Note from this blog: This is from a series of posts from www.rencesvals.blogspot.com/ on how to be prepared from an ucoming major catastrophe.
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Priority #5: Currency and Barter
Nobody can plan for every contingency. The best laid plans will reveal deficiencies once they are implemented. In such cases, it will be necessary to buy or barter for the things you still need. What you need to understand, however, is that, depending on the type of emergency that should befall you, cash may be of little (or no) value. Therefore, as a general rule of thumb, if you are fortifying against depression, unemployment, or short-term non-economic calamities (e.g., natural disasters), you will want to keep a cash supply on hand. In these types of events, cash will have retained its purchasing power, just as it does today. On the other hand, if you are preparing for hyperinflation, the crash of the US Dollar, the collapse of society for any lengthy (or permanent) period of time, then cash will not be worth the paper it is printed on. Why? Because the essence of inflation is that there is an influx of currency without a corresponding increase in the number or value of goods available for purchase. This has the effect of proprietors demanding more and more cash for the same goods. You could soon find yourself in the ridiculous position of burning piles of ash for heat in the winter, much the same way Germans of the Weimar Republic in the early 20th century.
In such cases you will need real money: Gold and/or silver. Men have always placed value on these metals precisely because they could not be manipulated in the same way cash supply can (e.g., Through the printing press and deliberate monetary expansion and contraction that arbitrarily increases and decreases the value of the dollar). But in the case of metals, not only is their weight fixed, but their value usually increases in inverse proportion to the dollar (i.e., Because it is perceived as a safe-haven, and a good store of value). For this reason people flock to it in times of economic uncertainty, which explains why silver hit its’ 2.5 year high today, and gold has been parked just short of its’ all-time high for a few days now.
The bottom line is that in crises of this nature, people will not accept your worthless cash for their goods. They will want metals. The questions then become: Which do you buy? Where do you buy it? In what form should you buy it? Lets take these one at a time, because they are all very important considerations.
My personal preference is to buy silver over gold. First, because it is cheaper. Second, because it is nowhere near its’ all-time high of over $50 USD/oz. Third, because although gold comes in different sized allotments, it is generally too valuable for small barters and purchases: If gold hits $2,000/oz, how are you going to divide that coin to buy a loaf of bread? Fourthly, you can’t buy (or sell) very much gold without triggering the $10,000 reporting mandate, which means someone knows what you have, whereas with silver, you can buy several hundred ounces (for the time being) for under $10,000, and nobody will be the wiser.
In any case, whichever you choose to buy, you need to purchase from a reputable company. I myself have purchased from a couple different internet companies, and will reference them below. But the way it works is that you will place your order at their on-line website, and will be given a real-time quote. If you accept it, you will have a certain time limit within which you must send payment (Confirmed by postmark). Once your check is received, and your check cleared, your order will be processed. You will be nervous, but be patient: It takes a while to fill your order. Usually, you will be given emailed updates to calm your nerves. One day, your metals will arrive by discreet (but heavy) postal delivery, which will normally be 3 weeks from the day you first placed your order. Most companies will give you tracking information, so that, if you preferred, you could intercept the package at your local post office, thereby eliminating the potential that the mailman leaves a very expensive package on your doorstep! Usually, they would not do this, but it did happen to someone I know. Once you have chosen your metal, you will need to further decide what form you want it to take: Bars, bullion (i.e., non-legal tender coin), junk silver/gold (out of circulation coinage), numismatic collectibles, etc. My own advice is to go with bullion “coins.” If you go with bars, it may be that people possessing the goods you want to purchase/trade for could doubt the content or purity of the silver, and refuse the transaction. In other words, bullion is more liquid. It’s weight and purity are recognized by most persons, but most people have never seen a 10 gram gold bar. Silver bullion is ideal for small and large purchases because of its moderate value. Some people will try to convince you to pay extra to get pre-1933 “numismatic/collectible” coins, but I think this is a waste of money (I.e., You have to pay extra). They will tell you that it is less likely to be subject to confiscation because back in the President Roosevelt confiscation regime, those coins which pre-dated 1933 were exempt. What these people don’t tell you is that there is no reason the government couldn’t arbitrarily change that date, or simply demand the surrender of all precious metals period. The smart money will stick with bullion versus bars or numismatics. Finally, so far as “junk silver” is concerned (i.e., out of circulation legal tender coinage of various dates), I also don’t waste my time with this, simply because I don’t want to have to worry about mathematical calculations in my transactions: Junk silver was not pure, and depending on the year and denomination of coin, only yields a silver content of between 40-90%. This means that if you want to buy something that costs 2 ounces of silver, you will have to get your pencil and paper to figure out how many coins to surrender (and the seller will too, which may hamper liquidity a bit).
One final note: Though metals will be the most highly sought, and widely used bartering instrument, they will not be the only acceptable form of “currency.” Anything with a practical or desirable use can be traded to get you the things you want and need. Things such as tobacco, alcohol, ammunition, medical supplies, food/water, and tools will be in high demand. If you do not stock up on metals, these could be a fall-back preparation, but you will have to accept that not everyone who has what you need will want to take beer or band-aids for what they have to sell.
PS: If anyone should suggest to you that buying gold or silver is worthless, because you can’t eat gold and silver, please be sure to see the you tube video (referenced below) taken in 2008 Zimbabwe, which was ravaged by hyperinflation (for many of the same reasons, such as deficit spending and money printing, we are experiencing in America presently). You will quickly come to understand that, in hyperinflation, if you do not have gold or silver, you will be a dead man.
