goldI suppose I have to address this issue sooner or later. What do I think about buying gold and silver to hedge against a financial collapse? Personally, I’d pass.

Among the 10 Principles of Preparedness, the Principle of Financial Preparedness is Number Nine in order of prioritization. If times get so tough that one feels like they have to rely on gold and silver, there are a heck of a lot worse problems that will come to the forefront which will have nothing to do with traditional currency.

Several years ago I had a garage sale at my mother’s home in Las Vegas. She was a notorious pack rat who had run in to sufficient financial troubles that she was willing to part with some of her “treasures.”  My sister and I traveled down to Vegas to help her organize, promote, and execute the sale. As I began pricing items, my sister kept assuring me that I was pricing things far too low and that they would sell in Vegas for a much better price. I can honestly say that I was shocked at what people were willing to pay for my mother’s items.  My sister was right.

goldIronically, it was less than 2 years later that my mother passed away and I was responsible for selling her “treasures” yet again, only this time in Utah.  I was once again rattled by the prices that her items were selling for, but this time because people were offering pathetic, nearly insulting prices for the goods. If I had it marked for only a quarter, inevitably someone would offer only a dime for it. (This was actually a bit difficult to take from an emotional standpoint given the circumstances.)  It didn’t matter that 6 hours away that same item would have sold for 4 times the marked price without the purchaser blinking an eye. What was even more surprising to me though, is that some of the oddest items that I had modestly priced triggered a “buying war” among a few of the browsers—rubber Stampin’ Up Stamps, Mason Jars, scrapbooking supplies, and some other oddball items that nary garnered a glance in Vegas two years earlier. The difference between Vegas and Utah County? Culture.

Gold-Backed Currency History

In spite of our culture valuing gold and silver for so long, it’s wise to understand that it’s really predominantly a “cultural thing.” Gold was supposed to be the backing of every U.S. dollar that’s ever been printed. Then the monetary system digressed to only being approved as fractional backing by gold. Now, it’s not a backed whatsoever by a hard asset. Our banking system is now permitting loans of fiat money to be backed with a small percentage of more fiat money.  Credit card companies are permitted to issue billions of dollars of “micro loans” every year without a single gold or silver coin in the backing. Not that I agree with the foolishness of these policies, but the fact of the matter is, when all is said and done, even gold and silver’s value is solely based on what someone will purchase or gain. Thus in my opinion, they are likely to only have value to a good dentist someday.

goldI think the best time to own gold is actually in the past—about 12 months ago or longer.  I think that there was obviously a financial gain to be had by that. But think about it for just a moment.  If gold is so valuable, then why are so many people  trading it in… exchanging it for more fiat money? This is simply because no one can purchase what they truly need with gold.  It’s not the gold that is valuable, it’s what it can purchase. And with the exception of a pawn shop or a drug dealer or black market broker, it’s rare that a person can walk into a place of business and purchase what they want and need with a gold coin or a gold brick.  My suggestion to anyone contemplating investing in gold is to first ask yourself if you have everything else covered.  And if you believe you have everything else covered, what about the other people you care about?  My personal belief is that you can never be perfectly prepared. There will always be something else you can do, learn, or obtain, to better establish an environment of independence.

Barter, Not Gold and Silver

Speaking of cultures, let’s remember that history is full of accounts of a broad spectrum of civilizations which thrived on consumable commodities such as salt, wheat, nutmeg, cattle, essential oils, and corn—not gold or silver.  When civilizations were discovered by people from other cultures which valued gold, then, and only then was the original civilization known as being “wealthy”—they were viewed that way simply because another culture labeled them as such.  When a time comes in which you just have to focus on the necessities to get through the day, then only the necessities will be worth anything to anyone else.

goldIn dire times, “the market” in their infinite wisdom (sarcasm intended) may arbitrarily place a value on gold. But I assure you that such persons are not dining off of gold broth nor are they living in a gold-plated shelter. The value of gold is merely established by digits flying through the air, exchanging gold for some other currency or wealth.  When such exchanges cease to be possible due to an earthquake, famine, fire, or something much more dire, it won’t matter who says what, and who claims they are wealthy in gold and other assets.  The size of one’s house and the label on one’s car only means that they ultimately paid more fiat money for that property, and nothing else. No matter what some ghost-like entity says gold is worth, it is meaningless to the man who is hungry and cold and even more meaningless to the man who has a bounty of it who’s stranded in the middle of the North Pole.

