saving my silver for a rainy rest of my life?

[billionaire]

Hey theres been some talk about the US dollar going down in 10-20 years on the internet and some other places. I was just wondering if any of you guys believed this. If so the media stuff said people were gonna need to use silver and other metals for currency. I might need to hit up the banks soon and get a lot.

 

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[Generic_Lad]

I would argue that the US is no more likely to collapse than any other country that prints more currency than they hold gold reserves - that is, a LOT of them. Admittedly, I don't follow history quite as close as you do, but I would question when Zimbabwe and Germany's currencies were devalued, what was the ratio of their currency to their physical reserves? Personally, I don't see the US approaching that point anytime soon.




Not bad advice necessarily, but you always have to be aware of your investments wherever they are. Many US and European citizens held bank accounts in Iceland and Ireland, when the interest rates were in the double digits. When Iceland went belly up, those accounts became worthless.

When we were in Hong Kong last year, my wife wanted to open a savings account at one of the banks there, as the interest rates were much higher than in the US. However, you have to consider the costs of currency exchange fees when opening the account, potential tax liabilities (both in the foreign country and at home), currency exchange fees when you cash out, and the potential of the foreign currency devaluing in relationship to both the US Dollar as well as the rest of the world. You also need to consider how you will physically open the account and transfer the money, as well as judge the risks of the solvency of the particular bank, as well as the country in which you wish to invest. Ain't nothing easy about overseas accounts!

Regardless, if you have bank accounts overseas, or hold foreign currency or stocks, always keep informed of that country's economical and political situation.

See, the problem is, the US government and the Federal Reserve have no obligation to pay out gold for dollars, especially not for citizens like you and me. While it could be used to help pay down debt to other countries if the US dollar was no longer acceptable in international trade, I don't see it as "backing" for dollars, at least not for us. Before the end of the gold window in '71, this would be an accurate point of comparison, but since there's no link to the dollar and any commodity I'm not sure it would paint such an accurate picture.

And yes, you have to do your research when it comes to offshore anything, especially because big news stories that happen in NotTheUS are barely mentioned by most of the US media. However, I think the Hong Kong Dollar might be worth looking into for a couple of reasons:

1) It is currently pegged to the US dollar and fluctuates within a very narrow margin.

2) This means that whenever Bernake devalues the US dollar, the Hong Kong Monetary Authority also has to devaluate the Hong Kong Dollar.

3) Since the Hong Kong Dollar has been so devaluated, there has been a property "bubble" that is associated with large sums of cheap money (interest rates are near zero) and so things are going for absurd amounts. Consider a parking spot that recently sold for over $150,000 (US)

4) Due to the rampant inflation, it only seems reasonable that the Hong Kong government would want to either remove the peg with the US dollar and go either free-floating, or peg it to a different currency (or increase the peg with the US dollar)

Because of these things I don't think it is really possible to "lose" too much by betting on the Hong Kong Dollar. Worst case scenario you end up holding the equivalent amount in FRNs as you started with (minus some minor fees), best case scenario is that the peg is removed and the Hong Kong Dollar shoots up dramatically leaving you with a nice profit when you re-convert it to US dollars.

 

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[Wilmingtonsilver]

Not to mention, when China finally buys the rest of the US, the Hong Kong dollar will be the main currency. The more China buys, the more you make.

 

[Gold Maven]

I believe its always a good idea to have some gold and silver, but now is not the time to buy. Just like when silver and gold spiked in the 80's, it won't last.

There have been countless downturns in the US economy in the last 200 years, but some how things always get back on track.

Wait till silver is back to 3 or 4 bucks again, and then you will be able to put away 10 times as much for the same money. Just my thoughts, GL.

 

[fistfulladirt]

I believe its always a good idea to have some gold and silver, but now is not the time to buy. Just like when silver and gold spiked in the 80's, it won't last.

There have been countless downturns in the US economy in the last 200 years, but some how things always get back on track.

Wait till silver is back to 3 or 4 bucks again, and then you will be able to put away 10 times as much for the same money. Just my thoughts, GL.

I thought there was a big difference between the conditions driving the silver prices between 1980, and now (the Hunts).

 

[dejapooh]

Well Im sure the Dollar in this country will never go up. But if you are wanting to CRH to try and get rich, its not gonna happening quickly. But if you have the mind set of doing it as a hobby, it will all add up

Believe me, you do not want the value of the dollar to go up significantly. Deflation is far more destructive to the overall economy than Inflation is. Prices of items do go down at times if outside factors influence the price (just watch the price of Oil over time, Up and down), but general overall deflation (an increase in the value of money) was the primary result, and ultimate cause of the Great Depression. Long term, mild inflation provides an overall benefit to the economy, allows for growth, and a flexible response to unforeseen economic issues.

