Poised for Recession? Guns or Gold?

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Diamonds, you can carry a million dollars worth in a marlboro pack
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Sounds great.... in theory. In practice, it IS horrible.

When each stone is worth quite a bit, you will find yourself trading potentially a valuable asset for a significantly less-valued asset.

Unless you have the ability to break a diamond....


Otherwise, I would not be surprised to hear of you paying a carat for a loaf of bread. And if you get hungry enough, you WILL. I really, really hope you enjoy that four-figure loaf of bread!

-- John
 
If you're talking a true-to-goodness devolution of social order, then I can't envision better barter fodder than good old .22lr ammo.
 
If you're talking a true-to-goodness devolution of social order, then I can't envision better barter fodder than good old .22lr ammo.
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Yep. Followed closely by .38 Special and .30-30 Winchester. 12 and 20 gauge shotshells might be another good bet. These make up the most prolific
chamberings in America.
 
OK, let's get realistic for a moment.

Q. Why are gold, diamonds, silver, et cetera valuable when there is an economic collapse?

A. Because they can be sold internationally.

Q. Why does international sale matter?

A. Local inflation. While a gram of gold may be worth $30 Local today and $300 Local in a month (due to major inflation of Local currency) it is worth basically $25 Euros the whole time.

Q. But Iron and Boron can also be sold internationally, why the focus on gold and other very high value density items?

A. Because gold et cetera is more easily smuggled. If you want to ship 100 tons of steel you can, but you will end up paying taxes, fees, and more. The same dollar value of gold can be carried in one hand and carried in a suitcase or aboard a fishing boat, pleasure yacht, etc.

Q. What's the big downside to these high value density trade items?

A. If you are forced to sell them (i.e. you are starving) and lack good contacts you will be lucky to get pennies on the dollar.

Now, how about guns?

Well, guns are something you would buy or would be imported in the same collapse. They are what people would be trading gold for. What does that mean? Well, if you have guns, and you have sufficient security to allow you to trade (without getting shot) you can turn guns into gold. You can then use your contacts to smuggle the gold to a non-collapsed country, convert it to a local currency there, buy more guns, smuggle them back, and sell them to get more gold.

If you just have gold... well... now you are just a consumer. You are at the mercy of the people who had what you need. If you have guns you are, at least while you have them, one step up the supply chain. Now people are coming to you in need.

So...

Stock in order of need.

Food (includes gardens and stored food/drink for personal use).
Defense (weapons, armor, etc for personal use).
Medical supplies.
Trade skills w/ related tools (the person who can fix a radio has an edge forever)
Trade items including guns, rum, seeds, CDs and so on (the person who can sell a gun has an edge while he has guns to sell)
Precious items for international sale (gold, etc)
Traditional investment instruments (stocks, bonds, etc) ... these are the best investments but the most vulnerable as well.

There are some holes in that but it's basically right.
 
Jwarren, are we talking about the decline and destruction of modern man or a recession. If it's the latter investmant grade diamonds would be a far better investment than gold or platinum or just about anything else, as they are transportable, you need to come up with a better one rather than pot-shoting the ideas that others came up with.
 
JWarren made a lot of sense to me.

I'll be making moonshine, mead, and keeping honeybees. Moonshine has kept my family alive through the great depression and back before that.

You guys can keep your gold.
 
I think the best approach is a balanced preparation for uncertain times which could be a depression or high inflation. Basically you want to buffer yourself from short term swings and have the ability to produce value on an on-going basis without being dependent on a paycheck.

I haven't accomplished all of these things myself, but this is what I working toward;

- Debt free. Being in debt is being a slave. hoping it gtes wiped out is theft.

- Independent means of producing value that others will pay or trade for. This could be a skill, a farm, a small business that can endure various conditions. Inventory heavy business is probably not as good as a service (skill/tools or knowledge) based one since inventories can be confiscated or damaged. This could also be through investment in someone else's business through a partnership, stocks, etc. Just make sure that the underlying business is sound, has low debt, has good profit growth, ethical management, etc. and that you can easily get your money out at any time. Could be a supplement to your current income that could be a fallback to full time.

- Material buffer for personal survival to get through fluctuations of income and currency/barter. This would be xx months of food, fuel, clothing, heating, etc. Food, gardens, Handy for periods of loss of income or severe societal disruptions such as in the transportation and distribution system. If there is no food on the shelves then it doesn't matter how much gold or dollars you have to trade, it isn't there.

- Means to operate freely. This would be the means for self-defense, transportation, communication, etc. without dependence on the local police, bus, telephone, etc.

- Barter items for getting through short periods of disruption until your means of providing value to trade kicks in. Ammo, fuel, batteries, water or filters, TP, gold rings, etc.

- Precious metals are mainly for preserving wealth for long periods of time, like generations. Only after I was set for the other areas for enduring at least six months of grid down would I even think about gold or silver coins.
 
