Welcome to this week’s newsletter, sponsored by SurviveInPlace.com Urban Survival Course and my preferred gold dealer, Cloud Hard Assets.
A very common question for people who are getting started with preparedness and changing to a more self-reliant lifestyle goes something like this…”I’ve only got $X. I know that I need to stock up on food, and I should probably have some gold & silver on hand, but what should I get first? Heck, it seems like half the ads in conservative magazines and on conservative radio shows are telling me to buy gold, but should I?”
It’s a great question and most people screw this one up massively. (I did) I’ve found it effective to look at buying survival/preparedness supplies like Maslow’s hierarchy of needs. If you’re not familiar with it, it roughly says that in order to be healthy mentally, you need to take care of your basic survival needs before you take care of higher level needs. If you satisfy a high level need like love instead of satisfying hunger and thirst, you might be happy, but you’re not going to last long.
Similarly, there is a hierarchy of survival needs.
Since I first introduced this concept a few years ago, it’s been added to several preparedness sites and sparked hundreds of discussions. As long as you put a link back to this site, feel free to add it to your forum, blog or site to spark conversation. One of the criticisms that I feel is the most legitimate so far is that “skills” should be on one of the most foundational levels. I agree with that, but if you knew that there was going to be a disaster tomorrow and you only had a few hours to get everything that you need, you can go out and buy “stuff” but you don’t have enough time to learn too many new skills.
Like any model, it’s a work in progress and if you have any thoughts, comments, or refinements, please comment below. Right now, though, we’re going to specifically address the debate between buying food and buying precious metals.
I’ll start by saying that gold and silver are a great way to store/transport wealth and to protect yourself against the devaluation of the dollar (inflation). But the key phrase here is “store wealth.” In order to store wealth, you’ve got to have “wealth” in the first place.
If we check in with Webster, we see that the definition of wealth is “The abundance of valuable material possessions or resources” or “abundant supply”.
It would stand to reason that you probably don’t have “wealth” to store until you have an abundance of basic survival items on hand…particularly food and water.
What I mean is that if you don’t have food on hand to last for an extended period of time, why would you buy silver or gold? Fast forward with me for a second and picture yourself in a survival situation.
You’ve stored up lots of silver and gold…now what? You can’t eat it. You can’t start a fire with it. You can’t drink it. You can only use it to trade for other goods, and to do that you have to find someone with excess food and disclose the fact that you have gold/silver to trade.
Also keep in mind that in the chaotic period between when a disaster happens and orderly trade takes hold, people who planned ahead and have items to sell will be able to sell them at extreme prices—and I do mean extreme. I regularly spend time in a place where water from the tap costs about 1.5 cents per gallon, but a gallon jug of water costs $2.50. There’s no emergency or price gouging going on. That’s just the current market rate. If it was a matter of life and death and we didn’t have any other options, I’d gladly trade our wedding rings for a few gallons of drinking water
Everyone that you approach with gold and silver about a possible trade is going to remember you as the person who has gold/silver. This is obviously not good from an operational security perspective, although you’re going to have the exact same issue trying to trade/barter with ANYTHING of value.
The longer you go without food or water, the more of your gold and silver you’re going to be willing to give up. People will instinctually understand your desperate situation and realize just how much leverage they have over you. Again, this is true with any currency or means of exchange, whether it’s gold, silver, cash, bullets, etc.
The fact is, if you have food and water, you can use it to trade for other goods just like you can with gold or silver…but if you need to, you can always consume it. Put another way, in a survival situation, you will NEED food, but you won’t NEED currencies.
There’s a common joke among people who don’t like gold. They say that gold won’t be useful because when you’re hungry, you won’t be able to find anyone with 1000 loaves of bread to trade for your ounce of gold. This is true…and it makes my point. If the person with the gold had prepared differently, they would have enough food and the gold would simply be a way to store their excess wealth.
Now this all gets much more complicated if you have to bug out and space/weight are a big issue. In this case, you may want to take a few ounces of gold/silver instead of several additional pounds of food, but you still have to find someone with EXTRA food who actually WANTS your silver, gold, or other currency in order to make it worth carrying.
So, am I against precious metals? Absolutely not. I fully support buying gold and silver…just at the right time.
So when should you start buying gold and silver?
There is no hard and fast answer, and the answer is going to depend on a number of factors, including your mobility, storage space, number of caches set up, the size/maturity of your mutual aid group, and more. Everyone is going to have a different guideline, but I will suggest this…I wouldn’t buy gold and silver until you have food, water, fire, shelter, medications, trauma gear, and tools for self defense sufficient to survive a breakdown in civil order lasting a month or more. Even then, I would suggest spending most of your money on core items for your survival needs and a portion on gold and silver–Unless you can buy the gold/silver for a price that’s significantly below market value.
What should you start buying when you DO start buying gold and silver as a survival item?
There’s no hard and fast answer to this either, but it depends on if you’re buying retail or wholesale. Let’s start with retail. If you’re buying precious metals for everyday purchases, I’d suggest buying what’s called “junk” silver. This is pre-1965 US coins that are made out of silver. For simplicity’s sake, they trade at a multiple of their face value. So, if the multiple is 25x, a dime is worth $2.50. I like them because they don’t hold enough value to be profitably counterfeited, and because they’re easily recognized and widely accepted.
