With 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.