Thursday, February 03, 2011

Is buying gold a good way to prepare for a financial collapse?

There's something in the air, whenever there are natural disasters or man-made disasters in the news, that makes us want to get ready for whenever a disaster hits home. For a relatively short-term disaster like a snow storm or a cyclone, gold doesn't make much sense. But what about the threat of a financial collapse? Is gold a good idea?

Some people put a lot of confidence in gold. Historically, it has always had some value. As a long-term investment, it will probably always have some value. That's something you can't say with confidence about any paper currency. And as a family member once mentioned to me, you can always bribe your way past a border guard with something like gold. In a financial collapse, you could probably even find someone willing to trade some of their stores of food for your gold. One financial analyst said, "Don't buy gold, buy spam." (You can eat spam.)

I think buying gold and buying spam are both short-term solutions that won't work for long-term problems. Sure, I have a little extra money socked away, and sure, I have a little extra food stored back. Short-term disasters happen often enough that we'd be fools not to prepare for them. The strategy we use for short-term problems is to have a stockpile large enough to last through. That strategy doesn't work so well for long-term problems when we don't know how long we would need to last. Buying gold and buying spam both share one basic problem: given enough time, you run out of both.

The only proven long-term solution is to be able to make more of something, so it's not a matter of running out of supplies over time, but a matter of always being able to get more over time. A few fruit trees seems to me more practical than gold, if looking for an affordable "financial-collapse" investment. For those with larger investment amounts in mind, a few acres of land planted with fruit trees might also be more practical than gold. If the system doesn't collapse in our lifetime, we'll still be glad for the fruit trees. If the system does collapse in our lifetime, the person with the gold will go looking for the person with the fruit trees. (And the person with the weapons may be looking for both of them. Maybe he could be hired as a security guard ... ). Not too far from where I live, there are some people who have planted all of their own yards with fruit trees, have run out of room, and have kept going on the neighborhood's hike-and-bike trail. Nobody has objected.

If you're inclined to hedge your bets in case of a major system collapse, think of investing in the ability to produce food as a way of diversifying.

Knowing an always-useful skill like carpentry is also part of a healthy preparedness plan against system-wide collapse.

And the best insurance policy against a system-wide collapse is citizens making sure their governments behave in a fair and responsible way that does not cause the collapse in the first place. But not every leader is responsive to the will of the people, or agrees with them about what it means to be fair and responsible.


Anastasia Theodoridis said...

Wise counsel!

Weekend Fisher said...

Hey Anastasia

Good to see you again. Thank you for the encouragement.

Take care & God bless
Anne / WF