision is discussed and every transaction receipt is kept. It can prevent hard feelings down the road. If your children are on the verge of becoming adults I would let them decide. I say this knowing that even young adults make bad choices. But in the end you do not want the money or how the money is invested or spent to come between you and them. It’s not easy to manage money for other people and it is easy to make a mistake. Becuse of this if the dollar amount is not “large” I would just leave it where it is.

  8. Sierra Grey says:

    CountryGirl: Good advice. I was assuming that the mother-in-law was not alive. Far better to maintain harmony that create discord!

  9. There’s an old saw which goes: ‘in hard times, those who own gold will prosper, those who own silver will eat’. Gold ‘typically trades 80 to 1 over silver (silver lost some ‘intrinsic value’ when it was no longer usedin developing photographs -along came progress & changed the dynamic…..). Gold has had value for 5000+ years, silver a shorter time. Then there is ‘Gresham’s Law’ which posits that in a bi-metallic monetary system the cheaper will drive the dearer out of the country (remember the Viet Namese boat people referred to above….). Gresham’s law (like supply & demand, laws of physics, math, chemistry, genetics, etc.) bespeak ‘intelligent design’. They didn’t just evolve (remember Darwin was a socialist & socialists fall head over heels denying God’s existence/supremacy)! I do not dine on primordial soup! I do like former US coins i.e., dimes, quarters, half-dollars, dollars which were minted in silver till tricky Dicky introduced the ‘sandwich coins’. The Eisenhower dollars used in currency (usually Vegas, Reno, etc.) are not silver, by and large. To my knowledge, the last ‘silver dollars’ were the standing liberty. Note how inflation (i.e., paper currency increases via the Federal Reserve & the U S Mint) made it not economically not feasible to continue using silver in coins. Much like copper in pennies these days. All 4 now…

  10. I wish someone in the Wolf Pack would explain how gold will be of value after the SHTF. Most people will not have gold, so how are you going to get supplies or other services if gold is not a common currency. (can’t be used to trade for goods with others, because if they don’t have any gold it holds no value to them.) I wish I could articulate my point better, but I can only say that if there is a shortage of food, and I have a food, I wouldn’t accept gold as payment, because I couldn’t use it as a currency for the things I need.

    • Hi GregJ, “if they don’t have any gold it holds no value to them.”

      If I understand you correctly, I am inclined to think that during tough times people who do not have silver or gold might very well want at least some.

      In any case, historically people have preferred money of some sort as a medium of exchange because it is more efficient than barter.

      If I am employed by a farmer to do manual labor, say I could get paid in fish, or silver coins. I might like to eat some of the fish, but not all, and the extras will rot before I can take them to the market. So I would prefer part of my pay in silver coin. Then I can take the fruits of my labor, store those fruits -the silver- for days or weeks or months, carry them far away and spend them on something I do want. The sellers will be happy to take my silver or gold because they know that other people will them them what they want for silver or gold.

      Suppose I was able to take only fish, the people who want fish before they rot want to give me only apples, but I need medicine. Rather than trying to engineer a three way barter deal with someone in one town who wants fish and someone in another town who has medicine, it is a lot more efficient for me to sell my fish for cash, go to the other town, and buy the medicine I want.

      That is also the case for all the other people in the deal: cash makes their offerings more valuable because they don’t have to engineer complicated deals with multiple parties in order to get what they want. Money makes life easier for everybody.

      The last several thousand years of history tells us that in bad times we can rely on people to want money, especially gold and silver. We may think that is silly, primitive, barbaric, magical thinking but it doesn’t matter if we are correct. To come out ahead, all we have to do is understand how OTHER people think of it. In this case, people want silver and gold. Not to the exclusion of other things, of course, but along side them, to make life easier by making economic exchanges easier.

