Money is an essential part of survival. It allows you to purchase necessities to sustain your life. Any emergency will impact the amount of money you have as well as its worth. You’ll spend to replenish your goods. Products that are high in demand will surely skyrocket in terms of price.
The basic rule for every survivalist is to always have cash on hand. Emergencies may leave your city without electricity, which means that you can’t withdraw from ATMs nor can you perform cashless transactions. Transactions will most likely be cash-based so it helps to have some physical cash on hand.
Keep your handful of cash in a safe and waterproof pouch so that it will be protected. Scout for local stores that are well-stocked and can perform transactions even if there’s no electricity. You can also use the money to buy food and other staples from a neighbor who’s willing to accept your cash.
Aside from cash, you might also want to stock up on some essentials that become high in demand during disasters. These items may also be used for bartering later on. These items include batteries, candles, fuel, matches, and ammunition.
You may also barter your services in exchange for goods. For example, you can offer to skin a deer or do first aid treatment in exchange for food. The fact remains that transactions are necessary for your survival during an emergency.
A Brief History Of Money
Most historical records show that the first few transactions in human history are barter. Barter involves exchanging products that are deemed of similar value so that the two parties can benefit. For example, if you’re rich in eggs but not skilled in harvesting edible roots, you can swap your eggs for some roots. This flourished into different forms of transactions during the early civilization. It also paved the way for the free market to be born.
The free market is an economic system that naturally exists wherever there are transactions among individuals. It characterizes an economic setting that exists without any government supervision, interference, or coercion, hence the name “free.”
In this setting, the prices are determined by what people deem as fair. The prices are influenced by the supply and demand of resources. For example, how many eggs you have (supply) greatly influences how much edible roots you’d want to buy (demand).
The free market has a self-correcting mechanism that keeps everything in check. That’s one of the reasons why it was a preferred way of running the economy. Government intervention in the form of fiat currency devalued money as we know it.
The Birth Of Money
The money came into existence when barter became insufficient to attain needs. You may want to buy more edible roots from your neighbor, but what happens when he no longer wants any of your eggs? You can swap out your eggs to attain goods he might need, but that process is just tiresome. As a consequence, money is born.
Money is small and lightweight. It is a means to attain a commodity. Its value is heavily reliant on what society needs. Early civilization utilized gold and silver as money. That’s because they are universally desired, universally recognized, easy to transport, homogenous in a sense that every ounce of the pure metal is the same as any other ounce, and are still retrievable after years of being buried. These pure metals retain their value and consistency over the years.
What Has The Government Done To Our Money?
Gold and silver were perfect money for a while. The problem began when people needed to transport large quantities. The metal weighed down their pockets. The government’s solution was to keep the gold and silver coins in banks.
When people need money, they can just deposit or withdraw from banks across different branches. It saves them the trouble of hauling bags of coins across borders. This also makes them safer and less suspicious of people who target vehicles filled with gold. The withdrawn amount is represented in paper currency.
People were initially suspicious about paper currencies, but it soon caught on. It’s a very convenient way to keep your money secure while giving you mobility. Coins with diluted pure metals were also created. One trip to the bank is enough to convert paper money into silver money.
More specifically, the paper one-dollar bill can be converted into a huge coin. The coin was made of ninety percent silver with almost three-quarters of a troy ounce of pure silver. Other conversions were available to accommodate smaller amounts of money. These conversions include asking for two half dollars, four quarters, ten dimes, or any other combination of these. Other countries likewise used silver as their money. For example, Canada used coins that were eighty percent silver.
The History Of The US Dollar
The first-ever silver dollar coin was minted in the United States in the year 1794. That was the second-largest US coin in circulation. It was largest in terms of size, measuring 1.043 inches in diameter, and thickness, measuring 0.079 inches. However, more people preferred using the bills, and making coins proved to be cost-ineffective. As such, the Mint stopped producing dollar coins for general circulation on December 11, 2011. The ones they produced hereafter were for collectors only.
It was only until 1837 when the US dollar was given its exact value in silver. The silver counterpart of a dollar weighed 412.5 grains and 0.900 purity or 90% sterling. The reason why there’s no such thing as a dollar coin made out of pure metal is that silver is a soft metal. That means it will wear out faster during circulation. It made more sense to mix it with another metal to form an alloy so that the coins will be more durable.
The first US dollar bill was issued in 1862. It was the first legal tender note (legal tender note stands for government-approved forms of money). The first-ever bill featured Salmon P. Chase, the US Secretary of Treasury during the Civil War era.
All About Paper Money
Paper money worked well as receipts or something that can be exchanged for cash for as long as there are no issues with fraud. They were generally accepted because of their convenience and ease of use. You can enter a bank and then swap it for the real thing – silver coins.