goldIn my opinion, gold and silver right now should be viewed no more differently than any other stock or bond which a person can purchase, leverage, and profit from. Yes, it clearly is a much safer bet than all of the rest, I’ll grant you that; but it’s nothing more than that—a bet. And given what centuries of history have taught us, there is no reason to place it in such a lofty place in our priorities so as to ignore the other more pressing matters of preparedness. I assure you that the possession of gold and silver and other hard assets will be meaningless within hours after a national (then worldwide) financial collapse is evident. Being debt free will mean a heck of a lot more to a person’s state of preparedness in such an event; which is why I suggest that the best form of financial preparedness is to see to our other priorities and eliminate as much of your debt with the fiat money you have now.


Michelle · October 29, 2010 at 8:54 pm

This is exactly what I’ve always thought…you can’t eat gold! So what good will it do you when the SHTF? I also feel the same about people who try and time their stock market investments, getting in and out, in and out, trying to beat the system by getting out just before any major crash. But, if the market crashes badly enough where it can’t recover, then any fiat money you have will be worthless anyway! So why try and jump in and out based on feelings and news reports that everyone else is seeing at the same time as you? Then, when the crash doesn’t materialize, your portfolio value gets eaten up by transaction fees, not to mention selling low and then buying high to get back in. Unnecessary. Just like gold, etc….Best just to leave a conservative portion of your portfolio in the market and hope for the best, absorbing the slow and steady increase in value over the long term.

Steve · October 29, 2010 at 10:00 pm

I’m really wondering if being out of debt may or may not mean much if we ever do have an EMP type SHTF. If the electricity doesn’t come back on, it will effect our money in the bank or 401K as much as the records of our debts. Everyone always says to get out of debt but just how much it would matter under a total collaspe?

    Kellene · October 29, 2010 at 11:13 pm

    I hear a lot of people mistakenly assume that if things go south they wont’ have to pay their bills anymore. They couldn’t be any more wrong.
    What folks mistakenly assume is that we will go from “normal” to “SHTF” stage quickly. Such is not the case. There will be a great deal of turmoil leading up to a full-blown collapse. The being debt free during that period of time is vital.

    Additionally, chaos breeds desperation and criminal behavior. Look at what’s going on right now with the banks, trading companies, and credit companies–they are already behaving in a very desperate manner. Don’t think for a second that just because there is no power or there is a financial collapse that anyone will be free from misery being inflicted upon them. I’m telling you that those we owe money to will become even more desperate and as such won’t have any trouble delegating collections of payments to other human beings in your back yard who are desperate enough in their own right to work for them. Regardless of how rational an act may be, I doubt that there will ever be a shortage of persons willing to carry out those acts. But if you are out of debt, you’re much less likely to be on any desperate company’s radar.

Rori · October 29, 2010 at 10:07 pm

Steve has an excellent point there. Could you please address his question, I would appreciate hearing your thoughts.

Again, thanks for a another thought provoking topic!

Sue · October 29, 2010 at 11:22 pm

I only worry about one thing and this is based on historical evidence: how to pay for taxes; ie., property taxes when it all come crashing down. You might have no debts, but if you can’t pay your taxes, they will take your property for non-payment. Taxes have never been suspended because of disasters. The only use gold and silver will be is to convert to the new currency (if the dollar is dead, there will be another currency). You won’t be able to convert from dollars to (Amero’s????) whatever. It will be from gold and silver to whatever. Then you will be able to pay those ever-present taxes and stay in your shelter packed with survival goodies. I can’t think of any other use for gold/silver and that might be a reason why you might want some. A very interesting public speaker by the name of Chap. Lindsay Williams in his DVD series “The Elite Speaks” (free on You Tube) stated that the elite are planning on destroying the economy by 2012 so if you have a hand full of gold and a hand full of silver, you might make it (evidently through until a new currency displaces the dollar).

