Gold: The Sucker’s Bet for Long Term Survival

This post was originally written in 2010 for the now defunct American Survival Blog. The gold prices are dated, but the basic idea is still the same.

With the survivalist community increasingly based online, misinformation and panicky predictions of impending doom have the potential to spread faster than ever.

The “buy gold” phenomenon now sweeping the net is the best example of rumor based marketing aimed at vulnerable groups of people willing to accept sometimes preposterous claims due to their ideological or cultural views. Gold retailers have been marketing their services to Americans by playing on the financial fear mongering of a left leaning MSM whose anti-Bush tax cut agenda is best served by convincing people that things are worse than they actually are.

Six years of propaganda, a chaotic middle east gearing up for World War III and China’s manipulation of world currency has substantially weakened the dollar. Congress demanded that credit be extended to poor people a decade ago or so, and now all that lending has led to a high default rate, which also hurts stock holders, causes market turmoil and basically makes people panic.

So is gold the answer to that?

Gold can be a wise investment for investors betting against the dollar or worried about long term dollar devaluation, but for the survivalist planning for TEOTWAWKI gold is not the answer. I know, gold prices are soaring and that makes what I’m about to tell you counterintuitive, but the fact remains that survivalists who put their savings into gold are playing a sucker’s bet that will haunt them well after they emerge from whatever apocalyptic scenario they envision.

First things first. Gold is like anything else, it’s only as valuable as long as the demand for it is. Gold prices are soaring in part because of good marketing by gold dealers and affiliate marketers. Many of the sites you’ve recently visited extolling the virtue of gold are what are called M.F.A. websites.

M.F.A. stands for “Made for Adsense” and they’re a powerful money making tool for web marketers. Google’s Adsense program is popular with web marketers because you make money anytime a visitor to your site just clicks an ad; they don’t have to buy anything. Different ads pay different amounts and the best way to guarantee high payouts is to write articles containing keywords that bring up high paying ads.

Guess what term has some high paying Adsense payouts. The payout for just one click can be $1 or more. Compare that to payouts for most subjects, which are often in the pennies per click.

Putting up a site with plenty of content discussing buying gold will bring up high paying ads. Thus site developers have an incentive to put up these sites. As more of the sites crop up, more people link to them, read them and begin internalizing their message, which the developer may or may not even buy into.

If you’re getting your info from a site that looks like this, consider the source.

Consider the message too. Gold sellers want you to believe that all currency is essentially valueless (which in a certain sense it is) but that gold has a value that transcends societal instability or world wide civil unrest. To prove this they point to gold’s wild climb in value, which if anything should prove to you that the gold market is as volatile as any other market.

Gold is only worth as much as someone is willing to pay for it, nothing more, nothing less. Gold popularity stems from its ability to be easily worked into various forms, like rings or bracelets, making it one of the first forms of portable wealth civilization had. If you’ve ever read the old Epic poems like Beowulf or The Niebulungenleid you will find that ancient lords and ladies were called “ring givers” and similar. That’s because gold rings were used as payment to vassals for their loyalty.

But times have changed. People don’t purchase farmland and cattle with a gold earring anymore, and modern money is a state monopoly. There is no way to be 100% sure that after civil unrest or worse, collapse, that people will trade gold at the levels you bought it at, if at all.

Imagine yourself in the closest America had to a TEOTWAWKI scenario, post-Katrina New Orleans. As the days go on and people emerge to trade you grab your trusty gold coins and hit the makeshift market. You plunk down the ounce of pure gold you bought for $800 and change (you bought at a premium) at the table of some enterprising fellow and then … what?

He gives you roughly $800 worth of goods and services for a coin he may or or may not get $800 bucks for when things normalize? He takes your word for it that it’s worth at least $796 or so?

Or he gives you less for it than if you traded in something he could really use?

People are nowhere near as far sighted as you think and unless you live in a community of gold hoarding survivalists, Ron Paul supporters or maybe Ren Festers, the chances of you trading gold coins for services post-TEOTWAWKI and getting anything near their value is a sucker’s bet.

Gold is a good investment in general, though profit wise currency trading seems as good as gold, pardon the pun. But gold isn’t guaranteed to keep its value any more than any other material. As a survivalist I’m all about the guarantee. I use my wealth now to prepare for worst case scenarios by stocking supplies and trade goods. Things like long storing foods, blankets and candles will have value no matter what the situation.

I have no idea, if civilization really collapsed, what the local economy will look like but I think the safest bet is having goods and a set of skills people will pay for. I’m not willing to bet my family’s lives on gold.

After a short term crisis when the banks reopen your gold will be valuable. But so will your check book. Any disaster in which gold would preserve your wealth would probably not be severe enough that having a diverse portfolio would hurt you either. Gold is a good buy, as long the demand keeps the prices going up, but like anything else the bubble will burst eventually.

But that’s just my two cents. Double down on gold if you want, just give me time to set up a site with plenty of Adsense.

 

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