Monday, May 24, 2010

Preparedness 101 - #3

A reader asked the following question:

What are your thoughts on buying gold? (From a source such as Goldline.) I've read that it can be confiscated by the federal gov't in the event of an emergency, and I'm not even sure how useful it would be in an emergency, but in the interest of preparedness, I thought I would ask. Any thoughts?

I'll have to preface this by pointing out that my husband and I are considered low-income, so doing something like buying gold is a nice fantasy for us but unlikely to ever happen.

I'll also add a codicil: I AM NOT A FINANCIAL EXPERT. If someone takes action based on my words and then loses a bunch of money, don't come whining to me that I ruined your life. If your responsibility to act in accordance with your own ethics and beliefs. (This disclaimer is known as "covering fanny.")

That said, here are my thoughts. If you have any significant amount of money in the bank, I wouldn't keep it there. We have three bank accounts (we have a home business so multiple bank accounts just seem to "happen") with three different banks, and all three banks are considered "vulnerable" or close to failing by Weiss Research. Since we live in a deeply rural location, we're somewhat forced to bank locally, so we just have to take our chances. But if we had any money to save, this would not engender us with confidence in the banking industry.

Additionally, inflation eats away at the value of any saved money. Therefore I'm of the belief that investment in hard assets - guns, gold, preparedness supplies, that kind of thing - is a wiser course of action.

When our daughters were babies, I remember noting that gold was $200 an ounce. That was ten or twelve years ago. Gold has ballooned to $1200/ounce. Sheesh, that would have been a super-dooper investment opportunity! Pity we were poor as church mice back then. (Um, still are. Oh well.)

But we've often discussed how we would buy gold, should the money be available.

I do NOT suggest you buy gold through an online source. I would say, arm yourself with cash. Park a couple blocks away. Walk into a reputable gold dealer. Buy gold krugerands or maple leafs. With cash. Don't give names or addresses or phone numbers. Be utterly and completely anonymous. If the gold dealer "needs" your contact info for whatever reason before completing the transaction, then you don't "need" to buy gold from him. Savvy?

In other words, the government cannot confiscate what it doesn't know you have.

Now if you don't have the cash to buy gold, I've heard silver is a good investment as well. Better, how about a bucket of beans? Rice? Oatmeal? Whatever the value of gold or silver, you can't eat it. That's why we've decided to take whatever surplus (ha) cash we have and invest in things like canning jars or a few extra bottles of shampoo.

Just my $0.02. Or $1200/ounce, depending on your point of view.


  1. Gold is great as a long-term insurance policy on your money, but junk silver (pre-1965 dimes/quarters/half dollars) is fairly easy to purchase and can be purchased (and used) in small quantities.

    We have a great little coin shop nearby that we visit once a month. We take the money that we had been putting aside for our Roth and buy pre-1965 dimes instead. It's low profile and we feel much better seeing our assets grow at home than in some bank ledger.

  2. "In other words, the government cannot confiscate what it doesn't know you have." Excellent point.

    My husband and I have been leery of the whole gold buying thing. I found this article to be helpful in regards to confiscation myths -

    The other thing we've wondered about is a scenario like this - I need food. I have gold. So-&-So has food. What if So-&-So can't make change for my gold? Better to have items to barter with. Like salt maybe.

    A friend of mine has this sig on her email - "Grain will get you through times of no gold better than gold will get you through times of no grain." That said, my DH and I have decided to invest our money into our home and land, into becoming as self-sufficient as possible. When the bottom drops out life as we know it will not be the same. It's better to prepare for a simpler lifestyle than worrying about how to maintain the lifestyle one is accustomed to.

  3. I've been enjoying your columns for several months now. But I just had to comment on one of your statements:

    "When I'm nervous, I tend to can food."

    Good thought ... personally when I'm nervous I tend to buy surplus ammo!

    Seriously, one thing I haven't seen you mention in "preparedness" yet involves water. Those of us living in the country usually rely on a well ... and on our submersible pumps to retrieve water from it. Those pumps run on 220 volts. A small generator doesn't provide 220. Additionally, for a prolonged outage, fuel gets prohibitively expensive ... and during an outage a generator is an audible beacon for about 1/2 mile in any direction indicating that someone is prepared.

    The solution -- a well bucket. Intending to purchase mine soon ... even before I get the next couple cases of surplus ammo ...