    Kellene · October 29, 2010 at 11:30 pm

    Actually Sue, the payment of property taxes as you’ve described them is based on a misunderstanding of some fundamental laws. In order to understand this though there is a lot of studying to be done (because lawmakers just LOVE hiding freedoms amongst a bunch of complicated, flowery word-smithing.) For some insight into this, I recommend tuning in to The Preparedness Pro Radio Show this weekend (Sat. from 10:00 a.m. to Noon, Mountain Time) for a discussion on this very topic. I will have an expert in freedoms and the law for the full two hours.
    If you miss it, you can download the recorded archive of the show here:

Liz · October 30, 2010 at 11:51 pm

I have always been told that the failure of people to pay their taxes in the 30’s was the reason for losing their homes. So I don’t believe they will stop when the monetary system goes south. The government does not have any money except for that which comes from “WE THE PEOPLE.” Seriously, anytime the government comes forth with money, it comes from off of our backs. Did you read where the federal government just gave 26 million for the street cars in the Sugarhouse area to meet the trax line, which is only two miles in length. They didn’t have any money to give, it is all of our money and I frankly would prefer to walk or to educate our people with that money! Who were the dopes that accepted that check as if it was a “GIFT” and with smiles on their faces – where did they get that money – WE THE PEOPLE!

    Kellene · October 31, 2010 at 1:46 am

    Liz, the assertion about why people lost their home is completely incorrect for so many reasons. For starters, prior to 1943 there were more people who understood that they were not required to pay federal income tax in accordance to the Internal Revenue Code.

    I totally agree with the fact that the government doesn’t have any money to grant, give, extort…it’s all ours.

Jake · October 31, 2010 at 6:09 am

Here’s a different take…

you have money in a retirement account… why not take 10% and do a gold IRA?

if money becomes worthless there is still a probability your gold will be worth something… why let ALL your money become ‘worthless’

Gold has always been a hedge… but hedge needs to be defined…

short answer: insurance…

don’t buy gold cuz you think that later you can sell it for a profit… buy gold cuz it Holds Its Value…

back at the turn of the century (1900) a one ounce gold coin was worth $20…. and you could buy a ‘fine’ mens handmade tailored custom suit for it…

today, you can take that same one ounce coin and one ounce (today) is worth $1359… you can STILL purchase a fine tailored custom suit for the same amount of weight in gold… why? cuz gold is an inflation fighter… it PRESERVES value as he dollar becomes worth less…

does that mean gold has no risk? heck no… the gov’t ‘could’ confiscate it like FDR did (they made everyone turn their gold in… and a $10,000 fine if found possessing any after the deadline) – so there is that risk… the only gold you could retain was old gold coins – considered collectables… this is why someone like Glenn Beck will only buy old coins hoping this same protection may stay in force… but gov’t could get desparate and take this too…

If you had 10% in gold (i’d prefer physical in your possesion but I don’t know of any way to hold a gold IRA in your posession – law says a “Fudiciarary” must hold the gold so you still have ‘counter-party risk’ = the risk that someone else has to be depended on to be honest and have your gold when you want it) you may have an ‘insurance policy’ if the dollar really tanks (fast)

of course gold is still valued in dollars and if the dollar collapses then maybe you would have no way to ‘trade it’… (assuming the dollar did a hyper-inflated crash overnite – not a long drawn out version we are seeing now)

but there is a circumstance where the dollar could start really falling fast and gold really going ‘up’ in price… but wait, gold doesn’t really go up that fast in value… it STILL has the same ‘buying power’ – so its the dollar that is going down ‘AGAINST’ gold… if this were to happen in real life you could take, say $10,000 of gold you bought today and if the dollar ‘collapsed’ and gold shot up to say 10X the cost of today… ($13,000/oz) then you might take your $10k investment of gold and sell it for a $100,000 of Worthless Dollars – but then take that amount and pay off your mortgage (assuming it’s 100k balance) – do you see how gold could come in handy to allevieate debts? Other than that you still may sell gold for many more worthless dollars to pay the insanely high prices of everyday goods but still have the ‘same’ buying power…

