There hundreds of articles that talk about investing in gold and silver. Many of those articles are produced by commercial sellers of gold and silver. Or those advocating in gold and silver have a stake in seeing the price of gold and silver rise. I want to talk about investing in gold and silver by common folks, like me. I have no stake in a company selling gold or silver. And don’t take advertising to remain independent.
So here is the core truth about gold and silver. These are not investments. But rather, gold and silver are assets. So what is an investment? By my definition, an investment is the putting money to work into some specific purpose with the expectation of producing income or capital gains with some type of business that provides an actual product or service. Owning apartment buildings is an investment. Owning timber land that sells timber is an investment. Buying stocks and bonds are an investment. Buying gold and silver is buying an asset.
That is not to say that gold and silver don’t go up in value. As an asset, the price of gold and silver are established by supply and demand. In fact, gold and silver can and do dramatically rise and fall. The website that I use to track the prices are:
Here is my perspective and reason why I own gold and silver. Gold and silver are the only assets that function as money. Take an ounce of gold to any country in the world, and you’ll find that the gold can be exchanged for goods, services, or currency. The reason I own gold and silver is capture a store of value. Buying gold and silver is like stopping time with your money. As of writing this article, the price of silver is around $20 per ounce. So for one ounce of silver today, you can exchange for about 5 loaves of bread. Likely 5 years into the future, that same one ounce of silver also will purchase 5 loaves of bread. Perhaps even 20 years from now, the one ounce of silver will be equal to the value of 5 loaves of bread. By buying one ounce of silver today, you are capture the current and future purchasing power for 5 loaves of bread. From my perspective, my stored gold and silver insures my children will never go hungry. Having 500 ounces of silver is equivalent to 2500 loaves of bread in the future.
The way to own gold and silver is best in physical coins or stackable bars. I don’t recommend owning gold or silver in an IRA account or brokerage account. Why? Because the government can and will see every bit of gold and silver owned in an IRA account or brokerage account. If a severe economic crisis unfolds, there is a distinct possibility that the government will confiscate all gold and perhaps silver as well. There is a precedent where gold was confiscated by the US Government in 1933. And gold and silver don’t produce dividends or income. And important attribute of gold and silver is it transportability and privacy. No one knows how much gold or silver that I own. And I like it that way. So why give up the independence, privacy, and transportability by owning either physical or paper precious metals in some type of investment account.
For those that say that an economic collapse is coming and you should liquidate all your stock, bonds, mutual funds, and ETFs. And then build gold and silver. My question to the folks that say put all your investments into gold and silver, what if an economic collapse never comes? While my personal opinion is an economic collapse and another great depression is very possible within the next 20 years, I have no way of knowing if this will come true. As a survival prepper, my goal is to prepare for both good times and bad. My wife and I are working hard to save for our retirement. And our primary ways to save for retirement are 401(k) and IRA accounts. We don’t have pensions. I very much want my retirement accounts to grow. And the best way to grow your investments in the long run are equities (stocks). For this reason, I limit my ownership of gold and silver to about 10% of my total investments. And the other 90% of my investments are in stocks, bonds, ETFs, and some mutual funds. And since 2008, my retirement accounts are up nicely.
I strongly advocate that you own gold and silver in physical form. What I mean by physical form is you actually are able to hold your owned gold and silver in your hand. And not gold or silver in mutual funds or ETFs. Owning gold or silver ETFs defeats the purpose of owning gold and silver. In my opinion, owning gold and silver is a hedge (insurance) against an economic collapses. If my gold and silver is in the form of ETFs, then when an economic collapse arrives and the stock market crashes, it is not possible use the ETF to buy food. In a stock market crash in the likes of 1929 and a bank holiday is declared, an ETF helps you none.
The form that I prefer for gold and silver is in coins. My favorite gold and silver coins are the US Eagles, Canadian Maple Leafs, and South African Krugerrands. Austria and Australia also have gold coins that I like. What avoid is Chinese coins of any type. Chinese coins have a high risk of counterfeit. My preferred sizes are 1/10th ounce for gold coins and one ounce for silver coins. In these sizes, you will be able to make common purchase. As of this writing, one ounce of gold is about $1300.00. It is very difficult to buy groceries with a one ounce gold coin. A 1/10th ounce gold coin is a perfect size to go grocery shopping with. My ratio of gold to silver purchases is 1:10. For every ounce of gold, I want to have 10 ounces of silver. By having this ratio, I’m able to make change for purchases made with gold and silver.