I'll weigh in.

Gold is great because just about everyone will take it as barter. The high price actually helps from a storage aspect. It takes roughly 50 oz.s of silver to 1 oz of gold so you can store more wealth in the same space. Gold is a much more efficient way to preserve and carry wealth. However silver is also a great for barter and breaks in to smaller barter amounts. Consider the gold the $100 bill and silver the 1,5, 10, 20's.

You can only shoot one gun at a time and if you've got more than a couple you'll be dragging a lot of extra crap around with you that will only slow you down. Of course you can trade guns and ammo just as readily as silver and gold but do you want to arm the competition in a SHTF scenario? :scrutiny: We've all seen the ban induced rise in value of firearms so there's an opportunity to make a couple bucks.

I guess you need to figure out exactly what you're trying to prepare for and plan accordingly.

I have a few gold coins and some scrap gold that I keep but I'm not a really weathy person. I've got a little stash of pre 65 US coins that I keep, a few liberty dollars, and even some 5 reichmark silver coins that I have on hand if the need ever arises. I consider it an inflation hedge, SHTF, and a way to preserve some wealth away from they prying eyes of the IRS and others.

my two pennies
 
Pay off the credit cards, buy gold/silver, buy ammo/guns?
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man, you're so right with that first one. Making a few percent on the stock market, or even a maybe-much-better return on gold, starts to sound pretty bad once you realize you're hemorrhaging negative-18% every month carrying over a balance on the credit card.
That said, I seem to be developing a serious weakness for investing in .22 handguns. :D
 
 
It is not too late to buy gold and silver. The point of buying gold and silver is not to make money after it goes up in price. The point of buying gold and silver is to have something of actual tangible value when the day comes that you're able to wallpaper your home with dollar bills. It's damage control in the face of inflation. It's just a way to not lose everything, as Gary North http://www.lewrockwell.com/north/north436.html says, in one of his other articles.

A short intro to the reality and nature of inflation that few people probably ever got in school: You often hear people on CNN or MSNBC talking about this "mysterious" thing called inflation. The Treasury Department says that inflation is "a general rise in prices." They offer a pathetic non-explanation of its cause.

Inflation isn't mysterious in the slightest. It's quite simple: inflation (this general rise in prices) is caused by the government printing little pieces of linen with numbers on them: billions more than are required to replenish worn bills in the existing money supply. To illustrate, let's bring in Say's Law. This law says that every salable thing in an economy can be purchased with all the money in the economy. For example, if there were only 100 pens in an economy, and 100 dollars in money, each pen would sell for one dollar.

Now, let's say someone takes a dollar, which everyone agrees is the going rate of a pen, and copies it. He makes an exact replica, and releases it into the economy. Let's say he does this 100 times. There are now 200 dollars in the economy, but still only 100 pens. Now, the 100 pens will each cost two dollars. While the money supply has increased, the demand and production have not necessarily increased. That means the price of the pens has gone up artificially, meaning, the demand for pens has not risen and caused the price to go up, but it has the appearance of increased demand. Such a situation may send false signals to manufacturers to increase production when there is no real demand.

Printing new money out of thin air is called "counterfeiting." It's immoral because it debases the current money supply, making your money less valuable. It especially harms those who rely on savings to survive. The current rate of inflation is about 13% annually. That is cutting into their savings. It's literally stealing. Who is the nation's number one counterfeiter? That's right: the Federal Government, through its puppet, the Federal Reserve. Guess who benefits from this money before it goes on to devalue the rest of the money in the economy? The government and its beloved contractors.

Gold and silver are valuable and retain their value despite inflation for two key reasons: people everywhere like the stuff, and it is known that there is a finite supply. This is not the case with linen slips with numbers printed on them. $400 of gold in 1980 got you just about what $900 in gold gets you now. You won't make any money by buying gold, but you'll save the money you have now. That is the point of buying gold. It is not too late. We're still heading into an economic disaster. Social Security will most likely tank by 2035, and if you are still around, you will not regret having purchased gold or silver for those times.

-Sans Authoritas
 
Guns, good luck finding someoone who will actually buy your gold coins at market price.
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Uhh...precious metal vendors are always buying and selling gold no matter what. Buy and sell prices over spot price is roughly 1% in large bullion, a fraction of a percent more at smaller bullion sizes. At the current $970/oz for gold, that means in large quantities, you are going to pay $10 more to acquire it over spot, and you lose $10 over spot when you sell.

The overhead for gold isn't as much as people might think. The whole point of precious metals is to have it in quantity, not to buy low/sell high like traditional stocks. You horde it somewhere and use it as a measure of value. Some people put too little faith in it, and some put too much faith in it. No one said sell all your guns and medicine to buy gold. Gold is simply one more outlet that has worth independent of the US dollar.

