Gold vs Goods in a Collapse

There was a post the other day on Reddit about the crisis in Venezuela. It was arguing that trade goods were far more valuable, or at least practical, than gold in an economic collapse situation.

Should preppers and their milder cousins, the conservative investor, be looking at Liquor instead of Bullion?

My take oh this question  is clear as mud, I would say – ‘Yes & No’.

Are trade goods more practical, hell yes. Try paying for a days worth of food with a Gold Eagle. Not easy.  As a matter of fact, analyzing this question of Goods or Gold may be best served by some basic definitions.

A collapsed economy probably infers the breakdown of fiat currency (legal tender whose value is backed by the government that issued it).  Or at least a problematic inflation, so much so, that it distorts the true buying power of the paper currency.

And so we turn to alternative stores of value (Money).

The Six Characteristics Of Money
  • Durability. Objects used as money must withstand physical wear and tear.
  • Portability. People need to be able to take money with them as they go about their business.
  • Divisibility. To be useful, money must be easily divided into smaller denominations , or units of value.
  • Uniformity. The item in question has a sameness,. Consistent quality.
  • Limited Supply. Should not be a common item, its scarcity is a positive.
  • Acceptability. Its value is universal.

Gold meets all of these except maybe Divisibility. There are different coins, but they can only go so small. This is where silver comes in, much more divisible. So If we say Precious Metals, as opposed to just gold, we are in good shape.

But you can not eat Gold or Silver.

If things are desperate enough, even precious metals have lower value. If your immediate concerns are eating right now then trade goods are going to mean more.

If things are going to get better eventually, precious metals are the thinking mans currency. If you are able to think long term, the stable value of gold will really be worth it when stability returns.

 If the situation is truly bleak, or you are at the end of your rope, then true barter takes over. You want some diapers, give me some eggs.

When I envision prepping and having all my bases thoroughly covered, I tend to want both piles in my basement. PM’s and a case of liquor. Hence the yes and no to the original question.

And in the end isn’t that really the mindset of a prepper? Pre-worrying all the scenarios and having redundant systems.

As a matter of fact, it is those two concepts that are really at the heart of Prepping. If you train your brain to see all the plausible situations before they arise and take the time to plan for them when and if they do arise, you are a Prepper.

Here is a far from complete list of timeless trade goods;

Liquor, Cigarettes, Drugs (both medicinal and recreational), Guns, Ammunition, Canned Goods, vitamins, antibiotics, bandages, toilet paper, feminine hygiene items, toothpaste/toothbrush,  pet food, salt, flashlights, batteries, simple games, diapers, baby food, disposable razors, coffee, condoms, condiments/spices, sewing stuff, fishing stuff, and seeds…..

This very same question is also on Quora with a variety of answers!

 

9 thoughts on “Gold vs Goods in a Collapse

  1. I tend to break these requirements into 2. The first one (where people may want precious metals) is in an economic crisis (not collapse). An example would be the Weimar republic, where the economic system melted down. Its there that I would want gold/silver as a hedge. Also no debt.

    For preppers, I would assume a full-blown economic collapse. At that point gold/silver would be mostly useless, and the commodities you outline would be the valuable elements. I actually think the most valuable would be a gun and ammo, to defend the supplies that you have.

    No matter what, everyone should have 3-days supply of food & water in their home in case of disaster (like Hurricane Sandy or Katrina).

    Mr. 39 Months

    • If I try to break mine down into which camp I have spent more money on, it leans to PM’s, but I still have extensive trade goods hoarded.

  2. If I have to choose it is goods all of the time. Besides, you would have to constantly worry about keeping the gold safe. There would be no places to put your money and while the goods could also be stolen they are also quicker to get “rid” of in a disaster.

    • Fast forward 50 years after the collapse, when everything is finally getting better again. It would make for a fascinating book to read about what goods were in highest demand locally – region by region. Lots of quirky stories in that anthology.

  3. Maybe does not clearly fit this list but I would add an “item” which is one of the most important ones in my opinion. Knowledge. Can be in any form (probably books in a disaster situation) but I think the best is deeply embedded into someones brain. Maybe I watched too many post-apocalyptic movies lately, but imagine a situation where the economy is collapsed and you are on your own. What would you choose, being a man with a bag of gold or the one with the knowledge which is essential for survival? (Do not cheat, the man with the gold AND the knowledge is not an option in this thought experiment :)) In such a situation knowledge could serve as life insurance also 🙂 And the best of all, these days it is very low cost to acquire 😉 Also, a little pile of gold would not hurt also…

    • This same ‘third position’ came up in an online Quora discussion on the same topic. I think it is solid enough to become the correct choice in the hypothetical.

  4. Tracing back to the beginning of humanity the means of production has always been the best form of wealth. Instead of hoarding items to barter, invest in the capability to produce those items.

    I realize wealth and currency are different. When you have the means to produce items that are in demand, you can trade those items for whatever currency is in vogue, be it bottle caps, bitcoin, or PM’s.

    An alcohol still is inexpensive, and you can make fuel grade ethanol. Even just natural disasters you see fuel is the first thing to go in a shortage.

    • If I had the property, I would look at a STILL, but for now I do not the wife will let me keep one in the basement. In another guest post I promised a level beyond the basic, moderate, and serious categories of prepping, I will have to add that STILL idea to ‘extreme’ level preps when I get around to writing that post.

Let's get things nice and sparkling clear