Redux of the redux of a redux of numerous posts.

Let me try this again.

If you want to preserve wealth, you ain't gonna with $1,900/oz gold.  Apart from my estimate that a third of the bar stock in circulation is tungsten-filled, that is still $19,000 for ten OUNCES of gold.  

Which is one acre of farmland or one mid-sized farm tractor or eighty Ruger stainless 10-22 rifles or 40,000 gallons of water catchment or a thousand gallons of crude oil or 5 like-new, certified-for-use 40'x9.6' Hi-cube steel shipping containers delivered to Hilo (or Kawaihai) or, if you could still get them, ~15 new, unfired, collector-grade M-1 Garands (which have increased in value at about the same rate as gold) or a chicken coop and 2,000 chickens which graze on coquis and produce up to 2,000 fresh eggs a day and sell (or barter) for about 40 cents per egg. That's a better return than PM is going to give you.

You can always sell a few egg-producing hens for ten bucks each but what can you buy with a $1,900 ounce of gold in a depression?  No one can make change and WTF would someone who is worried about food want with gold? 

I keep telling people they can't use gold in an economic meltdown.  Even hinting that you have gold is like telling people you are a Mormon and have a years' supply of food and water in your house. When the shit hits you will never be able to sleep again or walk around without constantly looking behind you.  Even then, someone will get you when you let your guard down for one second. Then the albatross is on their neck. For, while though I consider gold worthless in subsistence economy, most people believe, through faulty reasoning, that gold has some intrinsic value and that it can be used to preserve wealth.  Not so. The 'value' of gold has been below $300/oz as recently as 2001. NOTHING prevents it from returning to that level.  

But if you had spent that $19,000 to start a microbrewery, everyone would be your friend and you could barter a bucket of beer for anything you need –  no one tries to steal a brewery. 

There is not enough gold and silver and copper and pearls in the sea to back the dollar anymore, so that's not happening.  It's a dream.  It isn't real.  Trade can't happen unless everyone has access to the same medium of trade, even if it's paper. Sure, fiat currency doesn't have any intrinsic value, but neither does gold.  It's just a place-keeper.  We can use anything as long as everyone has some of it.  

Bottle caps, Confederate money, US dollars, it doesn't matter as long as it's something that isn't easy to counterfeit – but everyone has to have access to it and agree to use it.

Cognitive dissonance is believing that things WILL get bad enough to make gold worth $1,900 an ounce, in which case the 99% of people who don't have gold can't make change and don't want it anyway, or things WON't get bad enough to make gold worth $1,900 an ounce, in which case you are wasting your money because it is in a huge bubble which will burst.

*A friend just wrote back to me and said 'They can make change with silver/silver coins'.  HELLO!  Same problem.  No one has $1,899 dollars in silver coins to make change for an ounce of gold.  Or, if they do, they can only do it a couple of times and then what? *-ED

Suppose everything actually does tank and the Internet goes away.  Five days later, what is your gold worth?  $3,000 an ounce, or $300?  And so what? How ya gonna sell it?  But a dollar is still a dollar.  What it will buy depends on supply and demand in a barter economy, but it's a standard that everyone understands and will keep using. Your gold bar is a paperweight at that point.

PM is going to tank.  No small investor manufactures anything at all, much less anything that needs silver or gold. Most people don't HAVE silver or gold.  It ain't practical unless you got into gold at $40 and silver at $8. Then you might have a cushion – but in order for that cushion to work you need to sell at the top of the market and no one will. People who own PM will always hold it until they HAVE to sell it to buy food and then the food purveyor sets the value.

Guaranteed, you bring a shiny silver dollar to me to barter and it's worth a dollar.  It's only worth ~$43 to people who are in love with the word 'silver' – and your uncirculated $20 St. Gaudens double eagle?  It's worth $20.  The entire purpose for issuing money is to create a standard – and that standard is Face Value. 

Remember, Grasshopper: PM has no intrinsic value. People fall in love with it and lose their perspective.

