In this post, we’re going to discuss whether silver or gold is better in a SHTF scenario. We will discuss why people flock to precious metals during tough times, advantages of having gold and silver, and factors to consider.
Why do people flock to precious metals during bad economic times?
Simply stated, both gold and silver act as insurance. It’s real money and both do a much better job retaining their value than other assets like stocks and cryptocurrencies. In addition, precious metals like gold and silver are liquid and can be used to barter for critical items you might need like food, clean water and medical supplies.
While we talk a lot about a disastrous economic collapse and why having precious metals is important, it’s important to point out that precious metals can be very beneficial in other circumstances. For example, if price controls are implemented by the government a price ceiling would surely create shortages and rationing. In order to get specific items, one could use silver and/or gold to obtain certain hard to find items. This would allow people to pay over the price ceiling and remain off the radar.
Gold and Silver in a Power Outage
One event where silver and gold could be very useful as well is a Power Outage. We’ve all experienced this, and we’ve seen outages for hours and sometimes weeks or more. Many believe right now that our power grid is very vulnerable, and it’s just a matter of time until the power grid is taken down. It might not be the whole grid at once, but even a regional power outage could really affect the country.
While cash would certainly be one thing you could have, the fact is many people have none or if they do, not much. In addition, with the US dollar being inflated away it make much more sense to store gold and silver than dollars.
In the event a power outage arrives, we can expect that digital payments, credit and debit cards, all this will be useless. While bigger corporations might not want to accept gold or silver, this won’t be the case with smaller shops and local farmer’s market. They will need something for their food and other products. While again many will bring up cash, we could have a CBDC by then and also many people have little to no cash today.
In addition, if a disastrous scenario comes whether it be war, hyperinflation or something else, both gold and silver are great to have. They protect your purchasing power and act as insurance as well. Both can be used as money and are real wealth.
So, we know silver and gold are both great to have for a variety of difficult scenarios, but which is better?
Simply stated, in my opinion, the answer is to have a little bit of both. However, as we dive into the advantages and disadvantages, we’ll see deciding how much to own of each is not that simple.
What are the good and bad aspects of having silver?
There are several big advantages to stacking silver for an economic disaster. One is that you can buy 1oz silver coins and junk silver relatively cheap. These types of coins can be used easily in doing small transactions. That’s why many stock up on these smaller coins as they have value and are ideal for bartering or buying small items.
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One disadvantage of silver is that it isn’t as well-known as most people think. Despite what most people think, most of the general population has no idea around the value of a 1 oz. silver coin. If you were to go in the street and offer people wither a 20 bill or a silver coin, most people would take the $20 bill. In fact, I bet most would take a $10 or even $5 bill. In the event, an economic collapse happened, I’m not so sure that many people would be concerned or know what the value of silver is.
Gold to Barter
Gold on the other hand does not suffer from this weakness. Gold has been known for millennia and pretty much everyone in the general public knows gold is valuable, even small amounts. Survey the same people on the streets about whether they want a $100 bill or a 1oz gold coin, and good number are going to take the 1oz coin. Of course, there will be some who take the $100, but surely it won’t be as extreme as the above example.
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While gold is well known even outside financial circles, it is expensive and that in a way makes it somewhat less than ideal to barter with. 1oz gold coins cost around $2500, and even 1/10-ounce gold coins cost around $275 each. Not to mention, 1/10 gold coins usually have a decent premium attached them.
As stated earlier, I think it’s best to have a combination of gold and silver for both economic disasters and even events like a power outage, a CBDC implementation or government mandated price controls. Silver can surely be used for smaller transactions and has the ability to purchase or barter for things like food or supplies. Gold is useful for larger items you might need, like possibility a car.
When could we see a disastrous economic event?
This is tough to predict but the math says clearly this is going happen. The fact of the matter is that debt is spiraling way too much out of control. With the US national debt at 35 trillion, it’s becoming harder and harder for to see this number ever even slightly declining. By all signs, this number is going to continue spike and exponentially.
The last few years we’ve seen low unemployment. Imagine what will happen to the debt when unemployment spikes? GDP and tax revenue will drop, monetary policy will become much more lose and we’ll see a drop in interest rates. In order to prevent treasury yields from spiking, the Federal Reserve will almost certainly jump in the treasury market and start buying up US bonds. On top of this the Federal government will almost surely pass some pork filled spending packages.
All these actions will accelerate inflation and spike the national debt even more.
This is not assuming as well that we don’t winter a severely adverse scenario such as war or another Covid. Scenarios like that will increase the debt even higher.
Some might say a spike in unemployment will kill consumer spending and bring about disinflation or maybe even deflation. I disagree with this though. Consumers, Americans, cannot stop spending. We’re going to continue to see massive credit card debt and alternative lending products like Buy now, pay later. It should be the case that people will begin saving more, but unfortunately, I don’t see this happening.
In addition, to our national debt problem in the US, the US dollar has become less and less attractive. This is for several reasons. First, are the sanctions the US put on Russian. This was terrible policy mistake and one that many countries took note of. Second, confidence in the US dollar continues to decline as more and more countries are decreasing their purchases. This is evidenced by the higher yields. Third, other countries, such as the BRICS nations are beginning to explore an alternative currency. Many in the US scoff at the notion that they can pull this off, but starting a currency takes time. Also, it’s critical to start at the right time. If done too quickly or with still issues pending, the implementation could fall flat on its face.
United States Culture has a Grim Outlook
One non-economic reason that I believe stacking silver and gold is so important is that United States culture has declined so much the last decade. The Cultural decline will spill over into the economy and cause massive decreases in productivity. American workers are lazier and more spoiled than ever. Furthermore, people have become much too sensitive over a wide range of topics. Gone are the days of tough-minded individuals who accepted criticism, learned from their mistakes and embraced challenges.
Many think AI will save this country, I don’t believe so. I can only hope that we are able to regain the ideas and values that made this country great and once again.
