Gold: Sacred Cow or Useful?

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Gold: Sacred Cow or Useful?

Post by woodsghost » Wed Aug 27, 2014 1:29 pm

I searched through the archives on bartering, and there was a lot of good information. I am curious what y'all think about the storing of precious metals for SHTF.

Over and over I read lists that make a lot of sense to me. They go like: alcohol, booze, lighters, candles, batteries, tobacco, H202, bullets, spices, food, bandages, canning supplies, laundry detergent, ...... and gold and silver (maybe diamonds too?).

Sometimes things become "truth" because we repeat them so often that we assume they MUST be true. Other times, there is real truth to what is being said. This thread is to help me understand which applies to our focus on precious metals.

In a Katrina type event, cash seemed to still talk, but you needed more of it. At least, that is my take on what I have read. Might people have used gold or silver to get what they needed? Probably.

But what about a situation in which cash is largely worthless? Then you have gold and silver for bartering, right? But I see several issues. Gold and silver don't actually do anything. They don't get you food, or keep you safe, or keep you alive. They have value because people want them. People want them because they have value.... and are pretty. So, the real value in precious metals is in the fact that they are pretty. The moment people stop wanting them, or want other stuff more (beans, bullets, & bandaids), the value of precious metals plummets.

So, where do I see precious metals really having value? In small/localized collapses of the economy. If a civil war breaks out in a place the size of Rhode Island, or even Maryland, and cash becomes meaningless, then gold can be useful as it retains some value. Why does it retain value? Because you can walk/drive/fly across the border to a place that is not screwed up and sell your gold for the market value. Which means if you are using gold to barter, you will be letting it leave your hands at far below market value, because the person you are trading to has to get out of the country to find a decent place to sell it at some profit. And small countries are easier to transport goods out of than large countries. Or if you are close to the border of a large country, then precious metals will likely have more value as a bartering item.

But in a worldwide collapse, in a ZPAW (or regular PAW), what value does gold or silver have? You can't use them for anything. Unless I"m wrong. Then correct me.

It makes sense to me to use gold if you are worried your tiny country will descend into civil war and traders will be able to get the gold you trade outside the boarders to make their profit. It makes no sense to me if you live in the middle of Russia, China, the US, Canada, Australia, or any larger country. What value will precious metals really have?

I also see precious metals being useful if there is a slow economic collapse. People will want to put their money into something secure, like gold. Gold is secure because people want it. And people want it because it is secure...and pretty. There is a lot of circular logic here. In those situations (a depression), gold is primarily useful because it is going to be resistant to inflation. It's price, relative to other goods, will stay constant because there is a finite amount of it in the world. Whereas dollars can be printed (or legislated) if we want more.

So, it seems to me that value belongs to hard goods. Money can be made to be valueless. Durable goods (guns, tools, precious metals) always have value, but that value is dependent on the market. Consumable goods (beans, bullets, bandaids) are constantly in demand, and directly related to survival. In a PAW, it makes sense they will command a high price as they get used up.

It seems to me that precious metals do have value, but not as "cash." Rather, they seem to me to have value as ways of insulating yourself from fluctuations in the value of cash. Which assumes a working world economy. If the world economy collapses in some way, cash and gold become limited in value, I suspect.

What retains value today, tomorrow, and 40 years from now? Bullets. Maybe beans. This will hold true whether the disaster is small or large, localized or worldwide, mild or horrendous. Though improperly stored bullets do degrade. Improperly stored gold does not. Not that I know of, anyway.

It makes sense to me to sell your gold when demand is high and convert the cash into other tradeable goods and preps. When the market has 10-20 years of good times and the demand for gold drops, dropping the price, then put money into gold and when a partial disaster hits (economic downturn), and demand for "safe" investments rises, sell your gold again and buy the three B's.

Now, what I just said above sounds like financial advice. Realize, these are musings, not "advice," and I'll be interested in what others say in response. I"m working through things myself. I am not an expert.

I was reading about bartering, here and other places, and it seems like people think gold will be some sort of new cash. I see gold being an item of little value in any real PAW, and really only worth something in special circumstances, which mostly assume the rest of the world is just fine and peachy. It seems to me that other barter items will be a far better investment of your current prep $$$.

