One of the most common questions that comes up after we reference precious metals in a blog is “what value does precious metals even have after SHTF?”. We had the same set of questions as well when precious metals are referenced after a collapse. So instead of trying to constantly respond in the comment section and via email when people reach out with this question, we thought we’d do a blog that specifically addresses this issue. We purposefully have kept this blog relatively short and we ask that you stick with us until the end as we wrap up the question with an answer that once you read through the blog , you’ll understand the value of precious metals.
Alright, so track with us here for a moment.
Any true, prolonged SHTF situation has four distinctive phases: The Early Warnings, Collapse, Endurance, and Recovery phases. Fortunately, history and hindsight has taught us a good deal about what these phases look like. The most valuable things to you in all four phases are, obviously, the three B’s: Bullets, Beans, and BandAids. Obviously, when the grid goes down, food will be the most valuable commodity, but beyond these 3 “B”s, what is the role of precious metals? We’d like to walk you through these 4 phases and explain the role of precious metals throughout each.
OK, so in this blog we’re going to look at the scenario of SHTF which stands for Shit Hits The Fan. This is a scenario where things have fallen apart entirely and it’s up to each person to handle their own survival for either a short or long period of time. Whether this is a nation collapsing, an EMP which has taken out the nation’s electrical infrastructure or any other major catastrophe leaving you to fend for yourself and your family’s well-being, you are now on your own.
What we’ll do in this blog is walk you through the four phases and at the end, we’ll tie this together in a way that will then make sense. Again, it’s important for you to understand each phase we’re going to go through and at the end, we’ll take everything we learned and explain it in a way that will make sense.
So let’s jump in.
We personally think there’s more than enough warning signs that things are about to shake out in our world over the next decade (and few years for that matter) and those that are prepared will do better than those that are not prepared. We are now living in a moment in history where people realize they need to get ready. It’s something you can sense right now.
This early phase is the preparation phase for you. It is where you should be making sure you have an adequate supply of your essentials, those items lumped into, again, the three Bs categories: Bullets, Beans, and Band Aids. Here, of course, we’re speaking generally and these 3 B’s represent general categories of preps. Your personal defenses and protections are more than just bullets. Beans refers to all your long term food stores. And Band Aids refers to all medicines and personal care items you may need. So as preppers, we all know these 3 main categories…they’re pretty drilled into our heads as preppers.
But do precious metals hold any value in this phase?
The answer is yes. Following any disaster, manmade or natural, economies suffer. They often dip with people’s perceptions of how bad and how long it will last. When the markets suffer, or the dollar declines in value, or both, precious metals typically rise in value. We are not a financial advisor, and we are not trying to give you financial advice. But if you are observing what is happening right now with the Fed printing money and driving up the national debt, you can observe the spike in demand for precious metal prices as investors are looking to move their fiat currency to a safe haven with precious metals being just one of my assets they’re pursuing.
Natural and manmade disasters will continue to strike. Economies will crash and rise. Precious metals provide you a type of safe haven, but you won’t be able to acquire them at a low price if you wait until after the disaster strikes. Once you have your three B’s secured, we would recommend you turn your attention to precious metals to prep your finances to be more stable. If we were starting out in prepping today, we would focus on the 3 “B’s” and then pivot to precious metals. If your currency collapses, the universal currency of precious metals will allow you to still make transactions, but again, not in the immediate phase after a collapse which we’ll talk about next.
In the collapse phase precious metals have the least amount of value to you, though they may increase in value against the currency. A look at the post-WWI Weimar Republic is a great example of this. In January nineteen-nineteen, an ounce of gold cost one hundred seventy German Marks. Four years and ten months later in November of nineteen twenty three, one ounce of gold cost eighty seven trillion German Marks. In US dollars, though, an ounce of gold was around twenty one dollars. The German Mark was useless, a wheelbarrow full wouldn’t have bought you a loaf of bread.