I’m not saying i don’t agree with the author… it will be hard to ‘trade’ your gold coin down at Kroger’s for some food… but then again if the Schumer hits the fan then maybe Kroger’s won’t have any food anyway… but you could still use gold to buy stuff from a neighbor/friend and they use the gold to buy something from someone else… gold is only a ‘store of value’ since if I own an cow and you have some chickens I don’t really want to give you a cow and take 1,000 chickens in return (not sure of the cow exchange rate to chickens) but i could buy a cow for gold… and buy some chickens for silver or copper… it’s just ANOTHER barter value commodity to make change when you don’t have enough chickens to make you cow-deal work…

Gold has always been money… so I wouldn’t dismiss it out of hand… if you’re tight and don’t have a lot of extra cash to buy gold then i’m with the author about stocking up on lots of food, household items, guns, bullets, butter and other stuff that even if you don’t like it personally you can always trade it for stuff you do… Ammo is another “precious metal” that you can trade for food, medicine, seeds, etc… so think in terms of what becomes the most valuable when stuff is dissappearing… in fact, google the ‘top 100 things that dissappears first after a disaster” to get an idea of what may be good items to stock up on and use for barter…

do you know what the most cherished and valuable things were after Katrina:

1) Bottled Water
2) Toilet Paper

think about it…

i prefer to stock up on ‘wet ones’ when times get tough…

during the 30’s depression there were thousands of towns/areas where their ‘own’ currency popped up in order to stimulate and preserve their own local economy… if the SHTF or we go TEOTWAWKI we will see similar trends…

when innovation to survive kicks in there will be things you want and things you will be willing to trade… but they don’t always match up to a even trade and that’s where currency comes in… just a way to ‘transfer’ value into a ‘store of value’ until you can then find something you want and use your ‘stored value’ to purchase the goods you want…

don’t totally dismiss gold.. but if you have money in an IRA/retirement plan and you ‘can’t’ get it out and there is a chance it becomes totally worthless or gov’t makes you give it to them and they give you a pittance of an annuity (like they do in England) then maybe having a bit of gold on standby wouldn’t be a bad idea…



    Kellene · October 31, 2010 at 9:49 pm

    I think the mistake that folks make is in believing that “gold holds it’s value.” They only think that way because they haven’t had to live through an event in which it did not.

Tracy · November 2, 2010 at 1:27 pm

National Inflation Association has a great website. They don’t sell anything, they exist to teach us and prepare us for hyperinflation. They have a section called “NIAnswers” and I asked the same question: will we lose our houses to taxes if the fit hits the shan. They said no- you can look up the questions yourself, they’re really informative.
Kellene, I have heard of the unconstitutionality of income tax etc, but even if it is “legal” no one seems to attempt it and “get away” with it. I’m going to go listen to your radio show now, but that’s my first thought. When we get “picked up” by the authorities for “tax evasion” we can talk about the constitution all we want, but we’ll sit in jail while our families try to find a place to put our preps.

    Kellene · November 2, 2010 at 3:56 pm

    Tracy, actually I had subscribed to NIA for a long time, but it got to the point that all of the e-mails I got from them were selling something. So I discontinued it. Clearly we have a difference of opinion.

    Let me be perfectly clear here–I choose my words VERY carefully and deliberately–specifically when it comes to discussing federal income tax. Income Tax is NOT unconstitutional.I believe completely in paying what you owe. Congress has been given the authority to collect taxes. However, their authority is limited on whom they can collect taxes from and in what manner.

    I do not believe in tax evasion, even more so I don’t believe in not filing an income tax report. However, I do believe in understanding the law clearly so that one knows how much tax they are truly liable for. THIS is the most serious problem with the payment of income taxes. Most of us pay substantially more than we owe.

      Tracy · November 2, 2010 at 4:30 pm

      Kellene thanks for responding. Right now I’m listening to the radio show. It’s informative in a very general sense so far.

      I don’t want to get caught in a tax evasion talk- I just meant to use it as an example of taking what the constitution says (pay to a certain amount, our actual liablity as you said) vs someone trying to ignorantly tell others it means “don’t pay.” It’s not a good example.