The problem began when the bankers and politicians grew dissatisfied with the system. Since every piece of paper corresponded to a specific amount of gold or silver coins in the bank, there was a limit to the amount of new paper money circulating the markets. They claimed that there’s a need for the country to get an “elastic” money supply. This meant a money supply that can be mitigated by the banks instead of the free market.
This led to the founding of the private Central Bank of the United States in 1913, also known as the Federal Reserve. In 1971, the government completely let go of their legal obligation to only create money that was backed by stored precious metals. This transformed the money system from something based on precious metals to something completely baseless. It birthed a fiat paper currency that has zero commodity backing. If the founding fathers were still alive, they would have deemed that as illegal and immoral. It’s very reminiscent of historical precedents in which a fiat paper currency was used to forward tyranny.
“If the American people ever allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered.” —Thomas Jefferson
The transformation of a dollar with commodity backing into a fiat currency without any intrinsic value took three generations to complete. The transformation was filled with propaganda that convinced Americans that it was the right thing to do to cater to their best interests. This is quite dangerous because it is through this slow and careful manner through which most governments can carry out the most villainous acts. The change came in the form of waves with new propaganda. It was slowly yet surely.
There’s a common misconception that the Federal Reserve or the Central Bank of the United States was a government entity that anyone can trust. This is false because the Federal Reserve is a private entity formed by a network of the biggest banks in the United States. This cartel was empowered by the government itself to make invasive changes in regulating and creating the people’s money.
It is explicitly stated in the Constitution of the United States that only Congress has the power to create and regulate the value of money. This changed when a large group of influential bankers exercised their political influence to sway the Congress to give them the obligation of regulating the dollar because they could do a better job at it. Their argument became more convincing when there occurred troublesome bank runs caused by the Congress, when they ordered more money than the amount of backing commodity at hand.
The cartel of bankers claimed that this could be avoided if the peo[;e have an “elastic” or “inflatable” money that could stabilize the value of the dollar. Since then, the value of the dollar has depreciated by around ninety-five percent. As part of the transformation propaganda, in 1933, the government seized all of the US gold coins from the citizens and made it illegal to own gold. This prevented anyone from storing gold to use its value as a precious metal. This also gave the government full monopoly over the gold so that they can dictate its value. Simultaneously, they jacked up the artificial demand for the dollar.
They simply couldn’t let the dollar complete with gold because gold would win by a landslide and render paper money as worthless. Anyone in their right mind would obviously pick to invest in precious metals than in worthless paper. This went on until people can’t even cash in their money for gold. By 1965, the government began manufacturing coins for mass circulation that contained no traces of silver. Only the half dollar coin contained some silver, but this only had forty percent instead of the usual ninety percent.
By 1970, silver was completely removed from all the regularly-issued coins. Regularly-issued coins are the ones minted for mass circulation, designed for regular use. In 1971, President Nixon abolished the Bretton Woods Agreement. This agreement has been upheld since 1945 and it states that foreign local currencies must be tied to their worth in precious metals, while foreign currencies must be pegged to the United States dollar.
This completed the transformation of the way money works forever. Global currencies as well as the dollar were no longer redeemable for silver or gold which means that currencies won’t require backing. The value of money is solely dictated by government decree or by fiat. It took three centuries and it created a system of covert taxation and wealth confiscation.
Debasement Of The Currencies
Debasement refers to the practice of lowering the value of something, particularly currency. Throughout history, many nations have debased their currencies. Historical trends indicate that debasement brings with it a decline in civilization and a general collapse of society.
One good example is the rise and fall of the Roman Empire. Once upon a time, the Roman denarius was made of almost pure silver and weighs 4.5 grams apiece. These coins decreased in value as the government repeatedly collected them and then melted them into smaller coins but possessing the same value. The coin, despite retaining the same street value, lowered in overall value as it contained fewer amounts of silver and became smaller in size. This continued per emperor until the coins were only two percent silver by the second half of the third century.
The main reason why the Emperors did this is to achieve financial enrichment. Re-melting the silver coins into smaller coins while making them retain the same value is like bringing “new money” into the economy. The government would find new ways to collect money from the citizens, like through confiscation or taxation. They will then re-melt these collected coins into smaller ones while retaining the value and use the new coins for their own spending. Adding new money into circulation without changing anything else debases its value. This is also known as inflation.
Precious metals like silver and gold were deemed as backing commodities. When new money is created without adding new silver or gold, then there is no money created in reality. Inflation occurs which drags down the value of the currency. Debasement or inflation was used as a tool to transfer mass amounts of wealth from one entity to another. In the case of the Roman Empire, the wealth was transferred from the people to the government. It also became a means to perform hidden or covert taxation on the people.
Debasement Of The US Dollar
The first US dollar coins contained over three quarters or .77 troy ounces of pure silver. The Eisenhower dollar coins or “Ikes” that were minted in 1971 to 1978 for general circulation were mixtures of copper and nickel with no trace of silver. Susan B. Anthony dollar coins that were minted from 1979 to 1999 were shrunk in size that they’re barely larger than quarters. The Sacagawea dollar coins that were minted from the year 2000 onwards were gold-colored but contained no traces of gold whatsoever. The gold color was achieved by mixing manganese, zinc, nickel, and copper.
