Stocking up on Precious Metals? Might Be a Bad Idea

gold

by Charles

Talk to enough preppers about their long-term preps and you are bound to run into a decent number who plan on stockpiling at least a small quantity of precious metals for various purposes. Gold, silver, even rhodium and platinum, you’ll get a fair education form some of them regarding the importance of precious metals in a well-rounded SHTF survival supply room.

The specific reasons vary somewhat, but will all typically revolve around the historical importance of these precious metals in trade and industry, as well as their perennial value as currency since the dawn of recorded history.

This precedent makes precious metals, especially silver and gold, tempting and seemingly reasonable resources that you should provision if you are preparing for any long-term crisis.

But is it that simple? Is the “gold standard” one that is truly imperturbable, immune even to the crushing forces of a society-altering event or series of events? Is the presumed assurance of precious metal worth the tremendous cost and will it be worth sacrificing now to obtain it in the hope that it will pay off where nothing else can after a collapse?

People simply cannot eat metals. You cannot use them to heat your body or your house. You cannot fend off an attacker with them. Okay, well you could melt some of them down and form them into projectiles, but now we are getting a hair silly. If things get really bad, chances are most folks will be concerned with other things besides acquiring precious metals.

In this article, I’ll be discussing some of the pros and the lesser-considered cons of investing in precious metals for survival.

How Precious Metals May Save the Day

The typical imagined scenario by which a prepper sells themselves on the idea of stashing significant quantities of gold or other precious metals goes something like this:

Something Really Bad has happened. Society as we know it has crumbled. The government is either no more, or is doing a piss-poor job of keeping what is actually an assemblage of regional cultures stitched together and operating as a nation. The economy forthwith hanged itself from the nearest rafter, inflation is sky high and climbing fast, and that isn’t the worst.

This massive disruption and fear has led to sporadic availability of goods and services. Most places only accept cash, and many don’t even accept that, seeing dollars as so much kindling in the wake of the collapsing empire that was America.

Some preppers see the universal currency of the post-SHTF world reverting back to the historically commonplace use of gold or silver (or some other metal). They further envision that everyone will, most often anyway, be in lock-step agreement over the continuing value of these precious metals. If they have a significant quantity, they will be able to procure what they need, assuming they don’t already have it.

Viewed in this light, precious metals are a cannot-lose proposition: perennially and immutably valuable to most people in most places, no matter what event has befallen society or even mankind. The preppers that think so may be right. Or they might not…

A Sad King on a Sad Hill

Things may be so bad that trade and barter among survivors and citizens could strictly be for items capable of sustaining life and day-to-day operations. Gold, platinum or rhodium may be screamingly “valuable” but if folks are desperate to stay warm, stay fed and hydrated they may not be willing to part with their necessities for what is ultimately a shiny brick.

Of course, there will always be those of magpie temperament that covet jewels, gold and coin literally no matter what is happening, but they will likely be the minority.

So in this scenario, our dedicated prepper and his patiently amassed hoard of precious metal is, in effect, all gussied up with nowhere to go. Sure, he will likely be able to still use his metals for trade, should he wish, but the likelihood of him finding a favorable and fair trade, i.e. one where is liable to get out what he paid in to acquire his gold, silver or whatever, is less likely, in my opinion.

Opportunity Costs

The biggest problem with amassing precious metals is their drastic financial cost. Even one of the most affordable precious metals, silver, is pricey considering it will just be sitting in your safe or hidden cache.

Gold is several times more expensive, and platinum and rhodium are far more expensive still. The latter two are also less likely to be readily recognized by the uninitiated, so there is that to contend with also.

The point of all this is that the money you are sinking, and you will be sinking it by the bucketful, into amassing a quantity of precious metals could be spent on other preps and supplies that will make a much bigger difference in influencing events so you have a positive outcome.

The cash outlaid on a few ounces of gold will buy a lot of food, ammo or water. It could buy a few guns, a load of medical supplies, tools, clothing or training in any discipline you can imagine.

In short, you could do a lot with the cash you would otherwise outlay on some shiny bricks that you will sit on in the hope you can trade them to get something you need later. Alternatively, you could simply buy and keep stocked those things you anticipate, or know, you will need later!

Stocking Precious Metals

If you do decide to stock precious metals for use as real currency during a society-toppling crisis, keep in mind how currency is actually used. We have large denomination bills and smaller ones. The same with coins. Silver is worth more than gold, and incredibly precious metals like platinum and rhodium are worth more than both.