    • Sierra Grey says:

      GregJ: Exactly as you say. You make a good point. Expecting gold to be suddenly valuable for barter or trade or use as currency is not realistic, if the examples of history are important. In recent collapses of economies, for examples, or war time occupations, it hasn’t saved the day. When everyone is in need of food and living items, gold offers no real value in exchange with the common man. As you point out, you wouldn’t be trading your food for gold. Neither would I unless I had such abundance that it was possible. And how likely is that? In an economy that is untrustworthy, it’s not just a money or cash problem, there is a shortage of the things people need for life. In other words, it’s not just a breakdown in currencies and government, it’s a breakdown in production and transportation of goods, as well. Those that are in the business of selling badly needed goods, as was experienced in Argentina and Serbia, sold for cash and etc. But they were the last resort for people and you took your life in your hands to deal with them. PM’s, for that reason, are not a great resource if you a prepper is thinking they are going to solve their problem of trading and getting the things that they need for living.

      One thing IS certain, though. Even in the worse of times, even gold has value to someone. No, you can’t eat it. But provided that you have prepared for that need ahead of time, PM gives you something for later that you won’t regret having.

      Were my family of like mindset, I would much rather have a much greater store of food, etc, than I would PM. When stuff is scare and all of us are hungry, gold won’t mean a whole lot.

      • Good points, Sierra Grey.

        My thinking is that one wants both stocks of food to carry one through a disrupted period with intermittent supply line failures, and PMs to transport some wealth through the bad period and out the other side.

        The great strength of silver is its divisibility into coins of small value for small purchases during that bad period. That’s why I avoid silver bars: not easily divisible. The strength of gold is its very concentrated store of value for getting some wealth through the bad times.

        Even in gold, I avoid bars because of problems with both fake bars and real bars which have been drilled out and had tungsten rods inserted. I am not competent to spot them, so government issued coins are better in my situation. Other people’s situations are different, so they might choose differently – including not having any PMs at all.

        In any case, though, PMs are only one relatively small component of one’s overall allocation of savings. Real estate (a home), stocks, bonds, savings accounts, cash on hand, and other asset categories as seem appropriate for any given person’s situation should be far bigger than PMs.

        Most preppers would consider at least a month’s worth of food and water to be a good allocation of financial resources, and quite a few would consider 6 months or in some cases a couple years worth better yet. Like PMs, stored food and water are not to make money off of: they are a form of insurance to get one through tough times, either SHTF or TEOTWAWKI.

        • PrepperDoc says:

          You are selling yourself short, penrod: I feel fairly certain you would become very adept at spotting most fakes. Achimedes did it centuries ago, by immersing the weighed sample in water to calculate its volume (by the overflow) and thus its density. This will be a new occupation, exactly as there were “assayers” in the gold mining towns of the Wild West.

          (You could always melt down a large bar yourself to see what is in it)

          With a gamma source (there are naturally occuring ones, including very old lantern mantles, of all things!) and a geiger counter (preppers frequently have that) you can scan for changes in absorption, essentially doing an “xray” of the bar. [Every large hospital in america probably has a cesium source that smart guys will grab.)

          Not only that, there is a way to literally make a primitive “CT” machine if you merely have a gamma source, a geiger counter, some ingenuity & a personal computer that will works. I wrote a program to do it in my spare time when I was in medical school and there will be plenty of unemployed mathematicians who will beat me to it…

          “Do you see a man skilled in his work? He will not stand before obscure men….” (i.e., he will be highly sought after by powerful people: if you have knowledge, you will benefit those around you with your skills.

    • Chuck Findlay says:

      I know you can’t eat gold.

      But if you search U-Tube for “you can’t eat gold” and the name FerFal you will find out you can indeed eat gold and silver.

      FerFal lived through the 2001 Argentinian collapse and has real world experience because he was there. He’s not a fiction writer that can write any outcome they want to sell books. He tells us what did happen when the SHTF.

      Also his book is well worth the read, and occasional re-read.

      • PrepperDoc says:

        Preach it, brother! You are RIGHT.

      • Hi Chuck, I agree about the book. While it is far from polished -he isn’t a native speaker and I think he self-published- it is one of those “I was there” stories which is useful for anyone who thinks something similar may happen in their country.

        IIRC, Argentina was the 6th most prosperous country on Earth during the 1920s. Then it all fell apart.

        Amazon has the book in paperback: “The Modern Survival Manual: Surviving the Economic Collapse” by Fernando “Ferfal” Aguirre.