This debasement led to the disappearance of the famous saying, “sound as a dollar.” This also paved the way for the government to create new money and worsen the issue of inflation.
The debasement was also evident in the half dollar coins. In 1964, the Kennedy half dollar coin contained ninety percent silver but that was the last batch created with silver content. From 1965 to 1969, the half dollar coins were debased. The released coins had a core of pure copper while the front and back consisted of eighty percent silver and twenty percent copper. The total silver composition per coin is forty percent and only .181 troy ounces per half dollar face value.
Only the half dollar coins were minted with silver content. The rest of the coins, like the dollars, quarters, and dimes, had no silver content and were made of copper and nickel alloys. By 1970, not a single coin contained silver. Even the half dollar coins were transformed into copper and nickel alloys.
Counterfeiting The US Dollar
The US dollar used to be the equivalent value of a specific weight in silver. This weight was based on the Spanish Milled Dollars. This type of dollar used to be widely distributed and used by colonists. Later on, the value of the dollar extended to a specific weight in gold.
Based on the principle of backing commodities, the government could print out as much money as they wanted for as long as each coin or dollar was represented by the gold or silver in the reserves. That means that the government shouldn’t print more money than its worth in precious metal stocks. However, the transformation of the US dollar into a fiat currency with no backing commodity abolished this limitation.
As a consequence, it became so easy to counterfeit the US dollar when the money couldn’t be checked and compared to its anchoring value in the reserves. This inflation led to a huge hidden tax burden that’s supposed to be shouldered by the American people for generations. Another legal way for the government to counterfeit the US dollar is through Fractional Reserve Banking. This is actually very similar to the fiat currency and it was initially deemed as fraudulent, unethical, and illegal.
This system allowed the banks to keep a fraction of the people’s money inside on the assumption that not everyone will withdraw all of their money at once. The modern version of this is the presence of maintaining balances or savings accounts in banks. The stored money will then be used by the bank to grow itself by investing in businesses or through loans with interest. The people who borrowed the money might not even need to withdraw it at all, so the money will just stay in the bank, ready for its next cycle of investments and loans.
This system allowed banks to create new money without producing any physical money. The new money is only reflected in the banker’s ledgers. This system allowed the banks to profit off of its clients’ savings, empowering them to multiply their assets for as many times possible. This system is now completely legal but some economists think that it’s just a form of legalized fraud.
Another way through which the government controls the value of money (aside from inflation or printing new money), is by mitigating the interest rate on the money in the fractional reserve system. For example, they can make the interest rate drop which means that loan applications will spike up. As more people borrow money, there’s an increase in money supply. When the inflation seems to be getting worse, the government could just raise the interest rate. In a way, you could say that the government creates a problem and a solution in one go.
What Are The Effects Of Counterfeiting On The Economy?
The direct and immediate effect of counterfeiting is inflation or the abrupt increase in the money supply. When there’s a lot of money circulating in the economy while there’s the same number of goods, the prices of items will spike up. This simply follows the basic principle of supply and demand. The supply remains the same but the demand increases due to the inflation or new money in the economy.
It takes some time before the effect of the additional money can be felt in the economy. The first individuals who get to benefit from this are the counterfeiters themselves. They’re first in line to spend their money before the prices of goods hike. The second ones who will benefit are the individuals who receive money from the counterfeiters. The next in line are the next ones who receive the money, and so forth. There’s a trickle-down effect until everyone in society catches up and the market adjusts accordingly.
The downside to this is that it’s the average consumer who has to pay the price for all the inflation. They are the ones who have to pay the higher prices for goods and services even when they didn’t play an active role for it to happen. They aren’t on the front lines to have freshly counterfeited money to purchase more goods and services for the same value. This transforms into a huge and hidden tax burden shared by everyone.
Inflation: Causes And Effects
Going back to the definition of inflation, basic economics states that it is an abnormal increase in available currency and credit beyond the proportion of available goods, resulting in a sharp and continuing rise in price levels. This leads to an increase in credit and money. As the government adds more dollars into the economy, the purchasing power decreases. Even the value of the money in bank accounts decreases. The average citizen pays the price for this phenomenon while the government and other counterfeiters that receive the new money firsthand are the only ones who get to benefit.
The system of inflation enabled the government to covertly tax their people so that politicians can spend more. The government is unable to create real money simply because the gold and silver reserves are maxed out. The problem of inflation never occurred during the free market era. As a matter of fact, the government’s absence allowed the market to freely flow and fix itself. There are even cases of deflation in which the prices of goods dropped a few amounts. No one complains about deflation because it means more buying power and getting more goods for the same amount of money.
