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Thursday, October 27, 2011

Gold and Silver - Perceptions Changing

UrbanSurvivalSkills received this comment from Anonymous…… ”I remained unconvinced that buying Gold or Silver is a smart move. Historically the prices have fluctuated, caused by the filthy rich people buying and selling large amounts to make enormous profits. Anyway, the ratio of Gold to Silver is constantly changes so people can lose their ass buying silver when it will be devalued against gold. If there is a really bad SHTF situation then all commerce will be conducted by either hyper-inflated dollars or through simple barter or trade goods. I also think there are people who are not thinking clearly about what can happen and scaring them into buying Gold and Silver is doing them a disservice.”

UrbanMan’s reply: Everyone has to make up their own mind on the value of owning precious metals, Gold and Silver, or even silver coins for their silver melt value. I know people in my income group who have spent 4x or 5x the amount I have spent on Gold and Silver. Obviously they value precious metals more; think that during a collapse or SHTF situation that it will be extremely valuable to own; or they are thinking about coming out of a collapse and beginning over with a lot of wealth.

I approach buying precious metals, overwhelmingly Silver, as a hedge against the projected worthlessness of paper money during a collapse and as a way to buy necessary items when barter or trade is not feasible. While I prefer Silver not to lose it’s value as I eventually want the world to return to normal and to pass off my Silver bullion and Silver coins to my family, it does not matter too much to me if silver drops to $10 an ounce. Once an economic collapse occurs, the value will certainly rise significantly. I simply own it to be provide a possibility of commerce after SHTF. I would much rather trade in Silver than in food or ammunition.

If you don’t want to procure precious metals, primarily Silver, as a contingency during hard times then that is your business. I just think the suggestion of making this decision after considering all the facts including historically use and value or precious metals; type of collapse and after affects we may see; and your current state of preparation.

Here are some facts from http://dollarcollapse

The US Mint sells about the same dollar amount of gold and silver coins, which means it sells 50 ounces of silver for every ounce of gold. UrbanMan’s notes: Today’s current prices were (approx): Gold/ounce $ 1,715.00 Silver/ounce $ 33.00 This is a near 52 to 1 ratio.

Ten times more silver than gold is produced each year, and the ratio in the earth’s crust is 15:1, so how can the price be 50:1? Expect a return to the historical norm of 15:1, which implies that silver will outperform gold.

The paper silver markets trade a billion ounces a day and the world only produces 900 million in a year. The amount available for settlement of these futures contracts is something like 1.5 million ounces, ludicrously little compared to the amount of paper. On the physical side most dealers are only seeing buyers not sellers. There are a lot more people who can afford a one-ounce silver coin than an ounce of gold.

UrbanMan’s notes: Consider this as well -

Today’s (Oct 2011) fuel prices were $3.55 a gallon and Silver is $ 33.00 an ounce. So one ounce of Silver would allow you to buy 9.3 gallons of fuel.

One year ago (Oct 2010) fuel prices were $2.90 a gallon and Silver was $ 23.00 an ounce. This would allow you to buy 7.9 gallons of fuel.

Two years ago (Oct 2009) fuel prices were $2.80 a gallon and Silver was $ 17.25 an ounce. This would allow you to buy 6.2 gallons of fuel.


One more thing: Roger Wiegand of www.TraderTracks.com posted the following alert: "Chances of a major problem in Europe have escalated. Chances of huge precious metals moves in this last quarter of 2011 are very good. I am not talking of $60 in one day but perhaps a huge run from this morning’s gold futures at $1707 all the way to +$2,000. There is no where to go with money if bad things happen in Europe except physical PM and quality related shares. I would not touch any kind of bonds and the only stocks of merit are those juniors holding 2-3 three years of corporate cash with good prospects.

Also the intermediate and larger gold companies should be protected and do well. THIS WEEKEND IN THE USA IS CRITICAL. If SOMETHING GLOBAL BAD HAPPENS. It would probably hit after the markets are closed this Friday. Again, I caution everyone to hold a minimum of one month’s cash, fuel and other provisions. This is not a game. This is very serious and in all likelihood nothing happens. But not make a mistake disregarding this apparent danger."

I hope you are not alleging that I am either scaring people into buying Silver. I have nothing to gain from this. I am simply rendering my opinion. What is right for my Survival Plan is to procure Silver both in bullion and in coins for Silver Melt value. Even then the ratio of my silver procurements is much lower than most of the other Survival Preppers I personally know. I am just trying to cover all the bases. But by and large most of my resources are going into food and other material as well as alternate energy. I have bought several solar power kits when they are on sale – and these are for barter. I have bigger units and small man portable solar power solutions for my groups own use.

8 comments:

  1. I am certainly not suggesting you are scaring people to buy gold or silver. My point is simply that people need to understand that the value of gold or silver depends on things you will have no control over. You could buy gold at today's high price and hold it for 20 years before you could resell it at a profit (I did this many years ago). And secondly that in a true SHTF situation some things will be more important then gold and silver, things like stored food for example. I would recommend buying some junk silver as a hedge and to buy needed supplies after TSHTF. Thirdly if the economy collapses, which seems likely, the government WILL make the possession of gold and (probably) silver illegal. It will be illegal to own, transport and sell to anyone but the government. And the government will set the pricelower then what you paid for it. This WILL happen in the event of a collapse and worse, not only will you be forced to sell them your gold but YOU will be considered part of the problem for hoarding. The last thing you want to do in a SHTF situation is call attnetion to yourself. The "villagers" will be pissed off and carrying torches and pitchforks and smart politicians will use this "energy" to consolidate their power. That is the rule of law will be out the window and unscrupulous people will use the anger to acquire power. You don't want to be labeled the 1% in that kind of situation.

    I believe a few silver dimes and quarters probably won't attract too much attention but a handful of krugerrands will

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  2. I wasn’t on board with silver or gold until I read one thing. Currency has value as long as people perceive it has value.

    On the other hand, silver can be used to make large amounts of medical grade disinfectant, so for my money it‘s worth every ounce to trade for gas or food or to treat injuries, kill werewolves, that sort of thing.

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  3. If we purchase gold and silver now and sell it even after some 5 years you will get a good profit..Thats the reason why people are going behind it..

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  4. CDB: You may be able to predict the future and you may not. I don't know what gold and silver will be worth in 5 years and neither does anyone else. That's the point; the reason it is called speculation. My position is; fine! Buy gold and silver but do it from a position of knowledge understanding that you may take a loss if you need to sell it in the future. If it is "extra" money that you don't need and you like to gamble then by all means buy gold because it is certainly a gamble. Will gold go up in value in the short term? I believe it will. Will it go down in value in the long term? I believe it will. Does anyone know WHEN that bubble will burst? Nope!

    If you had bought gold 7 years ago and were holding today I congratulate you on your luck. If you buy gold today at it's record high you will need luck to break even.

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