#5 – Gold – 22 March 2010
A big question going around right now is, “Should I save up in gold?” The answer is a big MAYBE!
Gold as a storage medium has an extremely limited use; it is a great way to move about great amounts of wealth more easily. (That’s why we invented paper money, but gold avoids the inflation problem by inflating equally.)
Say you needed a leg set and casted up in a dire pinch; insurances are gone, hospitals turning folks away if they don’t have cash. A couple krugerands might be pretty handy.
But as a disaster preparation, to save more than a bit would be a terrible waste. “Investing” in physical goods is far more economical while shopping in full stores, garage sales, and second hand stores.
Consider that Miners in the California Gold Rush Mountains had to buy under duress anything they wanted from suppliers who came to them, or hike to town some days away. That would be time lost from panning. So they paid in gold, whatever the merchant wanted, or whatever they could dicker him down to.
Some of those actual prices are recorded in a display at the San Juan Capistrano Mission, which my family recently had opportunity to visit. The poster discussing the prices these miners paid were compared to modern exchange rates, adjusted for 2009 prices.
The list below shows the high prices charged to miners in 1851.
—————–Price in 1851——–Adjusted for 2009
Beef————$10.00 per lb———-$291.27 per lb
Butter———-$20.00 per lb.———$582.55 per lb
Cheese——–$25.00 per lb———-$728.18 per lb
Beans———$0.15 per lb.———–$4.37 per lb
Crackers——-$0.15 per tin———-$4.37 per tin
Eggs————$3.00 each ———–$87.38 each
Flour———–$13.00 per bag——–$378.76 per bag
Oranges——-$0.15 each————-$4.37 each
Rice————$8.00 per lb.———–$233.02 per lb
Boots———-$6.00 per pair———-$174.77 per pair
Shirt———–$1.50 each————-$43.69 each
Blanket——–$5.00 each————-$145.64 each
Shovel———$36.00 each———–$1048.59 each
So you can figure that anything you might need and can buy now, at our Mass-production, industrial-age, prices would be a massive bargain against what you might have to pay in Gold during hard times. You could get a nice shovel at a garage sale for two bucks, or pay all of twelve to twenty bucks at the hardware store. Wait till they aren’t really available, and a needed shovel could cost you a couple hundred. And you might pay it, if that was the only way you had to bury your mother out under the family oak.
A number ten tin of wheat, or oats, right now, is a couple bucks. If you haven’t eaten in a couple days, and all you have is a one ounce gold coin, would a really shrewd trader ask for nothing less? He might throw in another tin of evaporated milk just to be nice. And if you didn’t curse him, or spit on his shoes, he could even add a spoon to the deal just to be a good guy.
Point is, supply and demand are premises to consider if saving in all money for a rainy day . I frankly have never had enough money to save any. Each new family crisis took every penny I had saved for a rainy day. (Oh, that’s what it was for!) But I have always had nails, hammers, screws and drivers, drills and bolts, glue, shovels, barrow, hand-truck, rope, and tins of food stashed around.
So save some gold if you can, but don’t let it be your mainstay..