Precious Metals Advantage

By Stinili Philbrick – Re-Blogged From Money Metals

A lot of folks took advantage of recently falling gold and silver prices to beef up their precious metals holdings.

Those adding to their investment portfolios understood the old adage of buying low and selling high. Unfortunately, others wait until dollar values of gold and silver have zoomed before deciding to convert their paper money.

Still, most make buying decisions for their own good reasons. They either have the confidence of their convictions, or they have good questions still unanswered.

One of the frequent questions we get at Money Metals Exchange is a good one – How would I go about “spending” my gold and silver assets in a barter-type economy?

Readers and clients want to know if gold and silver would be accepted by a shop merchant or by a tradesman offering his talents. They ask how a seller would “make change” for gold and silver coins or bars. We feel those are perfectly valid questions.

The answer highlights the simple advantage an investment in gold and silver would give you in every financial transaction.

Every deal requires a seller making an offer and a buyer accepting that offer. Unless the buyer pays his money, there is no deal. The buyer always has the final option to seal the deal or walk away to find another seller who accepts metals..

If the time ever comes in your life or the lives of your children that a catastrophic financial collapse destroys the U.S. dollar or hyperinflation sends dollar prices soaring, your gold and silver assets will always hold value. Goods and services for barter would also have value, but there would be no meaningful, stable “dollar price.”

Precious Metals Become the Coin of the Realm in a Breakdown

Metals would be the primary form of currency most would need and gladly accept, followed by other forms of barter, including personal skills and talents.

In a financial collapse, the holder of gold and silver would be in charge of his metals transactions, not the fellow trying to sell goods or services. You need the goods, but he needs a reliable currency. If he’s competing with others selling the same thing, then you’re in charge, not him.

You’ll recognize another way of saying it – He who has the gold makes the rules.

The question then is not whether the merchant will gladly allow you to spend your gold or silver coins. The only question is whether he has enough goods or services to get you to part with your monetary metals.

For example, you would decide if your silver coin, readily recognized as wealth for thousands of years, is a fair trade for a bushel of apples that will rot in a couple of weeks and not be marketable at all, or a fair trade for an hour of a workman’s time and talent, lost if no one else hires him. You own the gold and silver. You decide its final value in the trade. You make the rules. You decide what “change” is due you, not the other way around.

Barter, trading one valuable for another, was the earliest form of money. Cows, coconuts, bullets, and bourbon have been bartered at one time or another. In one survivor’s account of the brutal Kosovo War of the 1990s, he wrote the most valuable barter item he had was a case of 1,000 butane lighters.

One historic trade, admittedly shrouded in myth, was the 1626 purchase of the Island of Manhattan. Wealthy Dutch fur trader Peter Minuet thought he got a great deal for his 60 guilders in beads and blankets, later calculated at about $24. The tribal chief was just as happy. He purportedly later confessed his tribe didn’t own Manhattan in the first place!

Beads and butane lighters might not work so well today. The most important characteristic of circulating currency is widely accepted confidence as a store of wealth. For that, it must be durable, it must have some historically intrinsic value, and it must be divisible for convenience and efficiency. Precious metals have best guaranteed that necessary confidence since antiquity.



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