        He has a more recent one out, but I’m not familiar with it: “Bugging Out and Relocating: When Staying Put is not an Option”

    • Hi GregJ,

      The most important thing in a currency, particularly in an SHTF or TEOTWAWKI environment, is that it has what is called “intrinsic value.” This means that if you don’t use it for the common purpose (purchasing power), it can still be used for other things, especially “hands-on” things. Gold and other PM’s (precious metals) have this value. From electronics to jewelry to craftwork to medicine, gold is useful. Now, what you say is true: outside of the prepper community, there will probably be few people who consider carrying gold. Moreover, many of the uses that I mention above require some skill or training to harness those uses and it may be you don’t have one of those people at your disposal or even that all of those people are dead. So to answer your question, yes, gold will be of value, but to what extent may be another issue entirely.

      • Hi Andy, “gold will be of value, but to what extent may be another issue entirely.”

        You have hit the nail right on the head. That is exactly why one should diversify one’s allocation of resources: No one knows for sure what the future will bring. Spreading out one’s bets helps insure that some of them will be winners, rather than betting everything on one or two things which then MUST be winners or else one loses it all.

        • PrepperDoc says:

          Solomon would be proud of you! He commanded the same, 3,000 years ago. Bravo!

  11. Chuck Findlay says:

    Any time there is a PM or investing topic people talk about if silver or gold is worth buying. I think it is and I buy a lot of silver.

    But if we have a bad SHTF situation where the market collapses to the point it stops auto sales, the flow of goods as truck fuel is too expensive, the stock market dies for good (not necessarily a bad thing), visits to the doctor can’t be paid for, hospitals stop taking people for free at emergency rooms and lay off 1/2 the staff, and pretty much everything else people do to make money.

    What are you going to do for money when your job blows up?

    As wonderful as a pile of silver or gold is most of us can’t possible get a big enough pile of it to last us for the rest of our lives.

    And very few of us (statistically ZERO) know how to or will be able to live 100% on our own and not need to trade or buy things from others for the rest of their lives.

    A see few people talking about or planning to have an on-going income stream in a real SHTF situation. What can you do to make money in a drastically down turned economy?

    We all should be working today to build a way to make money when all hell breaks loose and stays that way for a long time.

    I have a handyman business, I’m very busy now and I am building a reputation of being able to fix just about anything. I buy lots of extra supplies to keep doing this and am always learning new skills. I don’t see a time when things don’t break or ware out so I think I will be able to keep making an income.

    I see a few post about rental income and this is probably a sustainable income source as people need a place to live.

    I’m wondering if people don’t think about this, are too caught up in their present job to take action to build a side income not dependent on a company. Or just think they will always be able to find work in the same field they do now, or afraid to think about a world without the job they have now.

    It amazes me that more preppers don’t address this important issue, it’s as important as silver or gold because it’s sustainable and we all need money. And unless you have a silver or gold mine they are not sustainable.

    • Sierra Grey says:

      Chuck– I envy and admire your real world transition. You have actually moved your vocation to a useable reality in the world to come. Due to my age and health, I’m facing more of a challenge in doing that. My retreat location is in a rural area where I have met people who have been getting by like that for years. One fellow has a menagerie of tools, heavy equipment, and knowledge. And he can fix just about anything. Repair a road with his tractor and backhoe. Haul water in his home-made water truck. Fix a septic tank. He just gets by, but he gets by.

      • PrepperDoc says:

        OK, you don’t have to be a strong young buck to have something that will be of worth. Yes, I know that PhD researchers into polar-bear feeding habits may have to alter their plans a bit, but MOST OF US can do something useful:

        1. Grow food. Corn, beans, squash, onions, carrots…the list is endless.
        2. Reload ammo. (Takes only $200 to get started, why not now?)
        3. Plumbing
        4. Solar power skills / electronics. (I have a small stash of parts put away and I may enlarge it.)
        5. Engine repair. Extremely valuable!!!
        6. Anyone who can build a gassification system?
        7. Mining (your mines will be in the city dumps!)
        8. Livestock / Ranching of anything imaginable
        9. Gunsmithing
        10. If you can grow penicillin your future is bright.
        11. If you can harvest insulin, likewise
        12. Any surgeon or any doctor who can figure out how to deal with closed space infections — minor surgery will be very important.
        13. Likewise anyone who has a stock of anestheic agents or can find a way to make them. (Ether isn’t that hard to make)
        14. Teachers (what else are you going to do with the younguns after the field work is done?)
        15. Anyone who can make antivenom will be very popular.
        See the idea? Somebody somewhere knows how to make transistors. If they can crank up the furnaces and make them again, they are going to do well. And on and on and on. People made transmitters out of SPARK SYSTEMS 110 years ago. You don’t have to simple eat sleep and die. There will be more to do. Someone will make diesel fuel. Gradually everything will be slowly replaced somehow.

