Posts Tagged ‘Money’

Buying Gold and Silver

Posted: January 14, 2016 in Finance
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Should I buy gold and silver?  This is a common question preppers have.  Readers have been asking me for some insight on this topic.  Here are a few of my thoughts on the matter.

Preppers and gold seem to go hand in hand.  People often add it to the Three Military Bs – Beans, Bullets, Bandaids… Buillion.  Is having gold and silver as important as the other three?  Probably not, but it is something you may want to consider adding to your preparations.

My short answer to the question is… maybe.  When and why should you stockpile precious metals?  Precious metals are fairly stable and tend to hold their value well.  They really shine (nice pun) during rapid inflation or economic collapse.  When paper money becomes useless your gold and silver still have intrinsic value.  Throughout history there has always been demand for gold and silver for these reasons.

Precious metals are portable and dense.  Throw a silver dollar in a bugout bag and you have something that is worth roughly $15 at today prices.  Throw a 1 ounce gold coin in your BOB and it is worth about $1000.  As you can see gold is much more valuable than silver.  This is good and bad.  That 1 ounce gold coin can be very hard to spend.  If you need a $2 loaf of bread how are you going to split that $1000 coin?  Having some of both in different weights is a good idea.  Just like you would carry around paper money in different amounts -$5, $10, $20, $100 bills.

Rules of Thumb

  1. Food storage comes first – if you don’t have 6 months of food and water stored up don’t even think about acquiring gold or silver.  You can’t eat gold.  You will just find yourself trying to barter your metals for the food you don’t have.  Get the food first.
  2. Make sure you have the other basics covered as well before you buy buillion.  Guns, ammo, first aid, energy.  Otherwise you’ll just need to barter your buillion for the things you need.
  3. Buy and hold physical precious metals.IMG_4565  You can buys stocks, ETFs, certificates of precious metals.  This might be okay for investment sake but not terribly useful in an emergency.  I recommend having your own metals on hand.
    1. This requires some way to store and keep these precious metals safe.  You will want to invest in a safe.  The more money you have to protect the more money you have to spend to protect it.  Diversion safes are designed to hide things in plain site.  A coke can with a screw off bottom hiding in your fridge would work pretty well for a few hundred dollars of silver.  Maybe a fake book on your bookshelf.  There are lots of options.
  4. Start with silver because it is just cheaper and easier.  Junk silver coins are a great place to start. IMG_4561 They are called “junk” because they have no collecting value.  They are actually quite valuable for their silver content though.  Quarters, half dollars, and dimes before 1965 are 90% silver.  This tends to be one of the cheapest ways to buy silver.  You can also consider American Silver Eagles, silver rounds, and silver bars. IMG_4563 American Silver Eagles (and similar) will always cost a bit more because they are official currency from a government mint.  You pay a premium for this.  The nice thing about this is that they are easily recognizable and universally trusted for their silver content.  This may make them a bit easier to trade.  In addition actual currency may be safer from a government confiscation of gold or silver.  Our government has done this in the past.
  5. Buy from a reputable source.  There are many online retailers of precious metals.  Some are super shady and dishonest.  There is a whole industry just trying to scare you into buying precious metals.  Be wary.  I have used a few different companies and can recommend them.  You can buy local, but again be careful.  Find someone you trust.  I have never found the prices to be competitive with the online retailers.  Below are two I use.  Over many orders I have never had any problems.
    1. Provident Metals
    2. JM Buillion
  6. Look at gold and silver as a hedge against inflation and economic collapse not as an investment.  Investing in precious metals is an entirely different ballgame.  We are not talking about that here.  I simply look at it as putting some value away now in case of emergency later.  I don’t really care what it costs now or what it is worth in 10 years.  I feel good any time I can trade my worthless paper fiat money for silver or gold that has real value.
  7. Avoid numismatic coins.  These are rare coins that are collectible.  Their value is often many times higher than the worth of the precious metal they contain.  You aren’t interested in this for prepping.  This is collecting or investing in collectables.  You need skill and experience for this.  The unitiated will most likely get taken advantage of and end up losing money.  You just want the metal in the coins so don’t overpay for collectability.
  8. Do your due diligence.  This is a very superficial summary.  I would recommend reading some other sources and viewpoints on this.  There are a lot of good articles out there on this very topic.  Here are a couple other articles worth reviewing.  These are both very good blogs in general.
    1. The Great Northern Prepper – Precious Metals Investing
    2. Graywolf Survival – Will gold and silver be… when SHTF?

Summary

I do believe that gold and silver have a place in your preparations.  They can be very useful items to have stockpiled.  If you are just getting started put this on the back burner.  This is not a top priority.  Food and water are top priorities.  If you are a more experienced prepper looking to diversify then this may be a good direction to go.

