Gyroscopic Investing

I wonder if and why anyone holds physical silver. I know it's not recommended for PP, but was wondering whether people buy it as part of their VP or add into their PP gold allocation (that's what PRPFX and PERM do).

I think there could be a place for holding a month or two worth of "junk" silver at home as part of the "gold" portion of the PP if you're worried about bank holidays/hyperinflation, etc.  Beyond that, I guess if one expected silver to shoot through the roof it could be held as a speculation.  Maybe the hardcore metals investors who don't have enough cash to buy gold would hold it?  I don't hold any silver currently, but may end up buying $100-200 face value at some point for the heck of it. 

as part of the VP

VP....  mostly Canadian leaf, mostly as a shtf investment, not counted as part of my PP....  open to the possibility of speculative value but not expecting or counting on it in any way.

Remember, silver was a part of HBPP 1.0, and all subsequent versions of the HBPP - except the last one.  Over time the HBPP Au:Ag ratio varied - 1:1, 2:1, 3.4:1, and finally 1:0 (obviously).  When Harry sent silver away from the PP he admitted that it was lucky market timing rather than any insight into markets.

I like silver.  It has as about as strong a claim to being a monetary metal as gold, it has more industrial uses, and if the price of silver really tanks a dime is still worth a dime.  Junk US silver, junk Canadian silver, it is all good.

I know, central banks don't hold much if any silver.  The reason?  My guess is that it is too bulky per unit value.  Gold is an extremely compact store of value and so takes up less volume in the vault.

I hold a small amount of physical silver as part of my emergency fund, separate from my PP. (I don't have a VP.)

Personally, I prefer physical silver over gold as a portion of an emergency fund because it seems more realistic for barter situations.

Tortoise wrote: I hold a small amount of physical silver as part of my emergency fund, separate from my PP. (I don't have a VP.)

Personally, I prefer physical silver over gold as a portion of an emergency fund because it seems more realistic for barter situations.

One weekend while I was trolling youtube... I noticed that in Zimbabwe they used gold dust, not silver for barter.  Not discounting silver, I have some in my VP, but I feel like if we really needed PM we would probably be more in an economic situation similiar to Zimbabwe or Weimar Republic.

So, makes at least me start to wonder if I should hold some of my gold, as gold dust.

Bean wrote:

Tortoise wrote: I hold a small amount of physical silver as part of my emergency fund, separate from my PP. (I don't have a VP.)

Personally, I prefer physical silver over gold as a portion of an emergency fund because it seems more realistic for barter situations.

One weekend while I was trolling youtube... I noticed that in Zimbabwe they used gold dust, not silver for barter.  Not discounting silver, I have some in my VP, but I feel like if we really needed PM we would probably be more in an economic situation similiar to Zimbabwe or Weimar Republic.

So, makes at least me start to wonder if I should hold some of my gold, as gold dust.

I read The Modern Survival Manual, written by the guy who lived through the Argentina collapse, and he talked about keeping junk gold jewelry around, like rings and especially gold chains.  That may be an option.

Where would one find gold dust?  And how would one store it?  I would worry about losing it.

hoost wrote:I read The Modern Survival Manual, written by the guy who lived through the Argentina collapse, and he talked about keeping junk gold jewelry around, like rings and especially gold chains.  That may be an option.

The problem with junk jewelry (silver or gold) is the ability to determine whether it is genuine, the purity, etc.  In a SHTF situation having something recognizable (i.e. junk silver coins), at least in the early stages, seems more practical.

One convenient aspect of gold and silver chains in a barter situation (assuming the authenticity/purity issue could be resolved) is that you can "clip" off bits of the chain to make a payment.

Bean wrote:One weekend while I was trolling youtube... I noticed that in Zimbabwe they used gold dust, not silver for barter.  Not discounting silver, I have some in my VP, but I feel like if we really needed PM we would probably be more in an economic situation similiar to Zimbabwe or Weimar Republic.

So, makes at least me start to wonder if I should hold some of my gold, as gold dust.

That's mainly because you can find small amounts of gold in rivers in Zimbabwe. Barter was made using gold because that's what people could find after a day of work, not because silver was not desirable. I don't know if someone with a silver coin could have bought bread, though, but it's a lot easier to be sure you were paid which amount of pure metal when you get a silver coin than when you get gold dust. As a seller, I would accept dust only if I really had to and would take a huge margin of safety (i.e. selling less bread for a given amount of dust).

