Many experienced preppers recommend purchasing gold and silver for SHTF and TEOTWAWKI events. I see tweets and posts about buying silver. The problem is, none of these tweets tell you how to buy precious metals. I always click to see what they have to say, and more often than not, it’s an ad just to buy it. So, I decided to write a guide to help those of you that don’t know much about buying gold and silver.
Why buy gold and silver as a prep?
Until just recently, all civilizations used gold and silver as their currency. Gold and silver paid wages and bought goods. Even the US used the gold standard until 1964. This required all US dollars printed to be tied to a measure of gold the government had on hand.
Then, a brilliant president named Nixon decided to remove the US dollar from the gold standard. Moving forward, US dollars were no longer tied to anything of value. So the printing presses were turned on and the economy was flooded with dollars.
But what happens if the value of the US dollar drops to zero. They are suddenly worthless since they are no longer tied back to gold. It wouldn’t matter how many you had, you couldn’t buy anything with them.
That is not the case with gold and silver. During times of economic collapse, they will once again become the real currency they have been for thousands of years.
Why is that?
All precious metals are inherently valuable.
This simply means that they don’t rely on outside factors to make them valuable. A stock in a company becomes valuable when the company’s profits grow. However, stock in a bankrupt company is pretty much worthless.
You can never take the value away from gold or silver. Why?
Because gold and silver are rare elements with a limited supply on this planet that can never be replenished. Imagine for a second how valuable gold would be if you could not dig anymore out of the ground and the rest of it was owned by someone else. Supply and demand rules dictate that this situation would make gold priceless.
This does not mean that precious metals prices cannot be manipulated. Supply and demand, as I mentioned above, comes into play in determining price. Futures contracts, the value of other currencies and interest rates also affect the price.
You need a safe place to store your gold and silver.
If you decide to keep your metals at home with you, which I’m sure most of us would, never disclose that you have them. You would be wise to buy a fire rated safe to keep them in. Or you can opt for the old fashioned method of burying them on your property somewhere, just like the pirates did.
All joking aside, you must ensure your metals are safe from theft or possible destruction. Other methods available to you are a safe deposit box at your local bank branch.
Although I doubt many preppers will opt for this method, I wanted to throw it out there anyway. You can store your metals with a precious metals storage custodian. Storage custodians have high security vaults with procedures to restrict access to your metals. These places also insure the metals that they store for you. But, unless you live close to the facility, you won’t be able to get the metals during a SHTF event.
One note about metal custodians – If you choose to use a custodian, make sure they keep your metals in a segregated account. This means your metals will not mix with anyone else’s stored metals. They are all separated. The metals you get, should you ever take possession of them, are the original metals put into the account. With unsegregated accounts, if you choose to liquidate or take possession, there is no guarantee of this.
You can buy gold and silver in many different forms.
Both gold and silver come in bar form and coin form. The term rounds just means the metal is in a round flat shape like a coin, but never minted for use as currency. The weight of the precious metal that a bar or coin contains determines their value. Bars range from 1 gram to 1 kilogram in size. Coins typically weigh an ounce or less, including a half ounce, quarter ounce and in the case of gold, a tenth ounce size.
Junk silver is the name given to US currency coins, such as quarters and dimes, that were minted before 1964. When the US dollar was on the gold standard, all coins minted conained silver.
Rarer US currency coins were minted in gold as well until 1933. The eagle was a gold coin minted with a $10 value; a double eagle was $20, a half eagle was $5 and a quarter eagle was $2.50. People spent these coins like we would a twenty dollar bill today.
Of course, you can still use these coins as currency, but you would have to be an idiot to do so. The value of the gold in a double eagle coin is over 50 times higher than the $20 face value.
All precious metals purchases have a dealer premium.
Precious metals dealers and bullion banks make their money by charging a premium for every item purchased. Premiums differ between dealers and you can get screwed by not paying attention. Most of the time, the premium is charged per ounce of precious metal. Almost everywhere you buy, you are paying a per ounce price.
When buying, pay attention to what the melt value is of a coin or bar. The premium is the difference between the price per ounce you pay and the current spot price of the metal . Anything over $3.50 on silver and $80 on gold is too high.
Remember, some coins have value for their rarity (often referred to as numismatic value). These rare coins are often much more valuable than their metal content because of their rarity.
Coinflation.com offers some great calculators to help you calculate the melt value of any coin you are considering buying.
Keep in mind that the different forms of precious metals (coins and bars) come with different premiums. Typically, the bigger the bar you are buying, the less premium you are paying per ounce. Also, junk silver coins tend to offer the lowest premium of coins. Usually, brand new, sealed American gold or silver Eagles come with the highest premium.
Buying gold and silver is a good idea for anyone that is preparing for TEOTWAWKI. Having them guarantees that you still have buying power should the economy completely collapse. Even if you never see TEOTWAWKI, your gold and silver holdings are a safe savings account.
I’d also like to remind you that you can buy silver and gold in budget friendly amounts. A one tenth ounce gold coin might cost you $150 at today’s prices. You could get 6 ounces of silver for $150. You could buy one silver coin a week for approximately $20 and by the end of the year, you would have 52 ounces.