      I was trying to say that if something, like Obamacare or Senate Bill s510 is passed, but regulating healthcare and food growing/trading is not something that the Constitution says the government can regulate… well, it may be unconstitutional, but it still passed. Whether or not it’s constitutional, it’s the law of the land, and if you don’t want a health care plan (for example), you’ll be fined/prosecuted for it.

      That’s what I meant by we can be right all we want but still end up suffering for it. Because it’s a rule that the governing authorities (and their hoodlum collectors, like you mentioned above) can come penalize us for not doing.

      About NIA, I have been on their mailing list for a few months and they have only sent me emails about new articles or videos, and I’ve never, once, been asked to purchase or pay for something. Maybe they used to do that but had enough complaints that they quit? I don’t know, but we’ve definitely had different experiences with them. Of course, someone could still go to their website and read the Q&A or watch videos and not be solicited for money, by not subscribing to their emails.

ken smith · November 8, 2010 at 1:49 am

I have acquired gold not because I think that I can buy a loaf of bread from a starving person, but because I can buy something that I need [or my grandchildren need] when things start to work again. Gold is the only thing that history shows us that will have trading value far into the future. It will be here for me, my children or grandchildren as a usefull medium of exchange when paper money is a curiosity, if that.

jamie · November 8, 2010 at 5:41 am

I’ve botteled butter, waxed cheese, stored and made food. Guess what Sparky it only get’s harder and more expensive. keep listening to the Main stream media and believe that prosperity is just around the corner. FEMA has just set up and supplied 10 regional camps I’m sure you will get food and water from the feds.

jamie · November 8, 2010 at 6:41 am

I think it’s best to learn to make a loaf of bread or some other skill like waxing cheese or canning or botteling butter. These items have worth to me right here right now.I think stuff will hit the fan in the near future. I’m focused on food skills and preserving. If I can pick up a little gold or silver great! Sure is not my focus. But if you all like gold and silver so much and stock up on it I’m sure when you get hungry many of us will be happy to trade food for gold. Then again my beans,rice and flour/wheat may demand a price. You stocked up on gold and silver. I stocked up food/water and ammo. My pets will be fed will yours? My family will be fed will yours? All the gold in the world will not purchase food that is not availible.

Debbie · March 23, 2011 at 11:53 pm

Very Interesting perspective….gives me something to think about!

Meagan · January 22, 2013 at 5:17 pm

Kellene, I have to agree, I have always thought that ammo would be a much better investment than gold or silver in a shtf scenario. Of course in a lot of survival/apocalypse fiction they characters trade with 90% silver coinage, so I make it a point to check my change and set aside any that I find. I am at a loss though as to what to do with my 2 yr old daughter’s savings that my husband and I have been putting into her piggy bank (birthday $$ and spare change, but she has $140 in there now). I would hate for her to lose that if the shtf, but if nothing ever does happen, I want her to have it invested wisely so that she will have some money when she goes to college or whatever. I was thinking that I would buy silver with it so that either way she will be covered. Obviously it’s not a ton of money, but it’s hers and I want it to be available for her whatever happens. Any thoughts?

Kellene Bishop · January 22, 2013 at 7:32 pm

My personal opinion is that purchasing essentials, including ammo, is a much better investment than gold or silver. There’s a place for gold and silver AFTER the crisis has burned out and in an effort to reestablish things, but there’s a lot of time before that kind of thing would happen in a long-term crisis.

Curtis · January 22, 2013 at 8:12 pm

Gold and silver do fit into my prepping plans, and will become useful during the rebuilding phase of this country. Junk silver dimes and quarters can be pressed into service the very first time someone wants to unload some excess of a particular commodity they own, such as chickens, hay, etc.

Gold and silver are a lower priority on the prepping plan, but they are a priority nonetheless. One value of gold is that it is denser and easier to conceal than other commodities. You can deny owning gold, but can’t deny owning land.

If you are prepared enough to make it through to the other side, and have some fiat currency left over, I would recommend converting 20% to silver and/or gold. You’ll burn up the remaining 80% during the oppressive taxation and hyperinflation period before the financial implosion.

    Kellene Bishop · January 22, 2013 at 9:21 pm

    “You can deny owning gold but can’t deny owning land”–good one.

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