        • Hi PrepperDoc,

          Just some additional thoughts on your original post:

          1, 8.) In addition to these points, I can also see where the “hunting parties” of the 1800’s used to supply restaurants of that time may come back to supplement food to the overall populace.

          7.) I really like the perspective on this one! This could be the lynchpin for the “manufacturing”, repair, and artisan/craftwork industries.

          10-13, 15.) Agreed, although these individuals need not be doctors as we think of them. Anyone who can harness the power of the microbial metabolite and mycofungal ecosystems and make medicine from it is going to be a highly sought-after individual in the SHTF/TEOTWAWKI world. The same will be true for biochemical products.

          14.) In addition to teachers, I would say anyone with a higher education/academia background will be of great value. Not only can they teach, but they can, depending on their field, provide knowledge for societal advancements.

          6, 16.) Although your very last point isn’t numbered, I did so to simplify and make my point. There are already lots of “average Joe and Jane” types who are messing with DIY gassification systems and biodiesel as an alternative to diesel fuel. There’s more than one might think exist, especially in rural areas (at least, here in the U.S.A.-I frequently forget that this is an international forum). It’s just not something people are open about because, as of right now, biodiesel is illegal to buy or sell privately (in the U.S.A.).

        • Sierra Grey says:

          Thanks for a great list of ideas and a good direction to start thinking!

          I met a fellow in the mountains who has 20 acres. I have always respected him because he seems to have built up some real wealth using a variety of means, and because he is doing it at such a young age. He stumbled onto raising purebred horses. I noted that despite that also takes whatever work he can, such as commuting to food processing plants for common labor. On his property he has started raising pheasants for food, having a pair of breeders and then farming out the eggs to the chicken to hatch and raise! I asked him where he got his ideas for making money and he told me that he often spends time just looking at his property and asking himself, “How can I make money off of what I have?” Right now he’s considering the fact that his property borders a gas station, so he’s thinking about the possibilities of building a small place to sell fast food to locals. Smart fellow who is not a prepper, but lives a prepper life.

      • PrepperDoc says:

        If the world goes to pot, and that guy who can suction out a spetic tank is anywhere near me, I can GUARANTEE you that *I* will be hiring him on a regular basis!!! Skills like that will be priceless — just as they are today.

        Think how valuable the man who can drill a well will be? And anyone who has the ability to rebuild a well pump?

        Any skill or manufacturing capability that you can think of may well be worth something unless you are making “trinkets”…..in which case I would urge you to spend your brief days on this earth doing something of greater value to your Maker and your fellow man….

        • Sierra Grey says:

          After spending enough time amongst the rural mountain folk, I began to take notes. My place is in a location where there are few working farms or production capabilities. About half of the residents are retirees living on pensions or poor folks living off of welfare. The rest are a collection of government workers who work for the forest service, national parks, or various state agencies, and those who actually hew out a living from what they can find. Those are the ones that most interest me.

          I notice that the local self-employed who get by on a variety of means generally have an assortment of old equipment–tractors, trucks, implements, shredders, tanks, and tools. Most of it would be “junk” anywhere else, but they somehow keep it functional so that they can use it for any odd job that presents itself.

          They are very dependent upon family and friend relationships. There is a lot of “barter” within those circles that is based on good will. For example, if I can’t get a small motor working but I can buy the parts, Joe next door knows a lot about small engines and is likely to show me or do the work. In return, Joe knows that I am always willing to share some wood, or in this drought, some water from my well. Of course, some abuse this system and become the dreaded friend or relative. It’s reinforced my belief that relationships are critical–lone rangers better be VERY self-sufficient. It’s hard to put a monetary value on such intra-circle trading and bartering and sharing. But it is big.

