When/If SHTF, how long will silver/gold rounds and such last?

Having personally lived somewhere where it has happened twice in the past 20 years, it can and will happen eventually everywhere. Hmm, I do wonder why it is I can even buy gold in the bank, the supermarket etc.? Why is it that people prefer that noble yellow metal for big cash transfers?

People in the USA have never known what it is like, but alas, soon I believe they will. And it will not be pretty.

 

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I agree 99% of the time you are right, but it really depends on how BIG of SHTF it is. Worldwide, global recession and insane interest rates? Gold is valued because its rare and pretty, and simply because its gold. At some point in a major catastrophe, that will not matter. Yes, hope for better days will drive a value, but if there is no where to escape to where it will buy a better life, I just think eventually PM will be simply seen as another relic of better times, not applicable to current survival.

I am talking about something like a meteor hitting the earth, or something like that.

Short of a worldwide event, you are right Cloud that it will hold a value precisely because somewhere else it can buy you a better life, and its portable enough to actually go there with you to buy that life. I do not see the US gonig down that path, I simply see the US either defaulting on the debt, or devaluing our currency enough to make repayment possible. Those are the two paths governments always take, and usually the latter. This is why I have a Euro and Baht account, why I do have substantial PM's, I own international stocks, and even why I continue to buy ancients since that market is denominated predominantly in Euros. I am not immune to the dollar, but much more immune that many Americans.

Chris

 

Basically, if the dollar becomes worthless it's because the rest of the world's economies have collapsed as well. We see this in miniature right now. You won't be taking your pile of gold on a boat ride to sunny green meadows beyond the horizon, because they won't exist. If or when, however one wishes to extend this fantasy, bullion is used once again as money, like it has over and over in the past, the 1 oz gold eagle you paid $1800 for this year will probably be worth it's face value, if that, then. When gold and silver were used as currency before, the only way it worked was with it being regulated and cheap. As a priceless commodity, it would be worthless. People fail to take in account the reasons bullion rises and the consequences that entails when factoring in their "store of wealth". I can remember when vcr's were selling for $2500 each, but I didn't stock up on them as a speculator, luckly.
Guy

 

nonsense.

 

Stories of gold and silver being used as currency are as old as, if not older than the Bible. Judas betrayed Jesus for 30 pieces of silver. Whether PM's are used as official currency or not, and whether or not you can exchange them for other currency or have to throw your stash in your backpack and hoof it, if nothing else they should continue to be viewed as a store of wealth because that's what they always have been. Why else would gold be so expensive when it really provides no other practical use? Why else would central banks be buying it at today's high prices? Why else is demand at unprecedented levels?

For me it's not about speculation or making a profit (though profit is nice and I do anticipate that happening ;-). It's about having something that will maintain its value and provide an avenue of commerce in any situation.

 

agreed. I leave others to insert "the postman" into the VCR and masturbate furiously.

 

You keep repeating that gold has value only if it permits a person to escape to somewhere where there is a better life. I think you completely overlook human nature and the fact that people will do the best they can to make life better where they are. And since nobody knows whether or not life will be better or worse in the future, if the opportunity presents itself, virtually every person on the planet would store some gold and treat it as having value.

 

I simply think that is your cultural view. I believe a large percentage of the world values gold because of its value, not innately for its beauty. I think a lot of Chinese would believe most of the world would covet and value jade in such a situation as well.

Does this apply to diamonds as well? Rubies? What things that are value today would not qualify for such hoarding, if any?

 

I heard an interesting take on our debt crisis yesterday...

The Federal Reserve is mired in this murky exsistence where it is a private bank, but holds a place as a government entity.

The suggestion was that the Fed puts itself into that place in the government right now, but if we default on our debt to the Fed, which is a great portion, we could say "we defaulted on a debt to ourselves". We don't pay the Fed, so what... We are just not paying ourselves.

Then it was suggested all the sudden, the Fed will rise up and shout from the treetops that they are a private bank, which the have consistently NOT done in the last 100 years.

I am making sense?
Debt owed by our government, to our government = no harm-no foul if defaulted.
Then Fed will go from asserting it is part of govt, to asserting it is a private entity.
I thought it was an interesting discussion...

 

Hmm. Diamonds and jade pieces are each unique; one half-carat diamond could easily be worth many times as much as another of the same size/weight.

Gold and silver are fungible. One gram of 14k is worth about the same as another, whether it's a lump, a sheet, or a wire.

To us, of course, there's a big difference between a pristine 1933 double eagle and a 2007 $50 eagle with a little notch taken out of it. But even we talk about "junk silver" that's traded on weight or face value, whether it's a pile of Roosevelts or a pile of Walkers.

For trading purposes, PMs -- especially in a form of guaranteed or easily-verified weight and purity -- really are​ superior to many other valuables.

 

I think everything you mentioned will have value and will be kept wherever it is available. And this is a universal, not cultural view. People have valued beautiful objects for as long as modern man has walked the Earth. The advantage that gold and silver have over things like diamonds, rubies and jade is that they are divisible and more uniform in quality, so they are better suited for use as money. If you need to rely on large meteor hits and the extermination of 99.9% of the population to find a point where gold ceases to have value, then I think it's worth holding under every forseeable circumstance.