Which has all lead me to wonder if maybe precious metals as "barter items" are a bit of a sacred cow that needs to be slaughtered upon the Alter of Truth & Reality. But maybe I am just not seeing things right, and so I turn to y'all to help me see the world as it is, not as I think it is or ought to be.
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Re: Gold: Sacred Cow or Useful?

Post by Halfapint » Wed Aug 27, 2014 2:34 pm

Largely I agree with you, but I think you are thinking short term PAW or SHTF. In a Katrina type event, no, gold would be worthless really because unless you had a way to weigh it, and agree on a price, which would be a LOT less then it is probably worth in US dollars. Short term things like water and food are FAR more valuable, mid way depeneding on the the type of PAW spices, bullets, and other slightly more luxury goods would be great. But finally long term, say 5 years or more down the road when things may have gotten stable, people aren't worrying about food, water, shelter, security... and towns start to get formed and built up. Gold will be worth more than it is now. Because rulers/leaders will want something to show they are successful.

Gold and Diamonds are a link to a glorious past, even now we are fascinated by gold of the ancients. We've got the Crown Jewels in England, you've got the gold form Tuts tomb. People think of Gold, silver, Platinum, and Diamonds as powerful symbols. Even people who aren't leaders, want them to show they are successful. I could see traders wanting gold and diamonds to show that they have valuable goods. Even people who aren't successful would want it so they could try and boast, and claim great things and use the gold and other precious items as "proof".

Personally I enjoy prospecting I've got myself a nice little sluice set up and have gotten some gold out of rivers and streams.... I save a majority of what I get.
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Re: Gold: Sacred Cow or Useful?

Post by Mikeyboy » Wed Aug 27, 2014 3:07 pm

I just want to throw out there right now that I warned people for years and I laugh my ass off that gold is overpriced and now the bubble burst. Its like the panic gun buyer who bought an Olympic AR-15 for $2,000. Gold will drop back down below $500 an ounce, so buying it now, or when it was over $1800 an ounce is a complete waste of money and a poor investment. When gold get back to historic levels, and becomes cheap, say under $300 an ounce, then knock yourself out if you want to buy a few ounce JIC

That said does gold have value in a PAW? Who knows...it might but it might not. Contrary to what gold brokers will tell you, gold can become worthless. If the economy collapses, and there is no market or buyers for your gold, it becomes worthless. You would be better off buying $1,200 in food. Gold only has value if someone is willing to buy it.

Its a PAW and you and your wife have a gold bar and I have two hotdogs. You and the wife are starving and want to buy all my hotdogs with the gold bar. I say no, because I'm hungry and I don't think I could sell that gold to someone else to buy more food. I eat one hotdog in front of you and your wife. You both beg for the other hotdog. I offer you a small piece of the bun if you both give me all your clothes. You both get naked for two small pieces of bread. I tell your wife if she is willing to dump you and come home with me I will give her the other hotdog and I have plenty more hotdogs at home so she will never be hungry again.

So at the end I'm walking home with a full belly and with your naked wife, and when I get home I will be giving her plenty of hotdogs (in more ways that one :awesome: ), and you are standing there naked and alone holding a gold bar.

I started another thread. I am researching if its a true statement but supposedly according to most anthropologist and historians a barter economy simply never existed in human history.

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Re: Gold: Sacred Cow or Useful?

Post by raptor » Wed Aug 27, 2014 5:08 pm

Mikeyboy wrote: So at the end I'm walking home with a full belly and with your naked wife, and when I get home I will be giving her plenty of hotdogs (in more ways that one :awesome: ), and you are standing there naked and alone holding a gold bar.
:roll:

Anyway back on topic.

There have been a lot of threads dealing with gold, silver and other precious metals ("PMs") into which I would throw diamonds and other jewelry albeit in a sub-category.

There have been many opinions and no really has the answer since the PAW has not happened. That said, there have been in the past, instances when PMs were quite useful as preps and also instances when they were absolutely worthless.