You should not expect to simply keep a hoard of 1 oz gold coins or bullion handy to make purchases thinking you’ll get change back. Yeah, right. Instead, if you want to rely on precious metals as currency, you should keep metals of greater and lesser value and in various fractions and denominations, ideally mint marked with their weight and purity.

This will allow you to make “exact change” purchases more often, without the worry of getting hosed when you are in need and in a hurry.

On that note, the type of metal you are purchasing will play a part in how easy it is to use it. Gold is the, heh, gold standard (sorry) and silver is right behind it, though far less valuable. Both are well known and accepted in all parts of the world. In some circles, other, rarer or less commonly encountered as bullion metals are starting to gain traction. Among these two, platinum and the fantastically rare rhodium (also in the platinum group) are the standouts.

Platinum is an extremely expensive and rare metal, and available as bullion, though far less commonly than gold or silver. Rhodium is even rarer, and cannot be mined; all rhodium is created as a byproduct of mining and processing other platinum group metals.

Rhodium is notable for its absolutely essential inclusion in catalytic converters for automobiles, making it very much perennially in demand. Rhodium is only very rarely available as bullion, as it is extraordinarily hard and tough to work.

The breakdown of these metals’ merits and flaws for preppers is as follows:

  • Gold – Excellent value to weight ratio. Extremely common commercially, available in many sizes, forms and denominations. Expensive.
  • Silver – Valuable, but poor value to weight ratio compared to gold and other metals. Extremely common commercially. Affordable to purchase stash of hard currency.
  • Platinum – Superior value to weight ratio. Uncommon commercially, may be mistaken for silver by uninformed or ignorant. Very expensive to purchase as hard currency, and less denominations and forms available.
  • Rhodium – Best value to weight ratio. Very rare commercially, easily mistaken for common platinum or perhaps silver. Fantastically expensive (twice the price of gold) and only available as one or two kinds of bullion. Difficult to use as currency, but excellent hedge against collapse of paper money.

For common purchasing, gold or silver is your best bet. If you care to purchase metal to form a bulwark against currency devaluation when the lights hopefully come back on, platinum or rhodium is a highly convenient and compact option.

A Quick Note on Buying Precious Metals

Based on my research, I did not find any truly reliable online vendor of precious metals based on consumer and business reviews.

While the convenience and relative anonymity of such outlets make them attractive to some, the chances of being cheated or winding up with a dreaded case of “not what I ordered” and the lack of a retail storefront make this a dicey proposition.

My recommendation? Seek out and deal with a trusted local source in your area, one where you can physically ascertain the product and deal face to face with your seller.

A More Realistic Assessment of Precious Metals and How You Can Leverage Them for Survival

Now, I have come down pretty hard in the “nay” column when it comes to stashing precious metals for survival planning, but I don’t hate them! Heck, I even have a small stash of my own, but not quite for the same reasons I wrote about in the article.

As a trade commodity, precious metals do have serious advantages, I just see them better applied to events of a shorter duration and somewhat higher peak intensity.

When I am travelling, I often carry with me a small and easily hidden quantity of gold. I carry it as a favor-getter: if things go pear-shaped in a hurry, and hard, gold, like cash, can speak well on your behalf.

I might need a favor in the form of transportation, access or preferential treatment. I might need someone one to look the other way. I might need guns, or other supplies. I might need medical treatment with no questions asked.

The right approach and a liberally greased palm can make that happen. If the gold itself is not to be used for the transaction you can be assured of rapidly converting it to cash almost anywhere and in a hurry so long as there is the expectation of a “tomorrow” in the minds of the buyer!

I personally do not think that in the worst kind of major, society-ending event that precious metals will be as simple and effective trade fodder as some preppers hope.

That last part is what sets me apart on using gold from some other advocates of preparation: I see gold as, essentially, another form of hard currency when things are not too awfully bad, or at least, the awfully bad does not each from coast to coast or affect the fabric of the nation. So in that regard gold is more or less a part of my daily contingency planning instead of a long-term SHTF survival plan.

Also don’t discount the glamour of gold: a gold bar or ingot casts a peculiar spell on people, far out of proportion to even its monetary value. If you are a shrewd negotiator you can likely get a better “return” on your money using gold when you are in a pinch and emotions are high.

While not the ideal solution for everyone (some would rather just carry a wad of bills), gold and to a somewhat lesser extent silver both have merit as easy to carry and conceal currency alternatives to help you get out of a serious jam.

Conclusion

Precious metals definitely have their place in a prepper’s toolbox, but it is my opinion that they are not worth investing in as a long-term currency replacement for trade unless one so happens to be concurrently investing in physical metals as a matter of course.