As for SHTF situations in general : don't forget it's a lot less dangerous to barter with a silver coin or a parcel of gold bracelet than with a krugerrand, for obvious reasons. You don't want to be known as the man who owns krugerrands. Being known as the man who has to sell parts of his jewelry to survive is much more low profile.

WildAboutHarry wrote:

hoost wrote:I read The Modern Survival Manual, written by the guy who lived through the Argentina collapse, and he talked about keeping junk gold jewelry around, like rings and especially gold chains.  That may be an option.

The problem with junk jewelry (silver or gold) is the ability to determine whether it is genuine, the purity, etc.  In a SHTF situation having something recognizable (i.e. junk silver coins), at least in the early stages, seems more practical.

One convenient aspect of gold and silver chains in a barter situation (assuming the authenticity/purity issue could be resolved) is that you can "clip" off bits of the chain to make a payment.

I agree that determining the purity of junk jewelry would be an issue.  I'm not sure how they resolved that; I would imagine any jeweler or pawn broker would be able to quickly distinguish the purity, as a lot of them probably have to do it every day. 

I do prefer the idea of junk silver, personally; however, this guy lived through the situation, and says that junk jewelry actually was used.  And yes, he said that people could break links off of chains to pay for goods or change for pesos.  I think from a personal security standpoint, a thief would expect most people to have some old jewelry lying around that they could trade, but for someone walking around with junk silver coins, that may indicate that this person is a better prospective robbery target because there may be more coins back at the house.

All that being said, I'd probably stick mostly with junk silver; you would probably be able to trade silver for junk jewelry if you needed it for every day transactions.

Hoost,

I just consulted a copy of Collecting World Coins 13th edition which claims to cover issues from 1901 to now (2011 publication date).  Despite Argentina's name I do not see any silver coins listed in this volume.  I'm not sure how complete this book is (probably not very), but if Argentina had appreciable silver coinage in circulation I suspect that at least some would be listed.

So, perhaps the idea of junk silver for Argentina doesn't resonate there.

Regarding purity, typically gold and silver chains have hallmarks on the clasp, so if you left the clasp on and trimmed from the opposite end then you would retain a purity label.

WildAboutHarry wrote: The problem with junk jewelry (silver or gold) is the ability to determine whether it is genuine, the purity, etc.  In a SHTF situation having something recognizable (i.e. junk silver coins), at least in the early stages, seems more practical.

Do you really consider junk silver coins to be "recognizable"? If you approach a random person on the street and ask them how much silver is contained in a certain U.S. coin from a certain year, would they be able to tell you? I sure wouldn't.

That's why I hold 1-ounce silver bullion coins, not junk silver coins. One ounce is one ounce--very recognizable, whoever you happen to be.

Tortoise,

I know that Harry said in one of his radio shows (or books?) that the knowledge and ability to recognize a difference between pre and post 1964 US coinage was fading.  But if you are "into" silver then you know, and post-SHTF the presumption is that everyone will be "into" silver (and gold, and bullets, etc.).  In other words, that knowledge will become important and will be quickly acquired.

The nice thing about "junk" silver is that it is already divided into convenient-sized packages.  I do agree that silver is silver, and one-ounce coins (like Maple Leafs and US Eagles) are fine, if much larger than a dime.  Having the purity/weight on the coin is good, too.  Most of the silver Mexican coins show both the weight and purity of silver.

And for US coins, pre-65 dimes, quarters, halves, and dollars are all 90% silver, so all you need is a scale and a calculator (or slide rule, post SHTF!) to determine silver content.

WildAboutHarry,

I just consulted the book again, and from what I understand, he says that mostly junk jewelry was used in Argentina, likely because they didn't have silver coins there.  He recommends for those in the USA the possibility of using junk silver coins, since they are already being sold for their silver content.

He talks about going to jewelry stores and pawn shops, etc., and selling however many links you need for local (hyperinflating) currency and then going to spend the currency ASAP as it's devaluing so fast that you don't want to hold it.  I'm not sure that people were using the jewelry directly in transactions due to this issue with purity, etc.


Tortoise,

I too doubt that the average person on the street would be able to tell you the content of junk silver (.707 oz/$?), but I would think any coin dealer would be able to do so.  Based on my understanding, most people were selling their coins for local currency and then spending local currency on the street.  The idea as I understand it is to hold as little local currency as possible because its value is eroding so quickly.