Before government intervention in 1913, the value of the dollar remained virtually unchanged for about a hundred and twenty-five years. Since the establishment of the Federal Reserve, citizens have seen constant inflation. Government intervention loosened the connection between the money in circulation and the precious metals in the reserves. Eventually, the connection was severed so no anchor mitigates the amount of money in society. Money has deflated in value so much that one dollar in the 1950s is only worth twelve cents today.
What Does The Future Hold For Our Money?
Eliminating the gold standard led to deficit spending and even trade deficits. During the presence of backing commodities, there’s a natural correcting mechanism for the value of money and the amount of money in circulation. Back then, whenever the government borrows money from a finite reserve, the interest rates go up and it makes it harder for private sectors and everyone else in society to borrow money.
This phenomenon is referred to as “crowding out.” It creates a negative deficit that incentivizes the government to avoid such a problem. When the gold standard was eliminated, so were the mitigating factors that just led to decades of deficit spending on the government’s end. This is still ongoing up to this day and has ballooned into the largest Federal debt history has ever seen.
Trade imbalances were likewise mitigated during the gold standard. When a country has a trade deficit, the gold in the reserves can simply be transferred to whomever it was owed to. The complete opposite happened when the nation experienced a trade surplus. More money entered the circulation while chasing the same amount of goods, hence jacking up the price for everything and making these deals unattractive to foreign investors. As a result, there was a slow or reversed flow of goods between the borders just to rebalance the relationship between the nations.
Since the abolishment of the gold standard, the United States of America went from becoming the biggest global exporter to the biggest importer. The trade deficit actually racked up to seven billion dollars per year. Once upon a time, this country was the largest creditor. Now, it’s the biggest debtor. The total federal debt is valued at 12.5 trillion dollars as of 2010. This just gets worse and worse as each passing year is faced with deficit spending and deficit trading. It’s seemingly impossible to ever get rid of this debt since there’s no system to ever stop its growth in the first place. Each passing year shows its exponential growth with no clear ending in sight.
Another problematic development is the retirement of baby boomers. They are the individuals who have been religiously paying their social security fees that are used to somehow downsize the federal debt. Without them, and without the interest of the new generation to sign up for social security accounts and taxes, it seems like the US is facing impending doom.
So, what’s the solution? The US government intends to hyperinflate its currency to combat the extreme debt. As aforementioned, the newer money is created and allowed to circulate, the lesser the value of each dollar becomes. That means that the government is transforming the massive debt into a manageable size by reducing its overall value. However, this also means that they’ll pay off their debt using money that’s virtually worthless. Once again, it’s the ordinary citizen who has to suffer the consequences. Every American with assets and savings will have depreciated values.
The problem doesn’t end with the American citizens only. This also extends to the other nations who use the US dollar as a reserve currency. Foreign investors will eventually realize that it’s not smart to use the US dollar as a reserve currency and will therefore withdraw their assets. This is already evident in the status quo today. More and more nations are choosing to diversify their assets rather than sticking to dollars.
As they dump their dollars into the market, more nations will follow suit, hence increasing the number of dollars in the market. This results in another inflation, and the cycle continues. The value of the dollar will just keep on declining until its inevitable collapse. Most nations today adapt fiat currencies. When the US dollar declines, the other currencies that are tied to it in value will likewise depreciate.
Other nations will deliberately cause inflation to keep their markets competitive and their economies alive. This leads to a global depreciation of all the currencies in the world. It makes it hard to measure the value of each currency since they’re relative to one another. As such, the more valid metric for measuring a nation’s value is not in the currency, but through the commodities. Commodities are more stable and reliable since governments can’t just materialize them out of thin air.
Two main commodities are reliable indicators of a nation’s value: gold and silver. The reason why these precious metals are consistently valued is because of their active role as a monetary symbol throughout human history. Many individuals pertain to gold and silver as the only real money in society. This is why these precious metals are sometimes despised and demonized by the government. Gold and silver are always deemed as value anchors so there’s no complete freedom to manipulate the fiat currency.
The government never succeeds in driving down the value of gold and silver because the free market always wins. There’s always a supply and demand for these precious metals, hence giving them the ability to retain their values throughout history.
That’s why it’s a smart move to invest in precious metals. Allowing your assets and savings to be in the form of fiat currency will make its value depreciate until it disappears. Diversify your assets by converting a percentage into precious metals. At the advent of an economic collapse, society will reset and everyone will go back to square one which is reliant on the free market. Since transactions will regress into bartering and trades, you’ll get a head start if you have precious metals at hand.
What Does Hyperinflation Look Like?
This led to the biggest and fastest inflation in history. Even the prices of regular commodities doubled within just a few hours. It was so severe that some of the workers even have to be paid twice a day just to let them catch up with their expenses. During the lunch break, the workers’ wives met up with them to pick up the money so that they could spend it on necessities before the value plummets even further.