 

This would be all fine and well except that a lot of our debt is owed to China. I suppose we could just pay off our other debts by borrowing from the Fed which is sort what is going on anyway (more so indirectly by making existing dollars less valuable so the ones that are paid back are less wealth parted with), but if such an act was done in totality it would devalue the dollar very quickly, and make our assets undesirable by the international community if not potentially kill our status as the world reserve currency . Although it seems China is just as debt ridden as everybody else so I'm not sure they will be supporting US debt much longer anyway, especially with their recent foray into the Euro.

If you ask me the problem is corruption, fiscal irresponsibility resulting thereof, and lack of enforcement of known longstanding rules that keep things in check. When failed business models are rewarded with tax payer dollars, the executives of which are homogenous with our lawmakers, and those involved are cheating the system it makes it very difficult for a true recovery to happen since everyone else who is actually producing instead of vampiring is at a disadvantage. Unless this is resolved it won't matter whether we pay off the existing debt or not, in any manner, because it will just happen all over again.

 

Yes, it makes a lot of sense and may end up being the choice when the federal government is backed into a corner and runs out of options. In effect the government would be nationalizing the Fed and making it a branch of the Treasury. This would allow the Treasury to cancel all of the Treasury debt held by the Fed without increasing the money supply. The external debt to US citizens, institutions and government such as China would still be outstanding, but the total would be far more manageable. If this or some variation of it is on one of the back pages of the US Treasury playbook, then QE2 starts to make more sense. The more debt the Fed buys, the more that can be retired.

 

This would simply be mortgaging our future yet again. The Fed returns massive profits to the Treasury every year, and if you did this it would simply be taking a one time payment in lieu of a series of payments over time.

 

No, it would be net neutral on the profits. The Treasury would still receive the Fed profits from everything except Treasury bond interest. But since the portion of the payments from the Fed to the Treasury that come from Treasury interest originate from the Treasury anyway, there is no impact.

 

http://www.washingtonpost.com/wp-dyn/content/article/2010/01/11/AR2010011103892.html

Okay, this is a bit dated but shows that the profits returned to the Treasury are not "massive" compared to the amount of Treasury debt.

 

Indeed. Diamands & Rubys will continue to be valuable but not in terms of currency as they fail one of the basic currency tests. The test is they can't be divided without completely destroying their value.

 

I hold a US Treasury I-Bond for 5 years. Face value is $5000. So government gets $5000 of my Federal Reserve Notes for 5 years. When I redeem it, it's worth $6000 so the government returns my $5000 + $1000 interest. I netted $1,000. How did the government make any money on this deal? In fact, where did the $1,000 come from which they had to pay me when I redeemed the note?

The understanding of that will clarify why the government doesn't make any profit at all from it's banker, the Federal Reserve, printing money for it.

-------------------------------------

 

Relative to the OP. Nothing will happen to gold except that pure gold will get processed into coin gold or something similar. It won't get cut into infinitely smaller pieces to reflect the value in Federal Reserve dollars because they will be worthless and irrelevant. Here in lies the risk of not owning gold. At some point, as it did when the nation was formed, the government will simply re-define the dollar in terms of grams of precious metals. The economy resets using that as the new standard. They will use the general ignorance of the American people to take advantage of it.

Most likely there will still be 1oz gold coins, subdivisions down to maybe 10th of an ounce in physical form. Then silver for divisions beyond that. People will have to get used to understanding that a week's worth of work might be only worth a couple of 25 cent silver coins. In pure currency terms, the decimal place just got moved some. It's as simple as that. The penny now has meaning again.

Keep in mind this isn't going to happen without something close to a revolution because the elites will do everything in their power, to keep the status quo in place as long as they can. It won't matter if they end up raiding every retirement account (public & private), sell off all US public assets, place fees on breathing air, etc. They will squeeze people until they have nothing. This is the power the fiat dollar gives them. If you think it can't or won't happen, go study Greece. The public is being sent back to the feudal Europe, in part, to save the whole fiat system.

It won't be pretty. This is why they call it SHTF. The next few generations to come after this event, assuming something survives, won't trust any paper or anything else issued by the government in terms of currency. So what remains are PMs as the ultimate backing of currency. Then, beyond that, future generations will forget again, and the entire mess is repeated. Anyone reading this now will just be a historical relic at that point and people of that time will look back and say one of the most stupid phrases in the English language, "It will be different this time".

All of this will happen again. However the trick for the PM/bullion investor now is in knowing the timing. It could be that anyone reading this might not live long enough to see it through. I don't think it will take that long as the money printing is moving into the puck end of the the famous hockey puck graph. S

 

This talk about the SHTF is getting in the way of me worrying whether or not I should play golf tomorrow. I'm not a fan of worrying about a scenario like this. Enjoy today people.

I do think that rounds could be a currency if that happens, but then again if it really got that bad, I'd rather be paid in bread for what I do, not a piece of metal.