  4. I have been preparing in some form or another for awhile. About a couple years ago I started purchasing precious metals. Not very much or very often as I have limited funds but over time even the smallest purchases do accumulate.

    One thing I consider helpful is to consider preparedness type purchases and precious metals as separate ventures, with separate purposes, coming from separate allocations within your budget.

    I buy precious metals as the super conservative (though their values swing wildly. Gold bought in the early 80's would have just recently regained its value BEFORE INFLATION.) end of my overall financial portfolio. I don't think there is a rule for what is a portfolio and it makes me feel fancy. In case of high inflation or hyperinflation silver and gold will retain their value.

    It does add up fast and everybody can afford silver. With an ounce or a silver dollar costing around $20 these days pretty much everybody can afford to pick one up monthly.

    I prepare in order to preserve our health and lifestyle in uncertain circumstances of all types. Stuff like food, water, fuel, warm clothing, etc, falls into this category.

    The thing is that neither fully fills the purpose of the other.

    Buy preps to keep yourself alive and as comfortable as possible. Consider putting a little bit of money into precious metals.

  5. The point of gold is, it preserves your wealth. That Wealth is the primary word. Rather than stocks and investments for the long term, buy gold. After a disaster Quest Communications stock may be worthless, but ten ounces of gold will still be worth something, probably more than you paid for it.
    If you don't have enough money that you'd normally buy some investment (CDs, Money Markets, IRAs, etc.) then don't sweat anything. Use your money for usable hard goods. (Food, stabilized fuel, barter good, etc.)
    If you do buy precious metals, get your hands on it. NO GOLD INVESTMENTS where you get a paper saying you own it, but they keep it.

    There are no laws in America allowing for the confiscation of gold, but things could change. That's why people invented squirreling valuables in a hidey hole millenia ago. I would do so with such a thing, in the best of times.

    A good collection of small denomination coins (Real silver dimes, quarters, halves, copper pennies, real nickle 5 cent pieces) is advised by many for when things begin to get back to normal. Even plain band silver and gold rings. Easy to carry, hard to pickpocket, small denomination enough to not be seen as a "sign of wealth".

  6. many folks during the depression years were approached and had their homes searched for things like food that was possibly "hoarded" and if such things were found it was confiscated..

  7. Just started reading your blog, started last year after the elections when we started preping. We just purchased some gold from The salesperson was very informative and she mentioned about the use of gold in an ecoconomic down turn. In 1933 they did confiscate gold but not rare coins ie. european gold. I would suggest a little on hand. Thankyou.

  8. We've been trying to stock up on some basics as well. Our biggest obstacle is money. We just filled a 100 gallon diesel tank for $310. We are trying to build our supplies, but it is hard to do when you have very little left over every month to even buy 2-3 extra items. Our fuel bill will strap us this month. We could have filled the tank a little at a time to save money, but then if we needed it, we wouldn't have it. What are your secrets to building up supplies without going broke?

  9. Sorry Patrice,
    My last comment was supposed to go under Preparedness #6.


  10. Wanted to mention a couple of things on buying gold. A lot of people thinking about this end up talking to Goldline. I STRONGLY suggest talking with other companies. They are very smooth talkers. I don't know that they are doing anything illegal, but their charges are FAR above the competition. And, they have a myriad of ways of convincing you that is reasonable. They can be downright "bewitching." :-) The whole thing gets complicted, and crafty people can use that to confuse and cause you to "just buy."

  11. I am torn on the issue of buying gold. I definitely understand how it can be an asset, however, I think that when the poo hits the fan (hopefully it doesn't, God willing), bartering goods (food, seeds, equipment, water, etc.) and services will quickly eclipse gold in terms of transaction. People can't eat gold, after all. What good will it do if you have a pile of gold in your house, and nothing else? It's only worth what someone else is willing to pay. The wonderful thing about preparedness is that it forces you to diversify. We have not bought any gold, but we do have older coins with a high silver content and we are satisfied with that. In the meantime, we devote our energies to self-sustaining agriculture and livestock, and buy non-electric tools and appliances from Craigslist when we can. :) Just my thoughts! Thank you all for posting your opinions...I can't tell you how nice it is to read posts from intelligent people!

  12. whether or not you have a paper trail when buying gold or silver or guns etc doesn't matter.
    The government can't take what you are not willing to hand over. PERIOD!!!!!