Many Germans with assets lost everything as inflation made their currency virtually useless. Some Germans, who had the foresight to invest in gold and silver, actually got richer because the precious metals were able to retain their value despite the economic turmoil. They used their stockpiled precious metals to buy more businesses and resources which allowed them to multiply their assets.
The chaos and collapse that happened in 1923 was the specific event that enabled Adolf Hitler and the Nazi Party to take control of the German government. It led to the most oppressive and fascist government the world has ever seen.
What Can You Do to Insure Your Economic Survival?
As repetitively stated in the previous sections, the first thing that you need to remember is that only gold and silver should be considered as real money. Everything else is a product of inflation and they don’t follow the gold standard which means that they have no real bearing. Fiat currencies and paper bills are created by the government. Even their values are fake and only manufactured, therefore making them easy to manipulate.
With that being said, the second thing that you need to remember is that no fiat currency has ever been successful. Human history has indicated that they’re all bound for failure which means that you shouldn’t trust fiat currency to be the form of the bulk of your assets and savings.
The US dollar was deemed as reliable during history because its value was strongly tied to the gold and silver stocks in the federal reserves. Everything changed since 1971 when the Bretton Woods Agreement was abolished. Since then, the US dollar has transformed into a fiat currency whose value is merely dictated by the government. So much inflation has occurred that a dollar in the 1950s is only worth twelve cents today. You can conclude that fiat currencies aren’t reliable because their values deplete over time.
What’s worse is that each administration just does more things to worsen the issue of inflation. For example, President Barack Obama launched corporate and bank bailouts which translated into billions of dollars’ worth of federal debt. More new money is created to cope up with this debt which just further devalued the dollar. Money’s velocity, which refers to the speed at which it is spent in exchange for commodities, significantly slowed down during the recession. But the velocity of money just shot up alongside the increase of new money in circulation and it will make the value of money get reflected in the dollar.
The Obama administration’s adamant pursuit of social justice just worsened the overall amount of debt that Americans face. He believes that the end will justify the means, but socialism doesn’t exactly play out well in the United States. Many believe that his choices are catapulting the economy into an economic crash depression. It’s a very real possibility that everyone should be prepared for.
How To Survive An Economic Crash Depression
You can start by stockpiling your reserve by buying from reputable sources. Even astute investment and financial advisors will tell you that it’s a smart move to keep a portion of your investment capital in the form of silver or gold. These precious metals have continuously served as hedges against inflation and have always favored investors. These commodities have always protected investors against stock market crashes, hyperinflations, or economic collapses.
Investment advisors typically recommend that ten to fifteen percent of your investment or savings portfolio must be in the form of precious metals. The recommended investment percentage increases during economic turmoil. If you feel like there’s an incoming economic uncertainty, then up the amount to twenty percent. It is also heavily recommended to take physical possession of your precious metals.
Don’t store the gold or silver coins and bars in the bank. Keep them in your house or office in a secure location, like a security vault. This gives you easy access to them when the time comes that you need to take them out for bartering. Keep the location a secret so that you won’t turn yourself into a target for theft or assault.
However, you need to determine how much silver you wish to store. Five thousand dollars’ worth of gold can just fit in your pocket. Five thousand dollars’ worth of silver will need a wheelbarrow to haul around. It’s still easier to buy a loaf of bread with silver coins rather than a hunk of metal. The diversification is up to you. Silver is good for purchasing day-to-day necessities while gold is for major essentials, like equipment or bulk supplies.
What About Mining Stocks?
Stocks are deemed as commodities. Their prices will hike up alongside everything else during an inflationary period. It’s advisable to have a diversified portfolio to keep your chances of surviving an economic crash high. You may invest in stocks but just know that they’re not as liquid as precious metals. If you will buy stocks, make sure to use a separate fund that’s not part of the twenty percent that you’ll allot for metals.
Which Precious Metals Should You Purchase?
When you talk about precious metals, gold and silver might be the first metals that will come to mind. But there are other options that you can try to diversify your assets. Take a look at the advantages and disadvantages of buying each.
Gold is a good investment because it holds its value better than most precious metals, especially during unstable periods. It also becomes one of the most sought-after precious metals during a time of collapse, fear, and disaster. Go for gold if you wish to protect your wealth from any unpredictability.
However, gold can’t guarantee your survival in the long run. It may come useful during short-term disasters where barter will be the main mode of transaction, but it may turn you into a walking target during long-term emergencies.
That’s why it’s recommended to keep some gold to keep some of your asset value stables through turmoil, but throw in some other precious metals, particularly silver, to diversify the mix. Both gold and silver must make up the bulk of your precious metals stash.
A lot of people buy junk silver. Junk silver refers to the US silver coins that were minted before 1965. These coins contain ninety percent silver (at .900 sterling) and are relatively easy to buy. Junk silver dealers and collectors sell them in bags worth a thousand dollars, five hundred dollars, and two hundred and fifty dollars. You can take out each coin and trade them as you see fit, particularly during emergencies.
