I’ve never been a big fan of investing in precious metals but lately I’m warming up to the idea. In the past I shied away from putting money into gold and silver for one main reason. That is, I figured if the SHTF that bartering necessities would be the way to go. When people are hungry or scared they’re going to value a can of chili or a handful of bullets more than a coin, no matter what it might be “worth”. After all, something is only worth what another person is willing to pay for it and during tough times that could be absolutely nothing. I’ve always felt it was much more important to make sure my stock of supplies for food, water, shelter, and protection had to come first.
However now that I’ve gotten to the point where I’m comfortable with the amount of emergency supplies I keep on hand I’m starting to rethink my stance on silver and gold for a few different reasons.
First of all, when thinking about a post-SHTF scenario, especially if the event in question were to affect a large part of the country, there will be a return to normalcy. However, I think that paper dollars will be the last thing to recover and be truly valued. In my opinion, silver and gold will jump in value and while they might not buy much in the early days they will be the standard again at some point so it doesn’t hurt to have some. In more localized disasters, say an earthquake that only affects the west coast, I still think the overall economy could be damaged to the point that precious metals take a jump in value.
Secondly, even if we aren’t affected by a medium to large-scale disaster, the economic problems that most countries are facing indicate (to me anyway) that precious metals are a good hedge against inflation. Now I would never advocate selling everything and putting it into any one commodity but I do think that some portion of my assets should be in metals.
And finally, there are tax advantages to buying gold or silver provided you buy and hold the metal as a “collector” rather than buying certificates as most people would through a broker. By avoiding capital gains tax, which eats into profits, the value of the gold or silver you’ve purchased doesn’t need to rise as much for you to realize the same gains as you would have “after taxes”. Also, having the gold or silver you’ve purchased close at hand should you ever need to use it to trade is a big advantage.
Personally, I like bulk silver dimes and quarters minted before 1965. These contain 90% silver but are not so uncommon that they would be hard to redeem or trade for. Obviously the value of the silver contained in each coin far outweighs the face value of the coins. I prefer the coins to larger weight silver bars, as it’s much easier to sell or trade just a fraction of your holdings.
In the last five years or so both gold and silver have just about tripled in value. Who knows what will happen going forward? No one. Still, I’m going to pick up a little bit of silver just for fun.