December 16, 2013 ~ I’ve talked to a lot of people about why it’s important to own gold and silver, yet I find that most people don’t fully grasp why. Many of the opponents to owning precious metals for preparedness reasons often cite that because they can’t eat it, it’s worthless as a prep.
First, let me just get it out there that I don’t advocate buying precious metals if you aren’t prepared in the other areas, namely food, water, cooking, shelter, defense and so on. Gold and silver aren’t going to do much for you if you’re not prepared to meet the basic needs of your family during a disaster or crisis event.
However, many preppers will get to a point where they have reached their goals, or realize they can’t evacuate with all of their preps, yet still want to be able to evacuate with as much of their wealth as possible. There are many examples in history where people have had to flee with nothing more than what they can carry, but were still able to provide for themselves because they took whatever gold and other valuables they had.
If you’re one of those people who believe that you’re already living at your retreat area and thus don’t have to worry about bugging out, you’re delusional. No place is safe and no one is immune for forced evacuations. Much like no one who has money in banks is safe from inflation or the coming bail-ins. Your preparedness plan needs to accommodate for the possibility of having to leave your home with the possibility of never returning. There are too many reasons why you would have to leave that it would be far outside the scope of this article to even list them, but as a prepper, you should already know.
On a similar note, there are preppers that live in the city who know they’ll be bugging out ASAP for certain events. The smarter preppers also know that because they’ll be leaving, they can only store so much equipment and supplies at their home. Anything past a certain amount is just wasted money, as they can’t fit it all into their vehicles, assuming that they’ll be able to drive out of the city.
Given these various scenarios, it makes sense to have some way to store value that is also easily transportable. This is why precious metals will be part of most preppers plans. Sure, there are other items, such as food, ammo, matches, fuel, tobacco, alcohol, and countless other survival and comfort items that can be used for barter. But most if not all of the items just listed, and others, have issues when used for trade or barter, as they are not easily divisible and nearly all of them are consumable. Unless you’re looking at a Mad Max scenario, which is extremely unlikely, the local economy will still be based, at least in part, on items that have common denominators to our current money.
In order for something to be used as money, it must meet the following criteria:
1) (relatively) fixed amounts
2) not easy to create
3) not easy to destroy
4) easily divisible
This is why items like water, chickens and cupcakes don’t serve as a basis for money. As a barter item, nearly anything would suffice, so long as both parties agree to an equitable trade, but the reason we don’t use barter as the foundation for our economy is because it’s inefficient.
Let’s say you have 3 chickens that you want to trade for a goat, however, the current rate is four chickens for one goat. You don’t have four chickens and the other guy isn’t going to give you three-quarters of a goat (especially if you wanted a live goat), how are you going to make an equitable trade? The short answer is you aren’t – in order to make this trade, one of you will be on the short end of the stick.
The reason we have money is to prevent the above situations from occurring. If your currency grows on trees, or can be increased by mating animals, the system quickly becomes destabilized. The currency used needs to have the confidence of the people that it will retain its value and an intrinsic value that everyone understands. This is why precious metals, primarily gold and silver, have been the items that people have used as a basis for their economies for thousands of years.
Some people may make the argument that if these precious metals were so useful as currency, why aren’t we using them now? It’s a good question, but hopefully, by now, the answer is obvious. When you have a currency that is based on a commodity that cannot be easily increased, you have a stable economy, but this stability prevents bankers from creating money out of thin air, which reduces their ability to make money. As you can imagine, this really irritates the bankers.
When paper money is backed by metal, it’s referred to as being on a “gold standard.” At one time in the US, you could take a “United States Note” – not a Federal Reserve Note – to the bank and get 1.5 grams (about 23 grains) of gold. If you had a Silver Certificate, you could get silver. During this time, gold and silver were legal tender and were used as money. Paper notes simply represented a given amount of gold or silver that was held at a bank. People preferred carrying the lightweight paper, instead of the heavy coins, yet anytime they wanted to trade in their paper for real metal, all they needed to do was take the notes into any bank and convert them.
Thus, there is a rich history of using gold and silver as money. Not only in this country, but across the world the “gold standard” used to be the norm. Unfortunately, Americans have a very short memory and few remember that we once had real money.
Written by Rob Hanus for Kettle Moraine, Ltd., August 14, 2013.