Sterling silver items are usually clearly marked with “sterling” or “925.” 925 means that it is 92.5% made up of silver. Most people buy silver in the form of rounds, bars, or coins because of recognizability and liquidity. Silver bullions aren’t recommended because they are not as convenient nor affordable.
If you do wish to invest in silver bullion, go for US Silver Eagles or Mexican Libertads. These will most likely have an added premium value on top of their melt value. Both are legal tenders, with the former with a one-dollar value and the latter having none. That’s okay because the most important thing is that each coin contains one troy ounce of .999 fine silver.
It’s quite normal for silver coins and bullions to have an added premium value on top of their melted value. This is called the seigniorage. The seigniorage accounts for the costs of converting silver into an alloy that represents a coin. Coins and bullions usually have a higher premium than silver bars.
The US Mint is reputable for charging high premiums on their coins, with the US Silver Eagles having a 30% premium. That’s why you might want to go for older silver coins whose premiums aren’t that high. They have fewer markings and distinct characteristics, therefore making the manufacturing costs cheaper than the rest.
Most of the premiums of the mass-circulated and minted coins were already absorbed and shouldered by the government, but there are still some uncirculated and limited-edition pieces that cost higher than the rest. The premium will also be affected by other factors like desirability to coin collectors, the rarity of the coin, overall condition, and “eye appeal.”
Another reason to invest in silver is that data from the past few decades showed that silver’s usage has gone over the gross mining output. This means that the demand is greater than the supply which is the perfect formula for jacking up its price. Even the US government is doing its part in controlling the value of silver by stockpiling silver. This drives up the demand by limiting the supply, which leads to a jump in its value. By the time the value of silver is high enough, they’ll resell the silver for circulation and then do this monopolization process all over again. Another reason why they do this is to maintain the value of the US Silver Eagle bullions.
As of today, there’s a mismatch between the available silver and the public demand for it. Its application extended to other fields, particularly in the electronics industry. Its demand also skyrocketed in places like India and China, and one can expect the demands to grow as their economies grow.
Financial analysts predict that silver’s value is about to experience its biggest surge ever, reaching up to a hundred and fifty dollars per ounce.
You can purchase silver from reputable jewelry shops, or get them at discounted rates from estate sales or online auctions.
Platinum Group Metals (PGM)
This group of metals include platinum and palladium. The two are not as popular as gold and silver but they still retained some monetary value throughout history. Platinum group metals are widely used in chemistry and electronics. Platinum is widely applied in the field of chemistry and industrial processes. It is used as catalysts for diesel engines. It can be used as a purifying agent for oil.
Most electronic gadgets today contain at least trace amounts of palladium. Palladium can also be used as a catalyst for gasoline engines. These precious metals are valuable and will only become more valuable as technology progresses. These metals have wide applications in technological, chemical, and industrial fields that explain their value. They’ll also come in handy during an economic downturn because of the trend wherein their value goes the opposite direction from the fiat currency. That means that they’ll become more valuable as the fiat currency crashes. With that in mind, it’s a good idea to diversify. PGM may be hard to sell but they’re more affordable than gold and silver.
For the highest liquidity, go for PGM in the form of coins. There’s also a recent trend in Asia wherein they’re being transformed into jewelry. Platinum and palladium can be transformed into pieces like rings, bracelets, necklaces, and more. The demand for these pieces soared in recent years.
What Form Of Precious Metals Is The Best To Hold?
The most important thing to remember when stockpiling precious metals is to keep them diverse and easy to liquify. Liquidity pertains to how easy it is to “spend” your precious metals. This refers to how easy it is to use for barter or to convert to cash.
The reason why it’s better to stockpile precious metals in the forms of bars and coins is because these have clear trademarks that make them easier to make transactions with. Recognizability is directly proportional to liquidity.
For example, silver coins that are marked with “925 sterling” (meaning 92.5% silver purity) are easier to convert to cash compared to a silver necklace with no mark whatsoever. Gold bars are 99.9% pure and this is indicated on its surface. Silver Eagles and Gold Eagles that are minted in the United States are also clearly labelled and relatively easy to identify. The same goes for bullions.
Older silver and gold minted coins don’t have as many markings as the newer versions, but they are still easy to identify and are widely recognized by collectors. Old silver coins are very liquid. Old twenty-dollar coins minted in 1934 contain .9675 troy ounces of pure gold and are likewise good for trading.
Without the markings, a simple hunk of metal could be anything from 90% pure to just silver-plated. Not everyone has the keen eye and expertise of a jeweler which is why these markings are necessary. Once you see the sterling or karat, it just becomes a matter of weighing the precious metal and then computing for its specific value.