The tremendous cost of precious metals makes them an either-or proposition for all but the most well to do preppers, and the funds spent on amassing a stockpile of precious metal could be put to better and more certain benefit by spending it on supplies, training and other things.

If you are going to make use of a quantity of precious metal, make it a quantity and format which you can easily carry and conceal as a sort of emergency coin to help spring you from a situation where no other resource may get passage.

In all but the most severe situations, precious metals are valuable enough to encourage people to part with pretty much anything, a fact that a savvy prepper can exploit to their advantage.

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9 Comments

  1. While in a world wide SHTF situation you could be correct that gold or silver may not be traded there are many many stories of people who used them to bribe their way out of country’s like Germany during the second world war. from what I read in Venezuela right now they are being traded.While I would never advocate buying either as a plan for SHTF most people that prep will at some point reach a “saturation ” point on other preps. Once you have food,water,guns,ammo ect stock piled what will you do with the money you have earmarked each month for preps? Are you going to try and store 20 years of food? 1,000,000 rounds of ammo? Gonna buy a warehouse to put all these things in? A few hundred ounces of silver is going to cost at today’s rate about 3000.00 dollars and if you are like me you buy these types of things as insurance and hope they are never going to be needed. By the way my car insurance costs almost that much a year.

  2. the last time I checked platinum was trading at 900 dollars a ounce gold 1300 a ounce and has for as recent memory at least 6 months, and you really expect me to follow your advice?

  3. I have about $1,500 in silver stashed (spot value). They’re in smaller denomination rounds to make them more attractive in a SHTF trade situation (in my opinion). I don’t feel the need to keep more than what I have now. Barter goods are probably a better idea (matches, coffee and tea bags, etc. No ammo or booze from me though). I also have some skills that can be bartered (gun repair, medical).

    Holding some silver is just covering another base to me.

  4. You cannot eat 100 dollar bills, Cars , boats, land , houses and guns… But having a insurance of PMS is the smart thing to do. Pass it on to your kids. If they sell it oh well…. You did your part by trying to cover the pitfalls in life. The Ranger saying – Better to have it and not need it, than to need it and not have it.

  5. The author is right about some things but there are inaccuracies (gold is worth considerably more than platinum) and as a comment above says, once you have all the preps you need, then what? If you do have all the preps you can store and you also have some savings, it is wise to put your savings into gold or silver, because the US dollar, the euro, the pound sterling and every other fiat currency (currencies backed by debt issued by private central banks) will fail as have all paper currencies throughout history. This goes back to something like 2500 B.C. When currencies fail, savings disappear instantly. Gold and silver have always been storehouses of wealth and protection against currency failure and they still are. They have never been worth zero and as the great Voltaire said in the late 1700s, “All paper currencies return to their intrinsic value – zero.” This is still absolutely true.

    • Over 4 states have legalized the use of gold and silver as currency. 2 states currently mint their own coins.
      Wyoming passed a law requiring over 20% of their pensions to be invested in PMs. Canadian law says requires every bank in Canada to pay spot price for any minted maple leaves. The author of this article is dead wrong and is giving
      poor advice. The best financial researchers in the world recommend holding as much physical silver (and cash)
      as you can get your hands on. The world’s central banks are buying records amounts of gold, more so than any other
      time in history. JM Bullion is a very reliable on-line source for buying PMs. You do business locally, you’ll pay too much
      or get ripped off. You want good advice on precious metals, go to the experts who have made their millions investing
      in them. IE: Stansberry, Jim Rogers, Doug Casey, Eric Sprott, just to name a few.

  6. Please tell me of one time in history when Rhodium has been used as currency? You misrepresent the idea of having PM’s for an emergency. PM’s are not purchased in lieu of other needed preps but are a compliment to a well rounded preparedness stockpile. Insinuating a prepper will just buy gold and silver while neglecting to buy extra food, water, and medicine is completely wrong. It is a lot easier to carry a gold coin or some silver than it is to carry 50 bales of hay to use as trade. Portability is one of the big benefits to using gold, silver, or paper money as a medium of exchange. An earlier statement mentioned this but palladium has been worth less than gold on a weight parity for quite a long time. Surprisingly you mention the obscure metal rhodium but never once mention palladium (which costs more than gold right now).

  7. Meant to say platinum has been worth less than gold for quite some time. Ohhh, and your comment about there not being any decent online sites to purchase PM’s, bull pucky. There are plenty of good places to purchase online with fantastic results. JMbullion, Kitco, golddealer, Silvertowne are some among many. This article had a few thoughts but overall was garbage.

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