          Another thing I’ve noticed in this small community–reputation is golden. We have a problem finding labor sometimes–oh, there are people who need work but in getting someone who will reliably show up when he says he will show up is not easy. Thanks to food stamps and welfare.

          Alcohol is a real problem, and of course, marijuana, as this is one of the biggest growing areas in the nation. Folks are often intoxicated, but that doesn’t mean they are worthless or unreliable, off hand. I depend upon several guys that I know will probably smell of alcohol when they show up. And I am learning which ones always smell like alcohol, might not show up, and if they do, might steal you blind. So I don’t write off the alcoholics, off hand, but I recognize the issue. By the same token, offering a drink around here is major social “lubricant”.

          • PrepperDoc says:

            Great insights. My tractor is 45 years old. It cost less than a well used car. So I didn’t risk much to learn a lot about tractors! Never had to deal with the PTO, before, first diesel engine. Convinced me to get a diesel car!

            More skills we have, the better for all of us.

          • Hi Sierra,

            Your comments about reputation and reliability, and the things inhibiting them, really struck home with me. I’m a well-to-do guy in spite of my limitations in a small rural town who treats others well. That attitude may very well be my saving grace when SHTF/TEOTWAWKI comes because it may be prove the tipping point in a mob or an individual deciding not to rob me/raid my property. It might make them think, ‘Why am I gonna go mess with Andy and his group? They ain’t ever done nothing to nobody! He just works hard for his family. They’ve always been really nice to me too.’ It may be the thing that stops them or not. At least though it will give them pause, which works in my favor.

            By the same token, the obstacles you mentioned (welfare, alcohol, and marijuana) are the exact things that make me concerned for staying where I am. Fully 85% of my local town’s residency (and approximately 70-75% of the county residency) are on welfare, which doesn’t exactly suggest people on the up-and-up. Added to that is an endemic alcohol and pot problem (meth is a big one here too) and you can see the concern about an unstable and unreliable populace from which to exist and rebuild society.

            • PrepperDoc says:

              I think I would seriously consider leaving such a place. Sounds more like a prison then A countryside. If you’re really correct that 85%are on welfare, there are essentially no skills available. It will be a sad scene and you’ll need lots of ammo!

              • Sierra Grey says:

                PrepperDoc: I knew that my property was in a marijuana-growing area when I bought it but didn’t know that the property next to mine would sell to a grower (and they have an easement through my property), or that they were as much of the population as they are. The county outlawed growing last year and a lot of the big growers have left. Sad to say that one can buy off the sheriff and fed’s–just fork over enough cash and provide them some names of other growers and the helicopters will just “ignore” your property–but that is common with prohibition. It brings in the worse kind of people. They are all “medicinal” they say, but 99% are simply selling to the street. The Mexican cartel funds a lot of the 99 plant growers–provides them the upfront money for living and other expenses for a good price at harvest. But the law change did clean a lot of them out. I think the only long-term solution is legalization–take the high price out of the market.

                I was pretty naive in dealing with these guys at first. You have to be tough and don’t give an inch. What they don’t want is any trouble or any possible contact wit the law. The give away for identifying rural marijuana growers–wooden privacy fencing if the property is close to the road, water storage, and lots “beware of dog” signs. In fact, the dog signs are almost always the main give away–not that they have dogs, they just want you to think they do.

                In rural areas that are not agricultural, the welfare system keeps the population mix nasty. It’s cheap to live up in the mountains, as long as you are close enough to a city to make a trip every other week to stock up. Food stamps and government benefits keep the bad guys around.

                That said, it’s the property that I have. One advantage that in a rural community you can gain a pretty good knowledge of just who you have to be concerned about. In an urban area, most people don’t know who their problems will be ahead of time.

                I would sell and move if I felt that we had a lot of time left before the bad times come. As it is, I’ve developed my property for a retreat. I live most of the time in a suburb, and will be likely bugging-in unless it becomes apparent that I must flee or if the nature of SHTF demands it, due to health and my age. My property is one fo the few with a body of water and an artesian well, and the shelter is excellent. I’ve got 20 acres and it is next to a national forest. So, I’ve decided that I have to make the best of it. I’ve tried to make good relations with some of the solid neighbors and the ones who are the leaders in the community.