Avoid purchasing gold ingots as these are easy to replicate. Stick to coins, like American eagles, which are easier to buy and come in a range of different sizes and prices. American Eagles come in 1-ounce, half-ounce, quarter-ounce, and a tenth of an ounce in terms of size. The large coins are useful for big purchases while the smaller ones can be used for your day-to-day necessities.
It’s a good idea to diversify your portfolio and create a mix of everything. It’s smarter to make sure that the bulk of your stash is gold and silver. It’s better to get more silver than gold because they’re more liquid. Another reason is because silver increases in value at a faster rate compared to gold. Silver is currently undervalued and still has a lot of room to become more valuable. Historically speaking, the value ratio between silver and gold has always been 16:1, meaning sixteen ounces of silver is equivalent to an ounce of gold. However, in recent years, the ratio transformed into 50:1. This means that silver has the opportunity to triple or even quadruple in price while gold remains relatively consistent.
Should You Invest in Numismatic Coins?
Numismatics is the technical term for “coin collecting.” This is a highly specialized field that requires a ton of knowledge and expertise, from identifying the authenticity of a coin to assessing its condition.
Many coin collectors are willing to purchase overpriced pieces with high premiums just to collect rare coins. Another reason why they’re willing to pay for the expensive price tag is that there’s a chance that they can just get a return on investments when they resell the coins.
It’s not recommended to purchase numismatic coins for survival. Don’t attempt to purchase coins if you’re not an expert or if you aren’t advised by an experienced coin collector. These coins aren’t very liquid so you might have a hard time exchanging them for goods. You may purchase numismatic coins but stay away from those with very high prices. Purchase a coin based on its melt value. That’s a more reliable standard than the mere rarity.
What About Semi-Numismatic Coins?
Semi-numismatic coins are more affordable because they’re often sold based on their melt value. They don’t have a lot of premium added to them but they’re considered to be valuable if they have the potential to be rarer someday. China Panda coins are good examples of semi-numismatic coins. They are minted in small quantities so their rarity jacks up their value. US Silver Eagle coins, on the other hand, are still collectors’ coins but are produced in such large quantities that they are not deemed as valuable. The conclusion here is it’s okay to invest in numismatic or semi-numismatic coins for as long as you don’t pay a super high premium for them. Pay for the precious metals, not for the premiums.
It’s very tempting to buy something with a high premium thinking that you can flip it for profit. It’s better to purchase old and circulated US coins. Uncirculated coins have higher premiums on them. Any other gold bullions will do for as long as they were released by official mints of different governments. You may purchase gold or silver bars. These often sell close to their melt value and have little to no premiums. However, they’re not as easy to sell as coins so it’s ideal to go for coins.
Risks Of Investing In Coins And Precious Metals
Circulated US Silver Coins
At the end of the day, purchasing silver bullion coins is still the best way to get into investing in silver. They are globally recognized and accepted which makes them pretty liquid. Even the premiums and seigniorage were absorbed by the government so they are often affordable.
There are two main types of circulated US silver coins that you can purchase and are traded as silver bullion: ninety percent silver coins and forty percent silver coins. 90% coins were manufactured from 1964 and earlier. These include dollars, half dollars, quarters, and dimes. The latter was manufactured from 1965 to 1970.
The 40% half dollars have disadvantages to them that make the 90% coins more preferable. The 1970 coins have hefty premiums that you need to shoulder, with the minimum being ten dollars. Another disadvantage is the bulkiness. When you purchase a coin that’s only forty percent silver, that means you’re carrying sixty percent copper which is not worth anything. Additionally, the size is too big so you might have some problems with lugging them around.
The weight and the size will undoubtedly dilute the value of each coin when sold for the silver content. They are often discounted when sold which means that you’ll get less than what’s normally paid for per ounce.
Coin collectors will sell you coins with very high premiums while attempting to buy them with little to no premiums. As such, always remember that it’s only a good investment if you manage to buy bullion close to its spot price or melt value. Keep your eye out on the market for good deals, like uncirculated coins with a reasonable premium or a price close to its melt value. Keep in mind that you’re supposed to pay for the actual precious metal itself, and not the added taxes for its manufacture or rarity.
Where Should You Buy Your Bullion?
The most sensible location to search for bullion is within your area. You’d be surprised at how many bullion dealers live in your area. This is ideal because you can save a lot on shipping costs and you can easily return or resell the item if you find any issues with it. Check your local phone book or look up nearby dealers on the internet.
Just know that you’ll be paying a dealer’s fee when you purchase the bullion. That’s natural because it’s how businesses work and survive – the dealers purchase the bullion at discounted rates and then sell them with markup so that they could earn. No one makes any money by just breaking even.
You can avoid the dealer’s fee whenever you directly purchase alongside the public through an auction. You can try auction sites like eBay. This development eliminated the need for a middle man which means fewer fees for buyers. This also allows you to widen your search on a global scale.