 

[dejapooh]

There are several reasons fiat currency is beneficial if not abused.
1) When you peg your currency to a fixed point (such as gold, silver, or whatever), the amount of money you have available is fixed while the amount of stuff you have available to buy in the society changes. If you can not increase the amount of money available when you increase in the number of things available to buy, you end up creating a deflationary blip, which can quickly become a deflationary spiral (the great depression, the depression of the 1870's, the depression of 1830's, so on). Deflation is just as destructive... perhaps more destructive than inflation. The ideal would be a currency that held a fixed value compared to a fixed amount of things to buy, but with changing supplies of things to buy, changing populations and demographics of the population, you need a flexible currency to deal with the situation.

2) When bank panics happen, you need to be able to drop cash into the problem. Fiat currency allows the central bank to do that. The depressions that the U.S. has fallen into were primarily a seizing of the credit market which made doing business difficult if not impossible. The bank losses in the stock market crash of 1929 caused the banks to stop making loans to businesses. Because they could not make loans, businesses could not meet payroll or expand. That caused the widespread unemployment, the drop in demand, and so on. That is why the cash drops of the last 5 years were necessary and helpful. By making cash cheap and available, the credit seizing only lasted a couple of months, The drop was arrested, and credit was allowed to once again lubricate the economy. We were spared a second Great Depression by this quick and decisive action. Now, more can and should have been done to bring to accounts those who precipitated the crisis. But that is an issue of Justice, not economics.

Finally, you will notice that the great failings of currency have happened mainly after military defeat. There are outside things that can ruin a currency. A government can become irresponsible with Fiat Currency and use it to try to inflate themselves out of problem (or to buy lower taxes). If Guns don't kill people, Fiat does not kill economies, Irresponsible use of it does.

 

[drbecker]

The things that will still have value when the SHTF and money is worthless, are Precious metals, Ammo and food. Keep well supplied on all of them.

Some might say hoard guns as well but I think ammo a better trade tool. After all one gun can be used to fire thousands of rounds of ammo but ammo is only used once.

My feel is .22s are one of your best calibers to hoard.Cheap and take up little room come in 5000 round cases for a couple hundred bucks retail.

Silver would be easier to use as trade then gold so lots of silver coins and ounces make sense to me.

Food, MREs are a good thing to hoard if you can get them that are not to old. They last about 25 years but after 10 start tasting bad or at least more bad then when new. Rotate your stock as in eat some up as they get older and replace then with newer. I use them on hunting trips they are easy to prepare.

 

[fistfulladirt]

I can understand the food and ammo, but a wheelbarrow full of gold wouldn't buy my laying hens in a SHTF setting.

 

[NjStacker22]

You would most certainly sell for a wheelbarrow full of gold, don't lie

And for food, instead of spending a sh*t ton of money on MRE's, you can buy a dehydrator and prepare your own meals. MUCH MUCH MUCH cheaper AND you can make things that YOU want to eat and enjoy.

 

[50cent]

You would most certainly sell for a wheelbarrow full of gold, don't lie

And for food, instead of spending a sh*t ton of money on MRE's, you can buy a dehydrator and prepare your own meals. MUCH MUCH MUCH cheaper AND you can make things that YOU want to eat and enjoy.

Sell? If things got this bad the concept of buying and selling would not exist therefore rendering ownership of such frivolities useless. They hold value in modern times because of their scarcity. If things collapsed, gold if anything would be worth less since there are not speculators and hoarders over-hoarding it. Who would want gold instead of a car? Who would want gold instead of a heat source. All basic mediums of exchange would collapse and the average person would not be able to tell the difference between what is gold and what is a fake. Only thing gold will be good for then is teeth and, if you had wheel barrel, full of it, make bullets out of it. People would generally be on the move, not stationary, therefore taking 'small valuables' like gold with them useless. Things are not the way they are in movies and if you have an example of where government collapses and gold becomes a standard in recent history please point it out. Like saying places like Hati, or the central african republic, have the highest demand for gold in the world because they are in total anarchy and nothing could be further from the truth. Might as well live life and be content, and if stuff ever got that bad tough it out, things would be so totally different from what you anticipated, you'd probably end your own life.

 

[Generic_Lad]

There are several reasons fiat currency is beneficial if not abused.
1) When you peg your currency to a fixed point (such as gold, silver, or whatever), the amount of money you have available is fixed while the amount of stuff you have available to buy in the society changes. If you can not increase the amount of money available when you increase in the number of things available to buy, you end up creating a deflationary blip, which can quickly become a deflationary spiral (the great depression, the depression of the 1870's, the depression of 1830's, so on). Deflation is just as destructive... perhaps more destructive than inflation. The ideal would be a currency that held a fixed value compared to a fixed amount of things to buy, but with changing supplies of things to buy, changing populations and demographics of the population, you need a flexible currency to deal with the situation.

2) When bank panics happen, you need to be able to drop cash into the problem. Fiat currency allows the central bank to do that. The depressions that the U.S. has fallen into were primarily a seizing of the credit market which made doing business difficult if not impossible. The bank losses in the stock market crash of 1929 caused the banks to stop making loans to businesses. Because they could not make loans, businesses could not meet payroll or expand. That caused the widespread unemployment, the drop in demand, and so on. That is why the cash drops of the last 5 years were necessary and helpful. By making cash cheap and available, the credit seizing only lasted a couple of months, The drop was arrested, and credit was allowed to once again lubricate the economy. We were spared a second Great Depression by this quick and decisive action. Now, more can and should have been done to bring to accounts those who precipitated the crisis. But that is an issue of Justice, not economics.