                Other things that I have to be aware of is the high number of older, retired people on pensions. They will become a potential problem as they are fully dependent upon the system. Any breakdown will leave a lot of desperate folks. For now, though, having 20 acres in the mountains with a cabin and resources is better than having nothing, I figure, and far better than fleeing into the wilderness.

                But you are right–these aren’t the best of places. My advice to others is really research the area, ala MD’s book and writing advise. That said, if you are in such an area, get a handle on the problem folks. Don’t write off a guy just because he’s eccentric or tends to drink too much. He may be a valuable friend come bad times.

                • Thank you for your advice and comments Sierra and PrepperDoc.

                  All things considered, if my family and I hunker down and just blend in-don’t make any sudden moves to show than life’s changed, we stand a fairly good chance of being left alone. I say that because, while the overall societal status of the area is poor, things are somewhat counter-balanced because of our immediate neighbors. I really just came to this conclusion while considering the above advice, but if my family and I convinced just two more neighbors in our immediate area to commit to prepping, my “network” owns a tract of land approximately a third of a mile long. There are already three families along the route who are part of my network, with four other families who are ready to join at the first sign of things getting bad. In a SHTF or TEOTWAWKI scenario in which everyone returns to the homesteads, we would have a community of thirty to thirty-five-strong. Everyone has guns and all are either farmers by trade, rural tenant farmers, or hobbyist farmers with small boxplots and/or livestock herds (mostly goats and chickens).

                  Going back to Sierra’s advice, yes, I do have the problem folks picked out-they belong to what amounts to a hamlet across the road whose most endearing quality is a bar where fights are rampant. I’m well aware of the problem and am working on protocols for my “community” to prevent them from raiding us on an alcohol-fueled trip.

                  You know, now that I sit and actually think about the situation, I’m slowly becoming aware that I’m actually not in too bad of shape if all my neighbors come into the fold.

    • Chuck,

      Great comment! You’re right, I don’t think a lot of preppers think about a an occupation or a sustainable income (albeit eleven if one was paid in barter/trade goods, which does have a lot of precedence throughout history) post SHTF/TEOTWAWKI. As for myself, I am currently pursuing an education in naturalistic medicine. When access to “modern things” is limited or impossible, people will still get sick and hurt and, as I have said before in other articles here, the natural world will probably our most abundant source of medicine in that environment. Moreover, once we reach that point in that environment, people are going to be a lot less concerned about what initials you have behind your name (M.D., D.O., P.A., A.R.N.P., etc.) and come with the mentality of, ‘if you can fix me up and it works and it doesn’t hurt me more or kill me in the process or on the back end, you’re my care provider.’ I think you hit upon another great little thought-about point too, which is that that ‘job’ has to be sustainable in an SHTF/TEOTWAWKI world. Lots of sectors in present-day are based on technology that most likely will be gone in that environment. Many job fields in present-day are based on speculative or introspective or asthetic principles or machinations that will have no value to people in that environment. It’s important to identify key needs that people have that have existed throughout history and continue to exist to this day, then see if you can fill any of those roles or learn how to do so.

  12. mom of three says:

    Thanks all for the advice,my mother in law, is still alive and once she handed the money over to me she let’s it go. Our oldest received his money last year . Our kid’s are 11 and 15, so we have a few more year’s to go. Good advice on the attorney, we have one for the business. I’ll check with our accounting firm, we have had them for 13 year’s she may have some advice for us too. I learn so much from everyone here it’s nice to read from people who are living the real life. Thanks

  13. JP in MT says:

    There have been a lot of good opinions expressed here.

    I just want to note that if you feel that PM’s will have no future, then don’t buy them. If you only feel they will have value long term after a crash, treat it as such.

    I don’t think the author is trying to “sell” us something, just sharing information. Some folks tone has seemed to indicate that this is like a sales pitch. So if you don’t agree with him, that ‘s fine too.