Before the online era, dealers had to go door-to-door just to make sales. Taking their business online has been beneficial because of the wider audience reach. It has also been good for the buyers because more sellers mean competitive prices. Each bullion dealer had to get creative with their deals and offering the biggest discounts to attract more customers. The bullion business online is a win-win situation for all parties involved.
Aside from auction sites, you can also purchase bullion from other reputable dealers online like the Northwest Territorial Mint or www.scoins.com. It helps to constantly download their price sheets and compare them with one another so that you can get the best deals possible. Prices fluctuate almost daily. It’s better to buy on a good day when prices are low and the resale values are high. It pays to keep yourself updated about financial current events. For more information on the best online dealers for bullion coins, check out this video:
How To Buy Silver From Estate Sales
Estate sales are excellent places to purchase silver from because the “everything must go” principle makes the prices super cheap. An estate sale happens when an individual dies in an estate, leaving the family members to liquefy everything to clear out the property. This is usually done during the weekend after the deceased passed away. Everything in the house is for sale, from kitchen equipment to clothes. The prices are super cheap because they just wish to get rid of everything and because there’s no sales tax to cover.
Estate sales are excellent places to purchase silver because you can get amazing deals, like paying for up to only half its price in melt value. Try to purchase silver on the last two days of the estate sales for the lowest prices possible. It’s a good investment move to purchase a lot of silver and then hold onto them while fiat currencies plummet.
During estate sales, you’ll undoubtedly get blinded by the super low prices and deals that seem too good to be true. Stop yourself from purchasing all the silver you can find. It pays to be selective about what you’ll swap your money for. If you’re only going to use the silver for personal use, like creating jewelry or other trinkets, it’s a good deal to purchase them at their melt value.
However, if you wish to stock up on investment pieces, it’s best to go for sterling silver in the form of coins or bars. They should also be bought at a price below the melt value so that you can have some profit and you can flip them into something to buy commodities with. This is in line with the principle that there’s no growth possible if you’re only breaking even.
One of the most important things to check for when purchasing silver is ensuring that they’re sterling silver. There are so many items at estate sales that are only silver plated. That means these items will have practically zero silver content since only the outer layer is silver. Its base metal is probably just copper or nickel and those don’t have real value.
The telltale sign that a piece of silver is sterling is if you see them marked with “sterling” or “925.” These indicators will either be printed or engraved. Bring a magnifying glass or jeweler’s loupe with you so that you can spot these markings which are often tiny. You may also bring a small weighing scale so that you can weigh the silver items that you see. Weigh the item and then multiply its weight by 92.5% to get the total weight of silver in the item. Just remember to set the unit of measurement to troy ounces.
For example, if you see a teaspoon that weighs 2.5 ounces, simply multiply that by .925 (sterling silver is represented by “925” which means that it is 92.5% pure silver). That gives you 2.3125 troy ounces of silver in the teaspoon. You can then multiply that to the current value of silver per troy ounce, which is currently $24.83. From that, you can assume that the melt value of the teaspoon is $57.42.
Calculating the melt value is helpful so that you can get an anchor rate for negotiating its price. If you were being charged way over what you calculated, then you know it’s not a good deal and you’re just being ripped off.
You’ll likely see silver in the form of kitchen silverware. It’s better to prioritize looking for larger items like flatware, tea sets, trays, bowls, and more. These items are usually sold cheaper than their actual melt value, with some even reaching up to fifty percent off. Make sure to check for the “sterling” or “925” stamp at the bottom. If there are no labels, then you can assume that it’s just silver plated.
Another thing to watch out for is if the item has a weighted bottom or any appendage that isn’t made of silver. Some items may be hollow silver but filled with cement for additional reinforcements. Others may have plated fixtures to make the item more stable or just heavier at the bottom. Watch out for a stamp that says “reinforced” which will indicate that the item isn’t purely silver. You’ll notice this in candelabras and compotes.
Economic crashes have warning signs before they materialize. Keep yourself updated by regularly watching the news. For extra preparedness, refer to this checklist:
- Get some silver
- Get a ledger book or electronic budget program for your family
- Get a safe or security vault for your cash, precious metals, and other valuables
- Keep a ledger tracking all of your precious metal investments
- Get a pocket scale for measuring the weight of precious metals
- Magnifying glass or jeweler’s loupe (small magnifying glass used by jewelers to inspect jewelry) for inspecting precious metals for markings and their conditions
- Place some cash in the emergency stash
- Put emergency cash in the to-go bags that you take when you’re in a hurry
- Put emergency cash in all of your emergency kits
- Check out auction sites for precious metals that you can get at a cheaper price
- Look for sterling silver and other precious metals during real estate sales
- Form a family budget and then do your best to stick with it
- Pay off all your debts. Unpaid dues accumulate interest and will cost you money in the long run
- Convert twenty percent of your money into precious metals
- Keep physical possession of the precious metals
- Always keep an eye out for progressions or regressions in the finance world