As Sans Authoritas says, gold isn't really "worth more" today. Your dollar is worth less but an ounce of gold today has about the same purchasing power as an ounce of gold 50 or 100 years ago. A dollar in 1900 wouldn't buy you anything near what a dollar gets you today. A dollar in gold in 1900 buys you much more than a dollar today.

Gold was $35/oz in the 50's. House prices were about $20-30k. Cars were about $2-4k. That means it took 714oz of gold to buy a house. 86oz for a car.

Gold is $970 today with the recent price spike. That same quantity of gold will buy you $693k worth of house or an $83k car. Even at a more stable $400/oz we've seen over the last decade, that will still get you a $286k home or $34k car. However I haven't seen anyone say throw all your investments into gold because that would be foolish. If you wanted to make money, gold isn't a good method.

Again, gold isn't some stock you trade. It's a stable measure of value you want to hang onto.

Diamonds, you can carry a million dollars worth in a marlboro pack
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Diamond prices are almost exclusively artificially controlled by DeBeers. They have warehouses full of nothing but diamonds and pricing is determined by how much they bleed out. Gold and other precious metals on the other hand has been used by governments and empires for thousands of years and its not exclusively controlled by one private company or government entity. And as mentioned, its hard to get change for your carat diamond if you wanted to trade for food.
 
Cesiumsponge wrote:
Diamond prices are almost exclusively artificially controlled by DeBeers. They have warehouses full of nothing but diamonds and pricing is determined by how much they bleed out. Gold and other precious metals on the other hand has been used by governments and empires for thousands of years and its not exclusively controlled by one private company or government entity. And as mentioned, its hard to get change for your carat diamond if you wanted to trade for food.
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Aye that, Cesium. Diamonds are actually one of the most common gemstones on the face of the earth. Clean diamonds, granted, are harder to come by, but every time a new diamond lode is discovered, DeBeers comes in and snaps it up. It's just not economically feasible for the mine owners to refuse to sell.

-Sans Authoritas
 
Silver is silver. Gold is gold. Etc.

Diamonds dug out of the earth have all these magical grades based on aesthetics. These various grades are measured by the quantity of happiness of a woman receiving one. We started perfecting artificial diamonds that are superior to natural ones in the four C's and we get marketing noise from DeBeers that they're "not natural" and therefore worth less.

Gems are cheap and artificial grades are completely superior to natural ones. All our optical and electronics industries use lab grown crystals for lenses, optical devices, and semi-conductors, not ones dug out of the ground.
 
The best way to avoid a recession is to refuse to participate in it. Good time to buy stuff like land and stocks.

Guns are not a good investment. Not owning a gun at all is a bad choice. For example, think beyond a recession...what if there was a complete societal breakdown? Everyone must fend for themselves (like most of human existance). You have a lot of gold but no guns. Someone with a gun is going to end up with some of your gold...one way or another.


GOLD is for the mistress—silver for the maid—
Copper for the craftsman cunning at his trade.”
“Good!” said the Baron, sitting in his hall,
“But Iron—Cold Iron—is master of them all.”
-Kipling-
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Yes, I think gold is going to go much higher(from its current $940 an oz. price).But if the economy falls off the face of the Earth and the Dollar is worthless do you really want to be out there trying to barter with a few gold coins that you purchased in Feb. of '08..I will be more secure with another metal... Lead
 
gym wrote:

Jwarren, are we talking about the decline and destruction of modern man or a recession. If it's the latter investmant grade diamonds would be a far better investment than gold or platinum or just about anything else, as they are transportable, you need to come up with a better one rather than pot-shoting the ideas that others came up with.
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Don't get bent out of shape. You made a suggestion and I pointed out the MAJOR flaw in that line of reasoning.

If you read my post prior to your suggestion, you would see that I *DID* have a suggestion-- a few actually. Namely, I pointed out the suggestion that Consumer Durables and Consumables would be an equitable and liquid means of barter.


However...

I'm under no obligation to refrain from pointing out the major flaws in a suggestion-- especially a one-liner. You wanna hear constructive? Perhaps I dissuaded someone from actually following that suggestion. I'll call that constructive.

Do a search on "SHTF" and you'll see MANY suggestions by posters of this forum-- including me.


To answer your first question. I don't think that there HAS been a determination as to whether we are specifically talking about "decline and destruction of modern man" or a "recession."

If we are talking about the former, diamonds would frankly be a laughable means of barter. That kind of thinking-- much like precious metals-- is a non-essential needs mode of thinking. People are NOT interested in small, shiney objects when their stomachs are empty. A diamond becomes a pretty little rock with absolutely no use to the adverage person.

And then we are back to the point that you will NEVER get what you think the value of such would be in a barter-- nor would you be able to "break" it for smaller transactions.