Gold and silver have had intrinsic value to humans for most of recorded time. Nevertheless, you cannot eat it. As pointed above, if you are dying of hunger or thirst they will not be useful. If on the other hand, you were a Jew fleeing the Nazis in the 1930's, you needed portable wealth. Gold and diamonds would have been quite handy to have on you. Likewise gold and silver (less so gem stones) if you were a resident of the Wiemar Republic, Argentina, Zimbabwe or any one of a number of countries that experience hyper inflation. However, ironically in these later cases having your wealth in USD, euros, franc or about any other currency would have served you just as well.

PMs were useless in Katrina. They are likely to be useless in any similar natural disaster.

So then the question becomes should you have "some"? I have always been of the mind that PMs always have a place in a diversified portfolio. The percentage should be small, say between 1% to 5% of your net worth. PMs actually are a terrible investment in that they are in effect dead money. It earns no interest; pays no dividends and actually costs you money to store it. PMs rely on appreciation to "earn" their return. Here is the rub to that appreciation; it in theory, only makes up for inflation (it may or may not based upon timing but that is another discussion). So you have an asset that costs you to hold it and pays you nothing.

Why on earth would you hold such an asset? Because it is a contrary asset. I hold it to offset, at least in theory, some other market risks. It is in effect a store of value. A truly diversified portfolio will always have some dogs and losses. Hopefully the gains and income will more than offset the dogs and losses. That is the niche that PMs occupy in my portfolio.

I much prefer income producing real property with a triple net lease and an annual CPI adjustment to gold, much less gem stones. I would also argue that the proper income producing real estate would perform as well or better than gold in a PAW. For instance what would rather own in a PAW? A producing fruit orchard or gold worth the same amount (in pre-PAW $)?

Ok but then lets say you own such an orchard today and you have excess capital to invest. Would'nt be wise to put a small portion of that excess capital into PMs to in effect hedge your ability to say, pay your property taxes on the orchard? That to me is the place gold has in a portfolio. A hedge against the unknown that is totally different from other assets you may hold.


Edited to add:

In the interest of disclosure I am NOT a gold bug but I am long on PMs. The above is opinion and is NOT advice of any kind especially NOT investment advice.
Last edited by raptor on Wed Aug 27, 2014 5:41 pm, edited 2 times in total.

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Re: Gold: Sacred Cow or Useful?

Post by Evan the Diplomat » Wed Aug 27, 2014 5:17 pm

Raptor pretty much summed it up. Remember that on the island of Yip those giant stone disks were currency, or maybe some of us relate better to the idea of cigarettes in prison as currency.

So, I suspect PMs will have some value as they have had back to the times of Mesopotamia.
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Re: Gold: Sacred Cow or Useful?

Post by nolongpork » Wed Aug 27, 2014 6:13 pm

Personally I thing Pm's are there to preserve some wealth across the PAW, During they will be not very useful but once an economy comes back they will be useful, paper investments have never survived a collapse, gold and silver have historically done so.

I also think that it would be useful in the incipient phase of the PAW when people lose trust in paper and other faith based wealth. So it could make bribes or buy tangible assets, but once the fact that it really is a collapse it will be barter based till civilization comes back.

If you are squared away and wish to keep some monetary wealth, for when civilization comes back I think it would be wise to own some

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Re: Gold: Sacred Cow or Useful?

Post by itzybitzyspyder » Wed Aug 27, 2014 6:19 pm

Gold is a malleable, super-conductive, non-corrosive metal. It will always be useful in a PAW.
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Re: Gold: Sacred Cow or Useful?

Post by ZombieGranny » Wed Aug 27, 2014 6:40 pm

Gold, silver, jewels, old paintings, etc are a way to store wealth until the tough times are over, not to spend during the tough times.
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Re: Gold: Sacred Cow or Useful?