    Personally a SHTF situation need not be a collapse. I needed some funds to clear up a poor financial decision on my part. A crisis, abet personal, at the time. I has some PM’s and sold them to cover our losses. Turned out I also had great timing as the market reversed the next business day. It still has not gotten back to the “highs” where it was when I sold, so anything I buy now is like getting an interest free loan. My situation is not typical, and I did not buy the PM’s specifically to make a profit. I bought them as a hedge against future problems; just like I buy food, ammo, medical supplies, debt reduction, learn new skills, practice old skills, and make new friends. I don’t know what the future will bring, but I don’t like the “storm clouds” on the horizon.

    Everybody’s situation, physical and financial, is different. I think we all are working to improve our situations, and the advise given here is helpful.

    Just remember it’s worth every penny you paid for it.

  14. PrepperDoc says:

    Some great and some “interesting” comments (from my pea-brain’s view).

    1. If the central government loses credibility / control, and your corn is harvested, or a cow slaughtered, are you likely to accept US Dollars at today’s market value to buy portions of your harvest or meat? Not likely. Will you able able to fully arrange bartered goods&services “just in time” to fully pay for your potential “highest and best” sale of your meat/veges? Not likely. You are very likely to discount the value of Euro’s, Drachma’s, Dollars, arrange SOME barter, and gee whiz, that fellow with the gold coins and the lady with the silver rounds — that looks sorta SOLID and LONG-LASTING doesn’t it? So there will be a “price” for everything of value. Including precious metals. (If there is no electronics, the value of gold’s conductivity may not be in the forefront of your thoughts, however; you will be more aware that NO ONE in their right mind uses steel for currency — because it RUSTS.)

    DIVERSIFY!

    2. If the society crumbles, I agree that your stock certificates in a far-off company will be useful in your restroom. However, that does not mean the end of “stocks.” I think many of the ships that discovered America were owned by “stock companies.” You will — one way or the other — have them in what passes for “community” in your area also, as soon as more than a few people are next to each other. Say that you discover that I own or make swaging presses that can make ACCURATE rifle bullets, and even JACKETED rifle bullets. Wow! You’d like to have one for YOUR GROUP. But I want the moon for such a press. So you and your group put your assets together (might be lumber, gold, silver, powder, primers, rifles, roof tin, who knows…..) until we strike a deal and you have your press….. Now, who OWNS that press? Your group does — and likely each member, to the PERCENTAGE that they contributed assets toward the purchase. Guess what? You guys are STOCK HOLDERS! It may be a “private stock ownership” (you only allow others to buy in if agreed to by current owners, for example) or it may be “public” where there are less restrictions, but at some point, someone is going to want to make use of their ownership in that group to buy something else — and now they are going to “market” their stock in your group. I believe that is very similar to what went on hundreds of years ago when ocean-going (or large fishing) vessels were so exspensive that it was a group-type ting to buy them. Once I realized that your had to have a way to “market” your ownership (to meet pressing personal needs, for example) then I understand why (capitalistic) societies always come up with some form of stock ownership rules.

    Now, as to that swaging press, I sure think I might want to get one…..

  15. PrepperDoc says:

    If society crumbles, the argument that gold or silver will not be worth anything “because those who don’t have them will not value them” does not make sense to me.

    Just because I don’t have eggs, does not mean that I won’t value them. I may have corn; you may have eggs. I may barter to get eggs precisely because I value them (to eat!).

    People who don’t have silver may well choose to ACQUIRE SOME precisely because of what others have so eloquently explained: barter is cumbersome.

    People who wisely stocked up ahead on gold, silver, powder, seeds, bullets, firearms, fuel, wells, medicines — they may be the “new rich” in such a situation. Just because they have all that stuff, and you DON’T does not make an argument that the value of what they have stored is zero!

    Yes, food and seeds will be essential. But some form of compact tradeable “value” is universal in most cultures, so eventually the “value” of everything (including silver/gold) is going to be established, just as we have “exchange rates” right now for everything on earth: hog bellies, corn bushels, Euro’s, smokeless powder, copper, steel, rubber, gold, platinum, palladium….. you get the idea. Everything will have its niche, and I would not believe the value of gold will be miniscule!