If you had 100 diamonds in a little box, it would not be long before you had none and have VERY little to show for it when considering the monetary resources that went into stocking that little box.

And you foget the balance of power. It's NOT in your favor.

I'll illustrate:

You walk up to my house hungry, thirsty and in need. Well... bad example.. we'd likely help you anyway. But let's just say that I was not a person interested in helping without payment.

So... you walk up interested in getting food. "Sure... what do you have to trade?"

You say... "I have diamonds," and show a few. I may say... "What am I supposed to do with those?"

If you convince me that they would have use-- or if I DO believe that one day all this will be over and I'll be able to profit from them, I may take your deal.

So I'd say... "OK... I can give you a bag of food for one of your diamonds."

"What??? This diamond is worth thousands of dollars! I would need a truckload of food for this!"

I may respond... "well, I can't give you a truckload. We need food, too. Here's your choice-- Take a bag of food for that diamond, or walk away hungry."

You'll take the deal.



Now... if we are talking about a recession.


WHY exactly do you need to have a cigerette box full of diamonds???? We've been through a lot of recessions. We'll go through a lot more. People don't go on the lamb during a recession. They complain a lot. And they look for better options in their 401(k) or get new jobs. And they still watch American Idol.



At any rate, I doubt you'll appreciate this analysis, but hopefully it will be of use to others. I DO resent your comment regarding potshots. I won't lie to you. It smacks of a guy that got his underwear in a knot because their suggestion was found to be seriously flawed. I've devoted quite a bit of time to trying to help people understand the mentality of SHTF situations on this board, and have seen with my own eyes the progression of a fairly protracted one. Moreover, I've made numerous attempts to bring what I observed and learned to those that may not have to repeat dozens of mistakes that we made.

Do I have all the answers? Of course not. But why should I NOT point out serious flaws in a line of reasoning when I see them?


I could go on but what the hell.... I need a cup of coffee, and this is already mundane.



-- John
 
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Excellent points all around, JWarren.

By this
How many bushels of potatoes do you want for one of your AK's? That's an important question if food is really tight and your potential trading partner wants to trade only a peck.
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I was trying to address one of the same point with guns that you so nicely made about diamonds. They represent a pretty fair amount of money that you spend now. Are you going to be happy trading one for half a cabbage and a rutabaga?
During a recession, I'm not sure there'll even be much of a market for guns. As you pointed out, life goes on very much as usual except people do without luxuries. People who think guns are a critical item largely already have guns. People who don't think they're critical aren't going to spend money on one when money is tight. There will, of course, be plenty of guys who will be happy to buy them off you at a price that is unfavorable to you for resale during the coming better times.
Guns are something to buy for your own enjoyment and use. They aren't the best option as a financial tool.
 
Question, when you purchase gold for investment purposes, do you actually get the gold bars? Or do they stay at some holding place untill you decide to sell them? I know securely storing them at a house would be problematic, but it would be cool to have some around.
 
Therealmordis wrote:
Question, when you purchase gold for investment purposes, do you actually get the gold bars? Or do they stay at some holding place untill you decide to sell them? I know securely storing them at a house would be problematic, but it would be cool to have some around.
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You can do either, but it is recommended to have the gold in your actual possession. Krugerrands or ingots are usually the best way to go.

As for liquid means of barter for other purposes, JWarren is right on. In a serious depression, seeds, clothes, and food will be optimal for day-to-day living. Essentially, anything anyone wants.

-Sans Authoritas
 
I had a neighbor who was into gold, and he literally kept it at home in his safe. He was quite a noteable guy (predicted Hurricane Camille's landfall as a meteorologist) and while it was an honor that he trusted me enough to let me know (I was helping him move several things, including his safe, which he had to unload to move). He kept gold at home. Liquidity would be my biggest issue with gold. Yeah, you can sell it, but you certainly won't want to drop into the pawn shop. Of that I must plead ignorance.

As to a case of diamonds, Jwarren explained that very easily. And yes, that does indeed happen. When a loaf of bread cost $1 in the Yukon during that gold rush (or heck, a whole pie), it is easy to see how diamonds can be viewed like that today. As the point was made, luxury items lose value when luxury becomes unimportant. Especially since diamonds are artificially expensive. A box of diamonds works best in the future-primitive pulp fiction novels. I doubt we will fall into a barter system. Even in the great depression, where people lost phone service in areas because the phone company went bust (happened in the panhandle of Florida to my family), money was still spent. The issue then was it was not readily available.

The trick, if it is your concern, would be to take a recession-resistant government job. The post man or police officer has been employed in the darkest of panics or depressions. That is cynical, of course. The policeman was envied by the unemployed during the depression. His small sallary was not envied during the roaring 20's or today. When incomes are great, the stalwart jobs are less desirable. When money is tight, thoughts change.

Ash
 
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