During this collapse phase, precious metals may hold some trade value for you with people who either deny the collapse is happening or who believe in a quick recovery phase. This is the last phase we would actually try to use them to negotiate or buy with someone in the same economy as you’ll get the least return for them. You can’t haul large amounts of them if you are forced to bug out, and if they are being held electronically for you, you may not be able to access the systems needed to obtain value from them which is why I always recommend people actually receive them and hold them in a safe location.
This is commonly called the HOLD phase of an investment. You are waiting and seeing. If you see that the US market or dollar is plummeting in value, you might make some transactions from your gold to more stable global currencies. If that sounds too risky, or you see a larger global crisis looming, you might be better served just to hold to the next phases.
The Endurance Phase in prepping is really what you should be prepping for. Here is where your three B’s will really come into play. Here, too, is where any durable goods, shelter, and water, and anything that will sustain you become critical. You have to endure the tragedy. You have to survive until you can make it to the recovery phase.
While precious metals in small amounts may be useful in homegrown scientific applications like water purification, and they may have continued trade value as more people turn their attention to a recovery phase, their value is still minimal compared to the essential prepping supplies. Here, any precious metals are on the line between HOLD and SELL. There may be greater opportunity to exchange small amounts of precious metals for the essentials you are running low on or discover that you need.
OK, so having run through the first three phases, this is where precious metals really shine (no pun intended). The Recovery phase is where precious metals truly have value for you. So much of prepping attention is focused on the Collapse and Endurance phases of a disaster. Many prepare as if the end result of every instance will be some dystopic, Mad Max, post-apocalyptic landscape. While that is always one possible outcome and can serve as a motivator and guide for your preparations, history has shown us that a Recovery Phase follows in every instance. If an extinction-level event happens, the prepping you have done, honestly, probably will not matter too much; however, if the disaster is natural or manmade, or economic, it will have a recovery phase because it will not have a global catastrophic effect.
It is during this Recovery Phase where precious metals will be exchangeable for land, currency, or whatever else you need. While replacement currencies may come into play, gold, silver, and copper will allow you to acquire new currency. This is the SELL phase of your precious metals. Depending on how clear the recovery is, because sometimes recoveries can falter, you should only SELL a little at a time to secure your piece of the brighter recovery.
So let us wrap this all up in a way that makes sense.
Think about it this way. If a SHTF truly occurs and the grid is down for a very long time and we go into a truly catastrophic event which leaves everyone fending for their own, fiat currency like a dollar will be worthless. It’s just paper and will have no value. Cash is not an asset in and of itself. It’s merely an agreement between 2 parties in which we assign value to this item because it’s backed by a government. When things eventually come back to normal, if you’re holding a lot of paper money, it will be worthless during a rebuild. But if you hold an asset like precious metals, you now have something that will be recognized as value and it will allow you to move forward with something of high value. You can think of the example we gave earlier of the collapse of the Weimar Republic. Fiat paper currency became worthless. You couldn’t do anything with it once the society began to rebuild. People without assets had to start from scratch. But if you have a tangible asset that has value, you can now move back into the markets with something of value. It’s essentially transferring value from fiat to precious metals and when things restore, you can move the value out of this asset back into a fiat market to begin buying things you need. But fiat currency can’t do that. If everything truly collapses, fiat currency becomes worthless and may not come back to value once things restore. The currency the new government sets up may be completely different and this will be nothing but paper. But precious metals holds value. While during the first few phases it may have little value, at the end during recovery, it has been holding that value all along.
So, to answer the question should precious metals be a part of your prepping inventory, quite simply, yes. Not in the immediate aftermath, but if you’re looking at the long game, hopefully you see the value. After your three B’s are secure, you should consider adding precious metals to your inventory. You can’t eat or drink precious metals, but along the way they can help you secure both food and water. Having some precious metals in your inventory is a strategy based on insulating yourself from the economic impact of any disaster. Through each of the four phases (Warnings, Collapse, Endurance, and Recovery) precious metals will retain some value, even if that value fluctuates based upon circumstance. It is really the Recovery Phase of any calamity where they will have their greatest value. They can help you emerge from the darkness of a tragic situation faster and stronger, even though the new world that emerges may look completely different from the pre-disaster world you came from.
As always, please stay safe out there.