Monday, March 29, 2010

Gold & Silver vs. Guns & Ammo

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In the survival prepper community no topic seems to garner more heated debate than the question of whether to buy and stockpile gold or ammo. The gold side argues that investments in precious metals will see you through any crisis and are easy to accumulate and store. The ammo side, on the other hand, heaps scorn upon precious metals with such apparent simplicities as "you can't eat gold". Instead, the ammo folks recommend storing food, water, medical supplies, seeds, land, and other basic physical necessities as the best and only way to properly survival prep.

The reader of this blog may now well be asking themselves which survival supplies I recommend, gold or ammo? My answer is, YES! I do not take sides in the survival prepper war because I see a need for both precious metals and actual survival commodities in the following probable and possible future scenarios:

1. Inflation - has been the bane of our national existence the minute we started using fiat currency (paper money). It is highly likely that inflation will continue and accelerate in the future. Precious metals like gold & silver have been bulwarks against wealth erosion via inflation throughout history. It is likely that these shiny metals will continue to maintain their glow in the future.

2. Hyperinflation - The folly of our deficit spending and expanding fiat money supplies make this economic disaster a legitimate concern for any thinking man or woman. Once again, gold & silver have historically helped its owners to weather such times when the inherent worthlessness of a paper money supply unconnected to gold or silver becomes evident to the entire society. Inflation numbering in the thousands of percents per year can easily result, devouring the buying power of any paper or paper linked securities.

I have not mentioned the ammo side in the last two economic situations, because its value is distinctly inferior to precious metals in these particular cases. During the above inflationary periods basic necessities like food, clothing, shelter etc., are available, with only occasional spotty supply interruptions. The main problem isn't that food doesn't exist on the supermarket shelf, it's just that the prices have increased sharply. Stored gold and silver is easily converted to negotiable currency and will keep pace with either inflation or hyperinflation, maintaining or even possibly increasing commodity buying power. On the other hand, the extensive use of ammo in these situations where basic law and order is still present will only get you shot by the authorities or imprisoned. In addition, gold and silver coins or bars can be easily stored, transported, and sold. Physical supplies, not as much.

3. SHTF and / or TEOTWAWKI - In the case of the end of the world as we know it, precious metals can quickly lose their luster. If millions are starving, lacking basic medical supplies, and law and order has broken down completely, shiny metals will only get you laughed at or more likely killed. Imagine trying to bargain for food or water during the height of the Katrina disaster, with mobs of desperate looters roaming the streets, with only a few gold or silver coins! Starving masses want bread and clean water, not useless pocket change! In addition, for those who believe that a return to such a primitive existence will be permanent, precious metals will likely never be of any use as well.

However, in the course of human history there have been many natural disasters, wars, plagues, economic collapses, but we have always recovered. A return to even a limited law and order society will likely see the return of the gold and silver coins to favor. Why? Because carrying around bales of hay all day long so you can barter them to purchase chickens from a guy who's been touring with clucking fowl is a ROYAL PAIN IN THE ASS! That's why mankind reports the use of gold and silver coins in our earliest records.

I believe we must go back to the old west for some needed guidance and perspective in this precious metals worth question during a SHTF recovery period. A few hundred years ago when trappers traded with the Native Americans in the wilderness, they traded useful items like knives, guns, ammo, food, clothing, liquor etc., for the beaver skins they desired. After all, what would an Indian in the middle of the wilderness have wanted with shiny gold or silver coins? No, it wasn’t until the trader returned to “civilization” that he encountered trading posts willing to exchange silver and gold for beaver skins or other goods. A true SHTF or TEOTWAWKI situation is essentially identical to this old wilderness trading situation. Silver and gold only have value when you have established enough law and order and reestablished enough economic sophistication, that trading stations can be maintained and made profitable without being burned and raided on a regular basis.

No one knows for sure what the future has in store for us. I think a true survival prepper will use whatever resources he has now to provide for some level of protection for all three of the above challenges.

Disclosure Note: I put my money where my mouth is. I have some of all of the above mentioned survival prep metals and commodities.

Time is running out fast! Hyperinflation seems unavoidable as fiat paper money is being printed as fast as the US presses can run. To protect your wealth and your family, buy gold and silver now from these top companies, APMEX Gold and Silver and Silver American Eagles.

Rick

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