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In a previous post (The 2 Most Important Thins You Can Do) I talked about acquiring skill and getting in better physical shape.  I suggested these are the two most important things you can do in your life to improve your preparedness.  An able body and mind is much more likely to overcome difficult obstacles.  For the most part both of these things are free.  You can gain knowledge and skills with little to no cost.  You are doing it now!  You can also get into better physical shape for free.  Eat better, walk more, ride a bike to work, excercise.  Don’t fret if you don’t have any equipment or an expensive gym membership.  Body-weight exercises like pushups, lunges, planks, burpees, etc are great exercises.  There is one thing I would like to add to the above.  Get your financial affairs in order.

Money – we have a major debt crisis in our country.  Not just the country as a whole but as individuals.  We borrow way the hell too much money.  The median house hold income in the US is $53, 657.  The average indebted household has $15k in credit card debit.  Credit cards average about a 15% interest rate.  The average car loan is over $30,000.  Average student loan debt is $31,000.  Predictably, only 60% of people have at least $500 saved.  What if any little emergency hiccup happens.  Individual job loss?  Death or disability?  Global economic downturn?  This whole thing is a house of cards.  Get out of debt!  Stop borrowing money!  Cut your expenses.  Live within your means.  Start saving money.  Everyone should have a 1 month supply of food and water.  You should also have at least a months worth of money.  Ideally, you should have an emergency fund of 6 months worth of living expenses.  This way you are much more likely to be able to weather a short-term emergency like a job loss.

I highly recommend a couple of websites that I regularly read

Mr Money Mustache – this guy is great, and funny to boot!  He is all about efficiency.  He recommends saving 65% of your income and retiring in 15 years.  Sounds crazy right?  He did it. Check it out!  Even if he doesn’t convince you to save that much, some of his ideas are going to rub off on you.  From his homepage click on “Start Here”.  Read that article and click on all the linked articles.  Then keep reading.  I guarantee this will make you better with money.  One of my favorite articles “The shockingly simple math behind early retirement” shows that drinking Starbucks everyday and having cable TV end up causing you to have to work an additional 8 years.  This compared to saving that little bit and investing it.  Is cable TV and Starbucks worth 8 years of your life slaving away in a cubicle?  Do yourself a favor and start investing some time into mastering money.

The White Coat Investor – I read this guy’s book during my residency.  It is directed at doctors because although we may be intelligent and educated; we suck with money.  His website is full of wonderful advice about investing.  This is what you need to do with the money you are setting aside.  Make your money make money for you.  It’s a beautiful thing.  He loves Vanguard funds.  For that matter so does Mr Money Mustache.  Topics range from financial advisors and student loans to how to execute a backdoor Roth IRA.

The better control you have over your finances the better prepared you will be for… anything!

  • Get out of debt
  • Stay out of debt
  • Save money
  • Invest
  • Diversify
  • Learn to lead a more efficient life so that you don’t NEED so much STUFF

All of these things lead to independence.  Independence is truly a beautiful word that very few of us truly try to apply to our personal lives.  Financial independence is a huge piece of the pie.  Work on it!

As a reminder… (After all repitition is the mother of learning – as our Russian comrades like to say)

Move!  Get out there and move.  Go for a walk.  Walk to the store.  Leave the car behind.  Ride your bike.  Just do something other than sit at a desk or in front of the TV.  Find something heavy and pick it up, lift it over your head, repeat.  Do something difficult everyday.  Do something physically difficult.

Read!  Read a book.  Read for pleasure.  Read for education.  Read the above websites.  Turn the TV off.  The average american watches 5 hours of TV a day.  How is that even possible?  It boggles the mind.  Read a book instead.  Do something mentally difficult everyday.  Add to your mental library.

Save! Put some money away for that inevitable rainy day.

creature from jekyllAbout a month ago I did a Google search on the Federal Reserve.  I had always wondered what exactly it was and wanted to find out more.  It has been a very interesting journey ever since!  I recently finished reading the book “The Creature from Jekyll Island” by G. Edward Griffin.  It is a fairly large book, 608 pages to be exact, but I highly recommend it.  I became aware of it after watching a Glenn Beck episode about “The Fed.”  He interviews the author and discusses the book in the episode.  The show is about 40 mins, so if you have no interest in a 600 page book, it makes a decent substitute.  Glenn Beck episode on the Federal Reserve: aired Aug. 25, 2011.  I had never watched, listened to or read anything by Glenn Beck until this.  Interestingly, he was fired 3 weeks after this show aired.  The whole thing is a little conspiratorial so take it with a grain of salt.  Do your own research.  If I had to choose to believe the book versus the Fed, I would lean toward the book.

So back to the book… The Creature it alludes to is The Federal Reserve.  Jekyll Island is an island off of Georgia where a clandestine meeting took place in 1910 that culminated in the birth of The Creature.  It was held under great secrecy because the members of the group knew that if the public found out about the meeting they (the public) would never go along with the proposal.  And here is why… the group consisted of:

  • Benjamin Strong
  • Abram P. Andrew
  • Paul Warburg
  • Senator Nelson Aldrich
  • Frank Vanderlip
  • Henry Davison

Now none of these names may jump out at you.  But what about Rockefeller, J.P. Morgan, Rothschild?  You’ve probably heard of them.  These are some of the richest men in history.  Lets look at these 5 men more closely.

