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PaperclipPerfector  2mo ago (text post)   2940 thread views

Small-Scale Question Sunday for August 25, 2024

Do you have a dumb question that you're kind of embarrassed to ask in the main thread? Is there something you're just not sure about?

This is your opportunity to ask questions. No question too simple or too silly.

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Do any Motters buy gold or other precious metals, to store at your dwelling?

If so: why do you do this? How much of it do you have? (E.g., one month's salary worth, or some other relative figure that can just give a sense.)

This has come up frequently in conversation among my friends lately, for some reason. I am asking with an open mind.

I've tended to be skeptical of the idea, primarily because it's only protection against a very specific type of economic collapse. The kind where something has gone sufficiently seriously wrong with conventional fiat currency that it's dramatically lower value, but there are still sufficient goods available on the market to purchase from people who actually are willing to sell them, and those people are willing to accept precious metals in exchange for them. And have infrastructure to do so, including to weigh and value those metals and store them in such a way that they can't be easily stolen.

If I was going to hoard anything, I'd store primarily actually useful goods, such as non-perishable food, water filters, soap, medical supplies, tools, ammunition, fuel, etc. Those are extremely useful in any type of collapse or catastrophe. If it's one where people actually are exchanging precious metals, you will soon have all you could ever want when all of those people come to buy actually useful things from you with chunks of precious metal. Assuming you think the future is bright enough to actually accept such trades.

Cash is probably also more useful. In any of the much more plausible types of short-term disasters that have happened semi-recently, having at least a few thousand in cash lying around would likely prove very useful, because virtually everyone you might find selling things will be willing to accept it. Most of them probably wouldn't have much idea what to do with precious metals.

My prepper impulses are limited to ammunition rather than precious metals. I have considered precious metals as well but decided that I think the situations where metals are the difference maker are fairly niche. Arguably I'm underestimating the risk level and should just buy $10K in gold and silver as a slight hedge. I actually find that argument fairly persuasive, but I haven't done it anyway.

The time to buy gold and silver was six months ago, at the latest.

I know two guys who stash krugerrands in their home safes. One of them is bar none the most neurotic man I've ever met in my life.

They say they are concerned about the usual government collapse scenarios. Even accepting this as a likely scenario, I can't imagine that Krugerrands are particularly useful for exchange. A single $2000 coin is like ten months of groceries for myself at current prices. They didn't have a good response except to laugh that ten months of groceries might cost a lot more than $2000 in the future which of course totally misses the point.

I definitely did have that thought while researching this topic, hehe. I see that one can buy 1-gram gold bars that are worth roughly $100. I suppose silver coins would be much more straightforward to use in such a situation; a 1-gram bar of silver is worth like 3 dollars right now.

Generally for wealth holding in bullion you want bigger pieces than one gram, because markup rises with declining size of the piece of metal. For 1-Oz silver coins it’s pretty reasonable, but for 1/10 Oz it’s a serious money sink into premiums.

This is a good point that I had not thought of.

Krugerrands are bigger than a half-dollar coin, and made out of a soft metal, so I would say chopping them into quarters shouldn't be a problem. Still, that only gets you to 500 USD.

Yes, I own physical silver bullion in case of hyperinflation. This is extremely common behavior in my filter bubble, to the extent of physical silver dealers who will buy at the spot price and in bulk being located in my neighborhood- so in practice, bullion is a savings account with extra steps.

How much do I own? Much less than if I expected near-future hyperinflation.

Do you intend to acquire more silver bullion? What proportion of your holdings is in this form?

This conversation is partially inspired by a relative of mine, who is holding several thousands of dollars in the form of wads of cash, stashed behind a bureau in his house. I told him that I thought this may be the very worst method possible of storing one's wealth, and advised him to at least go buy some gold that he could hide more securely.

I have more wealth in stock than in bullion. I will probably acquire more now and again, but it’s not a main investment strategy.

The exception would be signs of genuine near term impending hyperinflation- in such a case I would buy a lot of silver bullion, because it’s easy to convert back into cash and anything is better than holding cash in that scenario.

Wads of cash is, agreed, not a good way to hold money.

I don't, but I know someone who does. He has something like a year's worth of living expenses in gold and silver saved up. He does it because he's convinced that the US dollar is going to collapse someday, and that gold and silver currency is going to be the only thing which retains value.

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