Finally, you will notice that the great failings of currency have happened mainly after military defeat. There are outside things that can ruin a currency. A government can become irresponsible with Fiat Currency and use it to try to inflate themselves out of problem (or to buy lower taxes). If Guns don't kill people, Fiat does not kill economies, Irresponsible use of it does.

On point 1, there hasn't really been a hyper-deflationary event, I know of no currencies that have collapsed because they were worth too much. As for the Great Depression, a lot of it was caused by easy money and credit during the Coolidge administration The Great Depression - Hans F. Sennholz - Mises Daily is an interesting article that helps explain the root causes.

The natural tendency for any currency is inflation. Why? Because when the value of it increases (deflation) the number of places where it can be profitably mined increases also. For example, consider the relationship between gold (being used as currency) and X (where X represents a desirable good with no substitutes), since it takes less gold to buy 1 unit of X, the value of gold in relationship to X has increased. Because of this, more resources will be devoted to increase gold production and previously unprofitable mines will be re-opened. Similarly, if the price of gold decreases, fewer resources will be devoted to mining gold and there will be less new gold entering the marketplace, so long as demand (population) increases, the price will rise. Barring any major discoveries, the price of gold will be relatively stable.

On point number 2, banking panics/runs only exist under the fraudulent framework of fractional reserve banking. By its very nature, fractional reserve banking is unstable and it is unsurprising that it eventually collapses. The proper move is not to create a central bank to help prop up this system but to move from an unstable banking system to a full-reserve banking system. If you had fractional reserve anything else, you'd be appalled. What if your stockbroker or mutual fund had fractional-reserve stocks?

There has been no government that has abstained from using the magical printing button and maintained a stable fiat currency. If those in power were omniscient and Omni-benevolent fiat currency could work just as well, if not better than commodity-based money. But those in power are not and I'm certain that they aren't looking out for my best interests.


And for those of you stocking up for a SHTF scenario, why not just leave? If it is clear that there will be an immediate (monetary, not something like a nuclear war or a worldwide zombie outbreak) SHTF scenario in the US, why bother living like its the 1880s struggling in the US, why not move to greener pastures? While undoubtedly a collapse of the US dollar will cause shockwaves around the world, there will be places that are much less affected by it.

Just look at the most recent "great empire" to collapse, the USSR. Of course freedom of movement was much more restrictive in the Soviet Bloc, but look at 1988-1991 in the US compared to the USSR. Those in the US watched in the comfort of their living rooms as violent protests and coup attempts broke apart the Soviet Union and Eastern Europe. Those in the USSR and Eastern Europe watched tanks roll by in person. While those in the West read about the devaluation of the Ruble, those in Eastern Europe faced it themselves.

If you can tell there will be a SHTF scenario I think it is much, much, much, much, much more prudent to flee the US than load up your AR-15s, break out the MREs and sit on your piles of gold and silver. Not that there's anything wrong with having those items, its very smart to store those things in case you can't leave for some reason, but I for one want to watch the collapse in some far away country in 1080p than smell the burning cordite.

 

[joeismad]

The way I look at it is this:


What can it hurt? Gold and silver have done nothing but increase in value the last 4 decades due to the US being taken off the gold standard. If you stock gold and silver now at the worst you will be no worse off than if you had put the cash in a savings account or invested it and could be substantially better off than many investors due to the up and down nature of stocks, etc. if the SHTF you will be at least a little better off than the average schmuck who has never stopped to think about the fact that fiat currency is all an illusion until it came crashing down around his ears.

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[FormerTeller]

Gold and silver have done nothing but increase in value the last 4 decades due to the US being taken off the gold standard. If you stock gold and silver now at the worst you will be no worse off than if you had put the cash in a savings account or invested it and could be substantially better off than many investors due to the up and down nature of stocks, etc.

Not sure I agree with this. There was a good 20 year period starting in the early 80's during which gold and silver prices were stagnant, and even fell depending when you bought it. This happened well after the US abandoned the gold and silver standards. During this same period of time, interest rates were sky high (the prime interest rate was over 20% in 1982). Consider a scenario now where you stockpile gold and silver, currently at near record highs, and the US economy turns around. Silver and gold prices fall, interest rates rise, and you either have to sit on your PM investments for years or take a loss before you can invest in something else that's actually making money. This is why PM's should be part of a balanced portfolio, rather than the bulk of one.

if the SHTF you will be at least a little better off than the average schmuck who has never stopped to think about the fact that fiat currency is all an illusion until it came crashing down around his ears.

No argument there, though I really don't see a complete SHTF or a TEOTWAWKI situation happening in the US. I certainly don't see the US reverting to a barter system.