Senator Nelson Aldrich – Republican Whip in Senate, Chair of National Monetary Commission, authored the original Federal Reserve Bill.  He is a business associate of J.P. Morgan and father-in-law of John D. Rockefeller, Jr.

Abram P. Andrew – Assistant Secretary of Treasury

Frank Vanderlip – representative of William Rockefeller

Henry Davison – representative of J.P. Morgan

Benjamin Strong – representative of J.P. Morgan

Paul Warburg – credited as the mastermind of the plan.  Partner at Kuhn, Loeb and Co.  Representative of the Rothschilds.  Interestingly, the character Daddy Warbucks from Little Orphan Annie is based off of him.

These men represent 1/4 of the wealth of the entire world.  25% of the wealth of the entire world!!!  That is just completely insane!  Other estimates say it is likely closer to half of the wealth of the world!!!  Holy crap batman, that is A LOT of money!  These men are all fierce competitors and they got together to hatch a plan, together?  Their motives must have been totally pure… right?

In short they designed the Federal Reserve, a cartel, in partnership with the government.  A cartel is an agreement between competing firms to control prices or exclude entry of a new competitor in a market. Sounds healthy for everyone.  As a side rant this sounds exactly like how the college football system works… hmmm.  They picked the name Federal to sound authoritative and governmenty.  It has nothing to do with the government, it isn’t Federal at all.  They picked the word Reserve to sound calming and stable and imply that they have reserves… they don’t.  On their website the explicitly say they don’t have any gold and that they aren’t employed by the governement.  It is a private central bank.  No one knows exactly who owns or runs it.  All of its books and dealings are completely private.  We are not allowed to know.  Its officials are not elected.  The president can appoint the chairman from an approved list provided to him by the Federal Reserve (sounds communisty).

These men had 5 stated goals of the cartel, *cough, *cough, Federal Reserve.

1.  Stop the growing competition – they hated the new banks cutting in on them.  Sounds cartel-ish…

2.  Obtain franchise to create money.  They wanted to be able to create money out of nothing and then lend it out and charge interest.  So, let me get this straight.  They create money out of nothing??? Lend it… and charge people interest??? Yep!  I agree this is a great business model, I would like in on this.  Oh I can’t, see #1.  All along I thought they actually printed money.  They don’t even have to do that!  They just make it up out of thin air.

3.  Get control of ALL banks’ reserve funds.  To protect them from runs and currency drains.  Sounds slightly more reasonable than the first two at least.

4.  Shift bank losses to taxpayers.  They didn’t want to be on the hook if they lost money.  They wanted the government to guarantee everything.  Basically, they can never lose becuase they will always get bailed out by taxpayer money.  So to compare to my personal finances I could take the wildest risks in the stock market and if I lost it all, I would get it all back from the government?  Risk free investing?  Yes, please!  Oh, wait… see #1.

5.  Convince Congress and the population that this is all for our good and to protect us.  How sweet, the Fed is trying to protect us.

In short, the Fed partnered with the government to create money out of nothing and make money by charging interest on it.  We the taxpayers are answerable to it for its losses.  The government allowed this monopoly to create and control the money supply.

Question: Why would the government want this?  Answer: It gives the government the ability to get any amount of money it wants without having to raise taxes.  People get mad and ask questions when you raise taxes, or elect new officials.  The government either has to cut expenses or raise taxes to have more money.  This way they get more money and we pay for it via inflation.  This is the secret tax of the whole system.  Our money loses value everytime the Fed gives the government money.  So in the end we lose, and lose, and lose.  Compounded yearly, forever.  Over your entire career the government will basically take back all of your wealth via this mechancism.  5% compounded interest, removed from your buying power, forever.

The really interesting thing is that this mechanism means that the government really doesn’t have to collect taxes.  They can have money anytime and tax us via inflation.  So why do they?  Basically, to keep up appearances.  We would start asking questions if the taxes went away.

Again, this is a 600 page book, so this is a very brief summary of some of the more interesting points.  Watch the video by Glenn Beck and pick up a copy of the book.  You will learn a lot about money, banking, finance, government, central banks, bail-outs, inflation, and more.  Knowledge is power!  Be skeptical of people looking out for your good.  Be skeptical of wealthy men meeting together in secret.  Look out for your own financial and physical well being.  Have a diversified financial strategy and be prepared!  Consider adding things like food, supplies, guns, ammo, gold, silver and hard assests into your financial plan.  Be prepared for impending financial difficulties.  Fear the Creature from Jekyll Island!!!  (I just had to end with a conspiratorial tone… I’m really not a conspiracy nut)