The downside to junk silver, and silver in general, is that it’s bulky. Ten dimes will set you back about $25, but they’re roughly the same size as $1,600 of gold. If you’re buying precious metals as a hedge against inflation, or even as an investment, gold is much more compact and portable than silver. I like US gold American Eagles, Canadian gold maple leaves, Chinese pandas, South African Krugerrands, and Mexican 50 pesos. All of these except for the 50 peso coins are 1 ounce coins.
I personally don’t buy commemorative coins or old collectable coins, but that doesn’t mean that you shouldn’t. And I will buy them if I can get them for spot price or slightly above spot price. Commemorative coins are rarely worth more than spot and you have the added challenge of having to prove their authenticity when you go to sell them.
Collectable coins (usually old, rare coins) do hold more value in a smaller package and have the potential to shoot up in value faster than non-collectable coins, but I just haven’t had the desire to become expert enough to risk money on them. There is an argument that many collectable coins are protected from confiscation, but I have my doubts that any government that would confiscate gold would pay any attention to confiscation laws that are almost 80 years old. If any government wants to ban gold/silver, they’ll figure out a way to do it. If they KNOW that people are buying gold and silver in such a way to get around an 80 year old law, then the new ban will take that into account when they craft their new law.
To come full circle, if you have a limited amount of funds and have to choose between spending money on precious metals or spending money on food storage, I’d pick food storage until you have several months set aside, with one specific exception that I’ll explain in a minute. And, to be specific, I’d spend the money on non-perishable items that you currently eat. Next, I’d buy some simple bulk foods like rice, beans, and oatmeal, but keep in mind that bigger isn’t always better. As an example, we can buy 2-packs of oatmeal at Costco for roughly the same price as buying it in 5 gallon buckets. We can open one of the 2-packs from Costco and eat our way through it before it spoils MUCH easier than we can with a 5 gallon bucket.
Finally, I’d buy freeze dried meals with long shelf lives…but only after you’ve tried them and are sure that your digestive system can handle them. I’m really not a big fan of all of these “25 year shelf life” foods. I just don’t understand paying a high per-meal price for food that we might not eat, but will have to store, for 25 years. We have a few dozen MREs, freeze dried camping meals, and freeze dried meals from all of the major sellers that we’re continually testing on hand, but for us it makes a lot more sense to keep a couple of years worth of food on hand that we’re constantly eating and rotating through.
When does it make sense to buy gold BEFORE food?
I mentioned that there is a difference between buying gold/silver at wholesale and retail prices AND I mentioned that you USUALLY want to spend any additional money you have on food rather than gold/silver, but there is one specific exception that I want you to appreciate.
If you have the opportunity to buy gold at wholesale prices, do it. In fact, I’d suggest that you buy as much as you possibly can. Why? Because if you’re buying it at wholesale prices of 50 cents on the dollar or less, you can immediately sell it for retail prices, double your money, roll your original money back into more gold/silver and put your profit (less taxes) into food storage and other preparedness gear.
25% of the population is unemployed or underemployed right now…that means that a LOT of people that you interact with on a daily basis, if not you, are underemployed/unemployed right now and would benefit tremendously from someone giving them more than pitiful “Cash for Gold” prices for their silver and gold. This is a time and situation where you can make really good money helping out people who are in a bad spot by giving them a fair price for their gold and silver items.
Some people are interested in buying gold as a way of creating an income for themselves after losing a job.
Others are interested in supplementing their income or earning additional money that they can earmark specifically for preps.
And others are interested in a skill/home based business that they know will be in demand and have carryover in the event of a breakdown in the economy or a complete breakdown in civil order. Knowing how to tell the difference between real gold and silver and cheap forgeries could mean the difference between getting top dollar for your goods/skills after a collapse and being taken for a ride. I want to strongly encourage you to learn how to tell the difference between real and fake silver/gold and have the tools of the trade on hand to do basic testing.
In any case, if you want to get into the gold buying and recovery business, I recommended >THIS< course.
If you’re interested in buying small or large amounts of gold/silver bars, coins, diamonds, or other hard assets, I recommend Tom Cloud from Cloud Hard Assets. To ask Tom questions or to order precious metals, please call him at 800-247-2812 or visit his site at Cloud Hard Assets. I am a customer of Tom’s and we have many common friends. Promotional consideration has been made for recommending him, so please let them know that David Morris referred you so that we know whether it makes sense to do interviews/articles like this in the future. If you do buy from Tom, please let me know how your experience goes with him. Make sure that you talk with a certified professional adviser before doing anything with your money. Precious metals can go up or down in value.
What are your thoughts on the hierarchy of survival needs?
How about your thoughts on precious metals? The ratio between gold and silver? And what about food storage? Have you gone the long-term food storage route, buying more of what you currently use, or a combination of both? Let me know by posting your comments below.
Until next week, God Bless!