Post by Halfapint » Wed Aug 27, 2014 7:21 pm

I would like to add to what I said.... I would never buy gold or any other PMs because honestly, I think spending my money on other preps is far FAR more valuable. I do however enjoy going out on a weekend digging in creeks and rivers finding enough to have my friend melt down and pour into a little bar for me. For what I've spend on my sluice equipment I've earned back about 5 times my investment. Silver on the other hand I've gotten silver from friends that were going to just go and pawn them, gave them about what I figured a pawn shop would give them, then get my friend to melt them down. Back in the day if you bought camel cigs you'd get a "camel" buck get enough you can turn them in and get something, well parents smoked enough that for my birthdays they'd give me a half dozen of the coins. They are 1oz of .999 pure silver, I still have about 20 of them and dad has about the same amount. So I've gotten quite a bit of PM's for damn near nothing.

That said I still think they are going to be valuable. You may not be able to buy something with it right a way. But if you survive the PAW then you may just have enough in PM's saved up to start a pretty decent life.
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Re: Gold: Sacred Cow or Useful?

Post by drop bear » Wed Aug 27, 2014 10:18 pm

Barter in general is a very unforgiving way of doing commerce. And gold without currency become barter essentially.

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Re: Gold: Sacred Cow or Useful?

Post by Sworbeyegib » Wed Aug 27, 2014 10:42 pm

While I understand why some people place emphasis on precious metals and such, it doesn't even rank on my personal priorities list. Not until I have literally everything else on my list crossed out and in triplicate would I begin to feel like I needed to invest in such things.

That being said, Ron Swanson thinks gold is a good idea.

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Re: Gold: Sacred Cow or Useful?

Post by Stercutus » Thu Aug 28, 2014 7:23 am

I have several pounds of the stuff in jewelry. I store it in a box in Mikeyboys basement since I know he won't touch it. What is the point? Everywhere I have ever been where the SHDHTF already everyone has it and uses it as a store of value. The currency may have collapsed and other things may suddenly become worthless but I have never seen or even heard of gold becoming worthless in a disaster or even a worldwide catastrophe. Normally it gets more expensive relative to the currency not less.
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Re: Gold: Sacred Cow or Useful?

Post by Browning 35 » Thu Aug 28, 2014 9:03 am

I think Raptor summed it up pretty well. Portable wealth that you can take with you to another country as an escape hatch if you need to take your family and leave. Try taking off to Switzerland or Canada with your years worth of food, medical supplies, gun collection, ammo, and so forth. Customs is going to have a problem with that. Especially if thousands and thousands of people are hitting the border at the same time trying to get out to escape 'X'.

Then people are coming up with scenarios where they have food and the people that have gold don't in an attempt to put themselves in some sort of position of power. Don't you think that the people with gold bought all the same things first before they got to the PM's and precious gems part of it? Sorry, shit don't work like that. The people involved in prepping with PM's usually have everything else squared away. It's not like gold is their only asset.

If you're still acquiring food, water, medical supplies, guns, training, ammo, gym equipment to keep yourself in shape, knowledge to use all the stuff, property off the beaten path and so on then PM's and precious stones don't really have a place in your preps yet. Once you've acquired all the hardware and software and you believe yourself to be in a pretty secure position *Then* you start looking at PM's and precious stones. It's one of the last things you'd look at in prepping, not one of the first.

Thinking that others are expecting a struggling college student to have a spare wallet full of cash, a valid passport, a sackful of gold sovereigns and a few diamonds worth $3,000, $1,500 and $11,000 respectively as bailout financing to possibly go start a new life somewhere in an emergency when they're still gathering basic survival tools, life experience and figuring out what training best fits their AO and lifestyle is lacking common sense.
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Re: Gold: Sacred Cow or Useful?

Post by Zimmy » Thu Aug 28, 2014 11:43 am

I think PMs will have value and are worth having after you are comfortable with your other material preps.

I especially like circulated silver coins. If you bring me a silver chunk of metal and say its silver, I don't have the expertise or equipment to test it. You aren't going to get the value you would if it was easily recognizable to me. If I take it at all.

Gold: I don't think it would be easy to find someone who can give you the gold's value in product nor do I think you will be able to receive adequate change for those large denominations in silver or other PM currency. Nobody smart is going to want to trade a gold coin for a meal and get $15k in rapidly devaluing paper currency in return.
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Re: Gold: Sacred Cow or Useful?

Post by Murphman » Thu Aug 28, 2014 12:15 pm

Anyone who believes PM's are worthless simply does not understand the history of money.