Another way I like to store silver is in pre-1965 US coins. Dimes, quarters, half-half dollars from 1964 and back contain silver. Also Morgan and Peace dollars from 1935 and earlier contain silver. These types of circulated coins are often referred to as “junk silver”. I like holding US circulated silver coins for several reasons, including (1) they are widely recognized in the United States, (2) Are perfect for making small purchases in a SHTF, WROL situations, (3) these coins have personality and character. I owe a number of Morgan and Peace dollars, simply because of their beauty. My full-kit bug-out bag (actually 3 bags and 2 plastic bins to place into our vehicle) contains 20 Morgan and Peace dollars, since they are so widely recognized. Morgan and Peace dollars do not contain a full ounce of silver, but rather contain about 94% of an ounce of silver. One Morgan or Peace dollar plus one pre-1965 US dime together are equivalent to one ounce of silver.
Lots of people will say, I can afford to buy gold and silver. I say, most people can. Just do it slowly over time. My approach is to buy a 1/10th ounce of gold and one ounce of silver per month. This is equivalent to storing $160 per month into gold and silver. A lot of people can afford to set aside $160 per month. By taking this approach over 6 years, I’ll accumulate 6 ounces of gold and 60 ounces of silver. If you can’t afford to set aside $160 per month, then I would recommend that you must buy one or two silver coins each month. Could you afford to buy one Morgan or Peace silver dollar per month at $24 dollars each? Give up on a case of beer or Starbucks Lattes each month, and you can afford to buy a Morgan or Peace silver dollar.
My favorite way to buy gold and silver is over Ebay.com. I tend to bid in eBay for the spot price and no more. I’ll lose 9 out of 10 auctions. But I’m fine with just winning 1 out of 10 auctions. Going to a gold or silver in person or via the Internet will result in paying a mark-up over the spot price. When you bid on gold or silver in eBay, I recommend that you place bids for reliable sellers. A reliable seller will have over 100 positive feedbacks, and no negative feedbacks in eBay. You’ll like pay a delivery fee, when purchasing via eBay. Some coin auctions have free shipping.
So how do store my gold and silver? Most of my gold is in a bank safe box, in order to protect it. But you must be vigilant if you store gold in a bank safe box. You must retrieve the contents of your safe box well ahead of an economic collapse or bank holiday. If the stock market takes a big dip and the bad economy dominates the news, it is time to empty your bank safe box. If you have a bug-out locations, 2nd home, or vacation home, I recommend that store a portion of your gold and silver coins at your bug-out location. Use buried caches or behind the dry-wall as places to hide your coins. Since silver is very heavy and very bulking, storing silver in a bank safe box is not practical. Most of my silver is stored in hidden places throughout my home and at my bug-out location. My hiding place is very non-traditional and you’ll never guess where. I prefer not to say where for safety reasons.
I often will be carrying silver coins when I travel. In my luggage, I have five silver one ounce coins. And I have 5 silver one ounce coins in my every-day-carry bag. The reason for carrying silver coins is a major disaster situation. I recommend that no matter where you go, always have at least $200 in cash in your wallet for emergency purposes. Flat tires, rural speed tickets, sudden trips to the emergency room, and helping a family in crisis are events that cannot be scheduled ahead of time. Carrying a few silver coins is my reserve emergency money for a major disaster situation.
How will I use and spend my gold and silver coins? There are just a few reason why I might sell my gold and silver coins in the future. The reasons include:
- In a long-term disaster or economic collapse situation, such as occurred in 1929, my gold and silver will be used to buy food or pay for a relocation to a safer location.
- If I lose my job for a long period of time, I’ll liquidate my gold and silver to pay the mortgage.
- And finally, my preferred outcome for my gold and silver coins is to provide an inheritance for my children.
There are many stories throughout history about a bribe of gold with let an escapee go past a checkpoint, or buy their way out of prison camp, or buy the last ticket to freedom. An example of this type of event is Simon Winston In the most worst case situation, have a gold coin sewn into your clothing my get you past a dangerous situation.
Other metal that I’d recommend store, but not as a store of value, are lead and copper. If you can cast your own bullets and able to conduct your own ammo reloading, your price of shooting goes down vastly. And you’ll have an excellent post-collapse business.
Joseph of the biblical story in Egypt advised the pharaoh to safe grain for a coming 7 year famine. When the famine arrived, stored grain was withdrawn to feed the people during the 7 years of famine. In my efforts to acquire and store gold and silver coins, I’m saving for the potential of a proverbial 7 years of famine. I sleep peacefully (mostly) as night, knowing a have a high-capacity firearm within arms reach. And I have gold and silver set aside to feed my children in the event of some dire disaster. And if the next great economic depression never arrives, then I’ll happily set up my children with their lifetime financial last-resort store of wealth, and they will never go hungry during their full lifetimes.
For additional information on this topic, please see this video: Five Reasons for Gold & Silver after SHTF
I welcome your commentary and questions on this subject.
May your family never know famine.