  16. Sierra Grey says:

    What a bunch of great commentary! It’s really reassuring if not comforting to know that there are a group of Americans who have wisely (1) been engaged in preparing themselves for an uncertain future, and (2) have included their finances in their preparations. The real wisdom is that the sort of plans everyone seems to be making comprise the basis of accumulating and storing wealth through out the ages.

    I am reminded that we can never eliminate risk. That there is no perfect plan for every situation. That our best plans will likely prove inadequate in some areas. That God’s providence must be accounted for. Stack PM’s and have a treasure-house of survival preps–it can be gone overnight, or we can be dead tomorrow. But none of these things negates the wisdom of preparing.

    Thanks, again, to all of you who take time to share your thoughts and experiences and advice on this site. And especially to MD for providing one of the most balanced sites on the web. It’s virtually free of extreme thinking.

    • Hi Sierra Grey, It is reassuring to see that some people are paying attention to our world. Enough attention to be aware that the future, while not unequivocally gloomy, is also not unequivocally rosie.

      We aren’t betting on a collapse, but we are making some preps just in case. That’s a way of spreading our bets. If we are lucky, we will never need any of those preps, but if we do, we have them.

      “have included their finances in their preparations.” I think this is critical, and think most preppers agree. The constant comment we hear about reducing and eliminating debt is just a part of that. The more wealth we have, the more options we have. A person or couple with $5,000 socked away has far more options and is far more secure than the person with $50. The person with $500,000 has even more options, and so on.

      Accumulating wealth IS a form of prepping, even for people who do not consider themselves preppers. They are preparing financially for an uncertain future, and the more money they have, the more options they have for remaining secure.

      As we discussed elsewhere this week, “The Millionaire Next Door” and “The Millionaire Mind”, both by Thomas Stanley, are well worth reading to see what actual self-made millionaires think about how they accumulated wealth, and why people who could have accumulated equal wealth did not.

    • PrepperDoc says:

      I’m always astounded and humbled by the number of people on this site who are basically growing all their own food. That may be my weakest area, although I’ve worked pretty hard at doing experimental gardening for the past two years and finally having a pretty decent success. But my hat is off to the people on this site who fed themselves for decades!

  17. JP in MT says:

    Another point that is seldom mentioned but may be worth considering.

    Ownership of PM’s is currently VERY easy. If you are looking to pass wealth to others, either now or when you pass, PM’s may be a very viable option.

  18. Sierra Grey says:

    Penrod– Thanks for the references to the books! You are so right about the fact that good financial planning is prepping. 30 years ago I had none of the concerns about the sort of things we are facing, although I did believe that there were two things to prep for–the certainty of old age and the problem with the national debt. I fully expected a major stock market collapse of the worst kind by 2005, or so. Expected it would impact my ability to live out my old age if I didn’t prepare myself. Even without a concern for a societal implosion, etc, old age and an unstable economy/currency makes prepping financially a must for everyone. My old age limits came on a lot sooner than I thought, but I am grateful that I did start something back then, even if it was not as thorough as I would have liked, looking back. I guess it’s the old thought, “I could have done more.” Had I not taken some steps, I really don’t think I would have been able to survive my current situation. It’s motivated me to make similar preps in terms of surviving the other issues that appear to be likely. I guess my old boy scout training of “be prepared” must have sunk in.

    • Hi Sierra Grey, “I guess it’s the old thought, “I could have done more.” Had I not taken some steps, I really don’t think I would have been able to survive my current situation. ”

      We can all see in hindsight things we could have done better -even those things we did well. The important thing is that you did things when you did, as well as you could at the time without the benefit of hindsight. What you did gives you a lot more options now than you would have had otherwise.

      Perfection is not an option. Doing as best one can is. Good going!

    • another great reference book is ‘The Red Book’ …. of coin collecting. It valuations of coins changes regularly, but its insights into the coin collectors market is invaluable; it also contains a definition of Gresham’s Law, which provides insight into metals as investments/monetary trends in any country…..

  19. One of several reasons pure gold and silver are good money is because they are physically soft.

    That is what makes them divisible. You can literally shave small quantities off depending on what you are buying.

    The whole point is you don’t have to worry about the form your metal is in. If you had to worry about that it would not be a good material for money!!!

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