Let me give you an example.  I assume, as a best guess, that the stressor will be economic. Suppose it isn't.  Suppose a nuclear accident or another unimaginable incident of some sort occurs on Oahu and shuts down the port. It can happen. Immediately there are no more barges coming to the outer islands.  Within three days there will be no gasoline or propane or food in the stores or toilet paper or, really, anything else. Ever business will have to close because there isn't any fuel. That stuff will have to come from the mainland by ship. But it can't come to the Big Island because we have no deepwater ports. We will simply not get a lot of stuff for a month or maybe much longer. We will also lose our electricity and Internet so everyone in the urban zones will lose power and, eventually, water. OK, you have prepared for this day by collecting 100 ounces of gold and a thousand ounces of silver. So? What are you going to buy with it and how will you get there? 

The stupid argument that a hoard of precious metal can mitigate a disaster is fallacious, but people simply refuse to believe a problem exists that gold cannot solve – or, in fact, that something they never imagined can actually happen until it does.  Then it is too late.
  
If you have a million dollars in the bank or a million dollars in silver and gold under your house, that's great. But I have seen what happens when we run out of stuff on an island and it can't be replaced immediately. So far, a week is about the outside before more barges come.  A month would be a different ballgame. The local idiots forced the interisland ferry out of business and there is nothing to replace them as a life-line. They COULD have run between the mainland and a shallow-water port, but no more. 

My point is always the same. It never changes. If you cannot provide yourself and your family with food and water for a month. If you cannot PROTECT yourself and your family for a month if vehicular transportation stops. If you cannot amuse yourself constructively without a television, or take the opportunity to teach your kids that it's OK and things happen,and that they need to learn and practice sanitation skills they never had before, who, exactly, do you think is going to do it for you?

What happens if a relative happens to drop dead at your house during the month?  There is no one to call. YOU had better know how to handle it. When something catastrophic happens – not 'if' – it will be too late to decide you aren't prepared. Can you cook without electricity, gas, and pre-packaged charcoal?  What are you going to cook? Do you know how gather enough food for your family unit within walking distance of your house? How are you going to wash the plates? How are you going to wash clothes? How are you going to wipe your butt without toilet paper and running water?  Do you know how to start a fire in the rain? Can you make charcoal? How dark is the inside of your dwelling if there are no lights and you have no flashlight? Oh. You DO have a flashlight?  Suppose you drop it and it breaks? What happens if you sit on your only pair of glasses? Can you get water out of your catchment system and purify it without electricity?

Now that you have thought about these things all of which might be required of you within a week after a disaster, can you tell me what part precious metal might play in your potential survival plan? 

All of this supposes that you are healthy and clever enough to actually think through problems calmly and logically while everyone else is having a cow. And then set goals and accomplish them – and that you have no casualties during the critical period. If a member of your core group is injured, or someone's appendix bursts, what will you do?  Can your family survive if you become sick or injured? This is Hawaii and food falls off trees all year long. Finding it SHOULD NOT present a problem, but you will require a varied diet and you will have to be mentally prepared to do this, whether it is for two weeks or two months.

It may never happen.  I hope it doesn't.  But something will.  Shit happens, every day in every part of the world.  We are not immune.  I live my life as fully as I can and I do not fear the unknown.  Challenges exist to be conquered.  But neither am I oblivious to the possibilities. 

So…having presumably survived the first onslaught of whatever natural or man made disaster, which no one ever expected or even believed could happen just happened, triage. What can you do right now, from where you am, with what you have immediately available to you? The first thing everyone will try to do is get home.  Can you get home?  If no, where CAN you go that would be immediately beneficial or reduce potential ongoing risk?  Or if you are near the center of the problem, your job is to help someone, right there, right now – because you would want someone to help you. 

In the case of an off-island disaster which will affect us here, what can you do to gather your core group and begin working through ACTUAL problems as they occur?  People do not panic if they are tasked with a goal and are working toward it. Start doing it. Don't eat canned corn and cold Spagetti-Os and drink canned chicken broth for a week expecting that at any minute someone will come to save you. 

The police and fire personnel are home taking care of their own families and the military has better things to do, although they might eventually deliver some MREs.  The good news is that there are now 24 entrees and 150 combinations and they are all self-heating. The bad news is that you may get a case of all chicken fajita meals which are actually worse than having none at all.   

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