That's all I can add to Raptor's very spot on post.
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Re: Gold: Sacred Cow or Useful?

Post by Cybrludite » Thu Aug 28, 2014 2:19 pm

I recall that FerFAL wrote that during the previous Argentinian collapse, a cigar box of bling was more useful than a stack of Krugerrands. With the bling, you can convert just the amount you needed or you could barter more reasonable purchases.
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Re: Gold: Sacred Cow or Useful?

Post by woodsghost » Thu Aug 28, 2014 2:47 pm

These are great responses and I really appreciate all the input.

One additional issue that has been rattling around in my head is the difficulty of telling quality stuff apart from cheap stuff. If I was a merchant and someone offered me some diamonds, how do I know whether they were dug out of the ground or made in a laboratory? That has a big effect on price and value.

If I was offered some Krugerrand or a gold necklace, or part of a gold necklace, how do I know any of it is real? How do I know whether it is 5 karats, or 14 karats, or 24 karats? Sure, it should be stamped on there somewhere. But then I have to figure out how much that is actually worth?

And what about Halfapint's prospecting? What level of purity is that gold? Kudos to you for doing that. I think it is really cool you have actually found stuff out there. That does sound like a lot of fun.

As a kid I had some Fool's Gold for fun. It is super cool stuff. But could someone try to trade that for goods?

And you can have gold plated jewelry, right? But the main metal is some other less precious metal?

If you have not noticed, I don't spend much time with gold or silver. I spend it with copper, lead, and steel. Those I understand :D

Anyway, if it was not clear, my biggest concern is that lists of barter items always seem to include PMs, and listening to people, I feel like they assume it will spend like some sort of cash. What I am seeing is that many here have a more complex view and understanding of the place of PMs in preps. This is helping me to better understand the place PMs will someday have in my own preps.

And thanks for the point that the rich and powerful will always want to display their wealth in some way, and for that purpose, PMs will always have some measure of value. I don't understand rich people. If I was rich I would display that wealth with a well trained and equipped army, not $3000 suits, $5000 shoes, and a bunch of jewelry. I think my head is in a very different place. :rofl:
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Re: Gold: Sacred Cow or Useful?

Post by ineffableone » Thu Aug 28, 2014 3:22 pm

PMs are only valuable as long as there is surplus of food. As soon as food is hand to mouth, PMs are worthless. So if in SHTF there is someone sitting on all the food in a Costco distribution warehouse, sure they will likely take PMs in trade for goods. But if the only food around is what you can hunt forage or grow, then it is doubtful anyone would trade food for PMs.

The biggest thing PMs are good for is wealth retention for when civilization returns, but not that useful for full on PAW.

As for gems, they tend to be good for holding extremely large sums in small packages historical, but they are difficult to assess value. Most people would not be able to tell you the worth of gems, most can't even tell if they are real or not, or natural or artificial. Also many gems are artificially kept higher than the reality of their value if supply was a true factor. Diamonds for example are a lot more expensive than the world supply for them should dictate. Same with emeralds and rubies. There is a lot of gems kept out of circulation just to keep the prices higher than if the market was flooded with the supply that is actually there. So even without PAW many gems could suddenly drop in value if ever the market decided to reflect the actual supply. If you had thousands tied up in gems, you could loose a huge amount.
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Re: Gold: Sacred Cow or Useful?

Post by ineffableone » Thu Aug 28, 2014 3:43 pm

woodsghost wrote:If I was offered some Krugerrand or a gold necklace, or part of a gold necklace, how do I know any of it is real? How do I know whether it is 5 karats, or 14 karats, or 24 karats? Sure, it should be stamped on there somewhere. But then I have to figure out how much that is actually worth?

..snip...

And you can have gold plated jewelry, right? But the main metal is some other less precious metal? \
The more accurate ways of testing metal purity is acid tests, but most folks wont be doing that in SHTF or PAW. The next most common testing is weight. Metals have a specific weight vs size, and so if you have a known weight and size, you should be able to tell the purity. though there is some metals (tungsten) that are so similar to gold in weight and volume it has fooled experienced gold buyers. Finally there is the old bite the coin trick. This is seen in movies, cartoons, etc and has historic basis. Testing the gold by seeing how malleable it is. As for plating the easiest way to test for that, is scratching. If you scratch into it and you see a different color, then it is plated.

