This article is written from the perspective of an acquaintance.
I’m a jeweller and gold dealer based in France. When Yugoslavia was imploding some years ago, a man brought to my shop a bag of gold coins to sell. He told me he had left Yugoslavia with wife and children and abandoned his house, his property investments and shops. All he had left was his family, a big stack of worthless banknotes and the gold coins, which he sold for a good price. I hope he managed to build back his wealth, it’s generally easier the second time around.
Gold is a store of value, it has always had value, and it always will. On average, it’s worth the same today, in purchasing power, as it was worth 100 years ago or 2000 years ago. People here talk about “apocalyptic events”. Ok, let’s talk about that. What do you mean? Alien invasion? World collapse? Just how is the world going to collapse so that money has zero value? War? Even in a war, gold has value, as people will trade just about anything to get out. Don’t look to Hollywood or books as to what you think of as a likely apocalyptic event. We live in the real world, not a fantasy world, and I suggest you consider what could REALLY happen in our REAL world.
Obviously, even if paper money loses most of its value, it will still have some. By having some gold, you can change it for much more paper money than you would have had if you had kept your wealth in cash. The law of supply and demand will always prevail and there will always be traders prepared, for example, to sell you gold at one million dollars per ounce and buy it back at $980,000 per ounce. This gives a value in dollars for gold and gives the paper dollars a value, as everyone knows they can get almost a millionth of an ounce of gold for every paper dollar. If the government prints more paper, the price of gold and all other goods will simply go up. A hundred years ago, a dollar would get you roughly a twentieth of an ounce of gold, today you will only get one 1757/th of an ounce. The dollar has been losing value in relation to gold since 1933 and will continue to do so, unless the US government starts buying gold in every time new dollars are printed (as it should do). The US dollar was once worth five times as much as the Swiss franc, today it’s worth less than one Swiss franc….. You need to understand that gold isn’t going up in price, it’s your money that’s going down in value (unless you live in Switzerland).
In Africa and South America, paper money regularly loses value and people have taken to keeping their spare wealth in gold and silver coins and jewellery. No government can make your gold or silver worthless; it can always be sold somewhere for its full value.
And I’m getting pretty sick of people saying you can trade with fresh water, tobacco, toilet paper or food. There has never been a long-term situation where gold or silver couldn’t be traded for essential goods. You can’t do much trade with bottles of water. And in each case, precious metals could also be traded for banknotes, no matter how low in value they were, so that small transactions could be done with notes. Sure, you can keep some water and food, but don’t dream you will be doing any trade with them.
In WWII in the Netherlands, when my mother and uncle were starving in the city, my grandmother set off into the countryside to try and get some food for her family. She came upon a farm and asked to trade for some food. The farmer told my grandmother she was unlikely to have anything that would interest him. He showed her a room full of antique silverware and candlesticks, clocks and linen he had taken in exchange for food from starving citizens. He said he would not take any banknotes, only gold, as the war was ending, but my grandmother had no gold. She then mentioned that she had some salt. This interested the farmer a lot, and she traded some salt for food and pushed it back to town in a baby stroller (which she had borrowed against a promise of a share of her purchases.) So, you can see that even in a war, gold has some value, as, apparently, does salt and strollers. Tobacco and coffee also had some value at the time, but again, gold was far more portable and non-perishable. If your family is starving to death, you will pay whatever it takes to buy food. It’s a seller’s market and if he wants gold, you’ll trade it to survive, whatever the price.
It’s thus worth keeping at least a part of your wealth in gold, to protect against what might go wrong. You won’t get rich with it, but it won’t lose its value and if you ever have to flee with your family, it can be damned useful and might even save your life.
The fall of Shanghai, 1948, people struggling to change their gold.
Preppgroup 