How to Survive the End of the World as We Know It - James Wesley Rawles [103]
As of this writing (2009) we are just in the opening stage of a bull market, so you haven’t missed the boat. I strongly recommend that if you own any metals you hold on until the market goes into the final phases of the bull cycle. In the nascent run-up, that probably means tops of around ninety dollars per ounce for silver and twenty-five hundred dollars for gold. That equates to a gain of nine times current spot prices for silver and 4.4 times for gold. In this bull, I think that silver will outperform gold considerably.
In a major disaster that creates an economic collapse, precious metals will have their greatest utility as a recognized store of value to facilitate barter in the latter stages of a post-collapse economy, as regular commerce starts to resume. Before that, you can expect only canned foods and common-caliber ammunition to be accepted in barter. The free market will determine their value, as it always has. If the dollar is completely wiped out, the old dollars will probably be declared worthless, and a new currency unit will be established, most likely pegged to gold.
In the short term, the metals markets—particularly for silver and platinum—are indeed quite volatile. But it is important to step back and look at the big picture. Forget the daily fluctuations. Instead, look at the 120-day moving averages (DMAs) and the five- and ten-year charts at Kitco.com. The federal government’s profligate spending and both government and consumer debt point to a long-term bear market in the dollar, and a corresponding long-term bull market in precious metals. I don’t expect Uncle Sam to change his spendthrift ways anytime soon, so take advantage of the long-term trend.
I recommend buying silver rather than gold coins. Gold is too compact a store of wealth for most barter transactions. If you want to buy a gallon of kerosene, a box of ammunition, or a can of beans, then gold will be awkward. How would someone make “change” for a transaction that is priced at one hundredth of the value of a one-ounce American Eagle or Krugerrand gold coin? With a cold chisel?
I recommend that you use two methodologies to purchase and maintain two distinct hoards of silver, and that you do not commingle them:
1. Your designated barter silver stockpile. The barter portion of your silver stockpile should be in small, divisible units, ideally pre-1965, 90 percent silver U.S. dimes. Those coins could presumably be used for day-to-day purchases in a recovery-stage (post-collapse) economy. Your barter silver should be considered a core holding, never sold for the sake of profit. If you don’t ever have to use it for barter, then count your blessings and just pass it along to your children or grandchildren so that they will have something to use for the same purpose. If you can afford it, I recommend buying one bag with a face value of one thousand dollars for each member of your family.
I’m often asked about one-ounce silver “Trade Dollars.” I don’t recommend buying the one-ounce rounds. They often carry a higher premium per ounce than circulated (“junk”) pre- 1965 coins, and they will probably be suspect as counterfeit in a barter situation.
Typically, dealers run most pre-1965 silver-coin orders through a mechanical coin counter. This is true for any orders large enough to be sold loose or bagged. (By bagged, I mean clanking together in a bag, rather than in rolls.) A quick visual inspection will show you that all of the coins are pre-1965. Scan for any rims that show a copper streak—which would indicate that post-1964 clad-copper coins got mixed in. There is certainly no need for you to count ten thousand dimes. As long as the bag weighs at least fifty-two pounds, then you got your full 715 troy ounces of silver. (That troy-ounce figure also applies to circulated silver quarters and half-dollars. But because of the different