You Can’t Eat Gold

By: Tom Chatham

If you talk to a number of people preparing for bad times eventually you will hear this comment. While it is an accurate observation, it misses the point of a well rounded plan. If you have some wealth and your plan for catastrophic situations is to buy and hold gold and nothing more then essentially you have no plan. That is what this comment really means.

For a person that feels the need to prepare for situations that force you into a survival position you need to place your eggs in several baskets. You need to take care of absolute needs first to get through the situation you perceive. A person needs food, water, shelter, clothing, sanitation, security, heat and light as a minimum to get through difficult situations. You need to determine how long the situation may last and how extensive your preparations need to be to get you through it.

In a normal functioning world a person may be able to get by in a situation with just money. Someone displaced by a hurricane can relocate to an undamaged area and just buy what they need until things are repaired but what good is money if money as we know it collapses?

That is the problem with other than normal disasters where supplies are in short supply and those with them refuse to sell at any price. A proper plan addresses this type of breakdown and prepares you for it. So why do so many people say buy gold and silver if it may not buy what you need in a catastrophic disaster?

Gold and silver are a way to store your EXCESS wealth until the situation stabilizes and commerce resumes in some form. You should not be dependant on PM’s to acquire goods DURING the crisis except in emergencies where something out of the ordinary may be needed such as a tire for your car or medicine for an unexpected illness. The things you must have to satisfy day to day needs should already be in your hands when this type of situation emerges.

This does not mean you may not be able to buy goods at all. Producers such as small farmers, fishermen and producers of other goods that people need may still have a production capability and will still need to sell those products to earn a living. Those that have a medium of exchange they will accept will allow the purchase of these items to bolster the items you already have and extend your supplies.

The value of gold and silver become important when the situation stabilizes and you want to improve your living position. They allow you to preserve your wealth and take advantage of bargains when others are unable to buy and acquire property, equipment, businesses and income producing investments such as rental properties. They allow you to get your hard earned savings from back there to up here where they will be needed to insure a good retirement. Precious metals are your life raft when everything else sinks. They allow you to stay afloat along with your other floatation supplies and reach safety.

When someone asks you if they should buy PM’s to get them through difficult times you should ask them what their plan is for food, water, shelter, clothing, sanitation, security, heat and light. If they say gold then you are correct for stating, you can’t eat gold.

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Posted on March 15, 2013, in Economics and tagged , , , . Bookmark the permalink. 2 Comments.

  1. You can’t eat a Visa card or Federal Reserve notes either, yet you’ll find most people are content to be in possession of them.

    I suspect the folks that holler “you can’t eat gold” (or silver) are simply rationalizing their economic place in life…..they can’t afford PMs, therefore they aren’t worth anything. I suspect if you toured their pantries, you’d find a bunch of them aren’t too well stocked with food either.

    Ad to that a whole lot of folks that also don’t understand what money IS, and ISN’T, instead confusing it with tokens and paper fiat issued by governments, ( governments that have deliberately conducted campaigns to mislead their population as to what really constitutes money ), and one can understand why so few people understand the value of precious metals.

    I’m all for food….I think everyone should have a year supply, bare minimum, along with a good water source, stored energy ( wood, propane, petro fuels, etc ), the ability to produce more food ( because if you every HAVE to use your stored year, there clearly is going to be a production/distribution problem ), and means to defend yourself and your stores.

    But once you get the basics squared away, AND manage to have any fiat left over, nearly ALL long term savings should be in the form of precious metals. People that are saving in the form of paper promises ( stocks, bonds, annuities, etc ) are going to get a huge surprise down the road when the true value of most of that turns out to be nearly nothing.

    The media is cheer leading the DOW now at “it’s near all time high”, while failing to mention DOW 14,000 is nearly 60% below the last DOW record in terms of real money…gold. April 2003, it took 23.47oz of gold to ‘buy’ the DOW…..now it takes only 9.13. That’s 10 years of DOW returns for a 60% reduction in purchasing power. Big Effen Deal…..and why 7 years ago, I cashed in my small IRA stock mutual funds, paid the penalties/taxes, and put what was left in 90% US silver coins. Silver at the time was 6 bucks. Now it’s 30. Those crappy stock funds ? About the same now as then, in nominal terms, and way down in real terms.

    • Yes, I’ve seen the numbers too for the DOW. Debasement of the dollar has made the nominal value of things go up and that’s all people see. The ones that look at the real value know the real story. A lot of people are being taken for a ride and don’t even know it.

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