The problem with all these methods, is you have to know them and have experience with them for them to be effective. Also someone trying to trade with you might get a bit miffed if you try scratching their gold to test it, or whip out some acid, or try biting it as all these can be construed as possibly damaging it.
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Re: Gold: Sacred Cow or Useful?

Post by Browning 35 » Thu Aug 28, 2014 3:46 pm

I guess much of it depends on what you're prepping for.

If you're of the mind that suddenly in a NY minute that there are going to be widespread world wide food shortages with nowhere being immune or that Zombies will literally be walking the earth then there's very little reason to have any sort of PM's or gems. That money in those peoples mind can always be better spent on more cans of beans, bullets and higher walls.

That's opposed to someone who's more prepping for a natural disaster, localized civil unrest, the economic collapse of the dollar/pound/peso/yen/ruble/euro/whatever on up to civil war or even a conventional world war where some place else that's relatively unaffected is always safer when the region you're in is extremely jacked up.

It's like the people who save up first, last, security deposit and 6 months rent if they're a relatively prosperous individual and living in the hurricane zone. If their home gets leveled then their family has a place to go. In this case it's just in gold or diamonds as well as cash. Having your identity documents as well as diplomas, certs and resume printed and together so that you can get a job when you get there helps out as well.

The other preps are for weathering lesser emergencies in place (bugging in) or in case you get stuck and are just in case you are unable to leave even if otherwise you would actually employ your (literal) golden parachute.

All those signs that say 'We buy gold' (gold exchanges) in addition to regular jewelry shops can tell if it's real or not and then you trade it in for local currency. They aren't going to be able to trade in a diamond ring or a gold sovereign at Jacks Liquor store. There's different ways of telling, but why go into them if people aren't interested?
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Re: Gold: Sacred Cow or Useful?

Post by woodsghost » Thu Aug 28, 2014 4:31 pm

Part of what is on my mind is that the Three B's will hold their value whether zombies walk the earth or there is a gradual economic collapse or just a devaluation of the dollar.

However, PMs are portable wealth if you need to go to Chili or Ireland or some place to get away from a bad situation, or stabilize your assets if the stock market and currency are headed south.

Also, they can help keep a portfolio afloat.

Also, maybe I should stock up on acid and a Brinell hardness tester if I think I am going to be some sort of merchant in the PAW. :clap: Actually, I'll need a hardness tester when I finally start casting my own bullets and start matching hardness to pressure levels. But that is down the road.

I just want to say again, thank you ALL for the information. This is hugely educational for me.
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Re: Gold: Sacred Cow or Useful?

Post by Halfapint » Thu Aug 28, 2014 6:52 pm

For the stuff that I pick out of the ground when it's melted down it is pure gold, 24 karats. But as stated above trying to test that is hard in a paw type situation. I would agree that PM's would only be useful/valuable if they food/water were readily available. Once those dry up they my lose their value for a while until things start to stabilize.
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Re: Gold: Sacred Cow or Useful?

Post by Stercutus » Thu Aug 28, 2014 8:17 pm

Halfapint wrote:For the stuff that I pick out of the ground when it's melted down it is pure gold, 24 karats. But as stated above trying to test that is hard in a paw type situation. I would agree that PM's would only be useful/valuable if they food/water were readily available. Once those dry up they my lose their value for a while until things start to stabilize.
I think not so much. Food and water are not readily available in a lot of parts of the world and gold is still worth it's weight in gold in those places. There may be some people who might try to take short term advantage of a bad situation by charging outrageous prices for stuff but it won't matter what the currency is.
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Re: Gold: Sacred Cow or Useful?

Post by Halfapint » Thu Aug 28, 2014 8:27 pm

I don't know I can't say anything for certain because there is food all over the world. Even Somalia during the drought had millions of tons of aid. The problem is distribution, not a lack of food. Not saying you are incorrect, but I don't think there's a real good similarity to a world wide PAW and places that are low on resources.
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