GoldWith the remark­able rise in the price of gold over the last 2 years (as of writ­ing this) as well as the appar­ent uncer­tain­ties, even declines, in more tra­di­tion­al icons of Amer­i­can eco­nom­ic prowess the yel­low met­al has once again come to the fore­front of inter­est by both prep­pers and indi­vid­ual investors. Add to that the boom in ETFs (Exchange Trad­ed Funds) and it seems like “gold for the mass­es” is the order of the day. Con­se­quent­ly almost every prepa­ra­tion blog, book, and pod­cast devotes quite a bit of time dis­cussing the use of gold (and sil­ver) in a SHTF or TEOTWAWKI event.

And most of them get it wrong.

In terms of prepar­ing for an eco­nom­ic dis­as­ter they mis­un­der­stand the role of gold (and sil­ver) in a prepa­ra­tion plan. In fact, one of the main argu­ments against buy­ing gold – that being you can’t eat it — is clos­er to the real under­stand­ing of the pur­pose of the met­al in a sur­vival plan.



But the pri­ma­ry pur­pose of own­ing phys­i­cal gold is not as a “uni­ver­sal cur­ren­cy” for if/when the dol­lar col­laps­es. I high­ly doubt the super­mar­ket will be accept­ing gold coins for gro­ceries no mat­ter what the Amer­i­can econ­o­my does. That is not to say some form of exchange or barter for gold won’t hap­pen. It sure­ly will. But that isn’t the main rea­son for own­ing gold.

The pri­ma­ry pur­pose for hav­ing phys­i­cal gold is as a store of wealth in shaky eco­nom­ic times. Peri­od.

It is true that if some calami­ty befell the entire world gold would prob­a­bly be use­less com­pared to more basic human needs like food. But the like­li­hood of such a world­wide dis­as­ter real­ly is low. It would take some­thing like a nuclear war or aster­oid hit or oth­er cat­a­clysmic event for such to come to pass. A mas­sive eco­nom­ic reor­ga­ni­za­tion is a far more like­ly sce­nario in terms of nation­al or glob­al calami­ties. And as such, gold (and sil­ver) will still be of val­ue in what­ev­er new cur­ren­cy sys­tems come out from the after­math.

And it is true that gold can go down just as eas­i­ly as any oth­er invest­ment. Though to this argu­ment I ask: For gold to return well below the $1,000/oz lev­el the dol­lar would need to soar and the econ­o­my to grow soooooo much as to be unre­al­is­tic. In the longer term maybe. But not today, tomor­row, and not like­ly next week.

The exact val­ue of that gold after such an eco­nom­ic event is unknown. But it will sure­ly be far more than what­ev­er the pre­vail­ing paper cur­ren­cy is (was) just pri­or to the event. And that is its func­tion: To store wealth for con­ver­sion into a more exchange­able form lat­er.

If you are for­tu­nate there may even be an oppor­tu­ni­ty to grow your wealth through gold own­er­ship in the times of trou­ble. But that too should be seen as an alter­nate ben­e­fit of own­ing gold and not the pri­ma­ry rea­son.

His­to­ry proves that phys­i­cal gold is a viable means of stor­ing wealth when tran­si­tion­ing from one eco­nom­ic real­i­ty to anoth­er. Far bet­ter than what­ev­er paper cur­ren­cy is the nor­mal at the time. The gold mined by the ancient Egyp­tians, Mayans, Greeks etc still holds val­ue today. Even with­out the his­tor­i­cal con­text, just melt­ed down it has a high val­ue as a met­al.

I am not sug­gest­ing you should be sell­ing every­thing you have and buy gold. Cer­tain­ly if it’s a mat­ter of pay­ing the mort­gage or buy­ing a gold coin, pay the mort­gage first! The future is not at all cer­tain, in spite of recent nation­al and glob­al events. But just as you may be com­pil­ing stores of per­son­al sup­plies, a store of gold or sil­ver is impor­tant too so long as you under­stand the main pur­pose and not have unre­al­is­tic expec­ta­tions of what you are buy­ing it for.

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