So the question that I get asked quite a bit is, “Should I have gold and/or silver and how much?”

Great question! And for me it is an easy answer, but maybe for different reasons than you might think. So, what is the answer?

It is not a simple answer but I will get into the detail but first, if this is a question you might have, I want you to answer this question, “What would be (or is) the purpose for you owning (or wanting to own) precious metals?”

My answer – I want to have some “real” money if, or I should say when, the fake fiat paper money that the US Dollar is fails. Really? Seriously? Yes, to both. Let me explain, get a dollar bill out of your wallet or purse. Now look at the front of the bill (the side with Washington’s picture), what does it say up at the top of the paper? “FEDERAL RESERVE NOTE” (if you have a real dollar bill). What does that mean?

Ah, well my friends who is the Federal Reserve? Well, funny you should ask, the Federal Reserve (Fed) is the central bank of the United Sates…and it is made up of 12 commercial banks located in different regions around the country. The Federal serve is NOT part of the US government. The Fed has no government agency providing oversight, auditing or control. Everything the Fed does internally is secret from everyone, including the government. Yup!

And why is this important? Well, you see the term “note” means “loan” in the English language. So the $1.00 bill you are looking at is a loan to the Federal Reserve in the amount of $1.00. So? That means the dollar bill is not truly money, it is receipt for a loan you have made to the Federal Reserve and that “note” like other loans can be defaulted on. And the US Government doesn’t have to stand behind (i.e. guarantee) that it will make good on that dollar bill should the Fed decide not to honor it as a note or loan. Yes, the dollar bill does say it is legal currency for all debts public and private. That simply means that you can exchange that note with other people to help identify the value of what you are exchanging. But remember, the note is only as good as the entity that is backing it. And should the entity decide to no longer back it, then consider what actual value does that dollar bill has. In any event, with what exactly would the government pay you for your dollar bill?

So you see the paper money you think you have in your wallet or purse is actually only a promise to pay a loan. A loan with absolutely ZERO assets to secure it with. Sounds pretty shady to me. US currency use to be worth something tangible to make any sense, right? Coins used to be made out of silver and so they were actually worth something tangible. Paper currency used to be redeemable for precious metals, but no more.

So ask yourself, “Why did they stop back currency with precious metals?” Yeah, getting a little spooked yet?

But let’s talk about the money you have in your bank account, mutual fund, 401k, IRA, etc. How much is that worth? Well, it is only worth something if you can take it out and convert it into cash, right? So that “value” while in the bank or mutual fund company possession isn’t even worth Federal Reserve Notes at this point, it is only “digital” money existing in the computer world.

And think about the phrase “full faith and credit.” Yeah, that is what is supposedly backing up the US currency (Federal Reserve Note). The full faith and credit of the Unites States government. The same government that is currently $18,000,000,000,000 ($18trillion) in actually debt and another $100,000,000,000,000 ($100trillion) in unfunded liabilities.

I have laid the basic ground work for my explanation of the value of precious metals to a “prepper.” But now I will lay out my mission for precious metals:

To have a source of a tangible currency of intrinsic value with which to bribe and buy during the initial stages of a “grid-down”, emergency, or disaster.

Yes, you read that correctly. I have not bought into the whole “investment” aspect of precious metals and I certainly don’t have enough assets to make me wealthy. Precious metals are a horrible investment because its value can be so erratic. If I was worth a million dollars, I would probably have about $200,000 in gold. That would make it easy for me to retain some of my wealth in the event I was unable to access the bulk of my assets. If I had the need, I could transport my gold “insurance” rather easily since it would weigh less than 16 pounds.

Now let me explain to you my mission for precious metals the way it works for me. Let’s take the most extreme case, which is where I think the real purpose actually lies. So the grid goes down, most people don’t have a lot of cash on hand, so they will try to use a credit or debit card to panic buy things they think they need such as food. How long do you think that capability would continue working? I think debit and credit cards would be useless rather quickly. Cash would probably become unavailable rather quickly once people burned through what little they had on hand and the ATM machines ran out and the bank doors closed. So what is left? Right!

People with precious metals will get it out and start using it to buy the things that they need. The word will get around pretty quickly that there are people willing to pay for things in gold and silver vs. paper money. The people with “stuff”, who will want to sell that “stuff” to? Yup, people with gold and silver. Which then naturally becomes very valuable since it is the only true currency that is in demand. Hence, it has increasing value.

Remember I said “bribe and buy” and I laid out the case for “buy” in the preceding paragraph. How does the “bribe” come into play? Easy, people without gold and silver will want it. People that have ways to earn it will want as much as possible.

Remember my “power and money” concept? People with money want power and can buy the power. People with power want money so they force people with money to give it to them. Yes, that is exactly how government and politicians work today. But we are talking a “grid-down” situation. Now simply substitute “money” with “gold.” How’s that working for you now?

Practical Example #1: You have $500 in cash from your gun safe and head to Sam’s Club to buy the last 20 gallons of olive oil and 100lbs of rice. You get there and the manager tells you the store is closing because they can’t transact credit or debit cards anymore. You tell him you have cash. He says he doesn’t care. You get out a 1/10th ounce solid gold US Mint coin. He says, “Welcome to Sam’s Club! How can I help you?”

Practical Example #2: You are trying to make it home and there is a roadblock. You are the second car in line and you hear them say that the road is closed and no one is getting through. You ask for the supervisor and ask to speak with him privately. While asking to be let through you let him see the 1oz gold US Mint Eagle coin and assure him that his family would appreciate the help that gold would bring to their security. Fifteen minutes later you are 10 miles down the road having passed through the roadblock.

The examples could go on and on but you get my point. When paper money becomes worthless or scarce, precious metals will be in demand. And if you have some, then you will be able to buy power since you have real money.

Yes, there is a dangerous downside to having it. Other people may want it so badly they will simply try to take it. And they may hurt or kill you in the process. So you do have to be smart about how you handle it and who you try to bribe and buy from. But that is another topic – security.

Now what kind and how much? Again, for me it is simple.

Silver – is the poor man’s gold. Silver is more easily purchased because you can do so in dollar amounts that is more compatible with most people’s budgets. An ounce of silver right now is in the mid-$16 range. Gold about mid-$1,500 range. And for “grid-down” buying I like “junk silver.” Technically that is only a nickname, junk silver are 90% silver coins. Silver coins are easy to recognize and calculate value since they come in dime, quarter half-dollar and dollar denominations.  And so that makes transactions easier, faster and more defined. Silver “rounds” are 1oz silver coins put out by various mints. They sure are pretty and in demand. They are .999 pure, or should be. Then there is silver “bullion.” It is much harder to transact with bullion since the true purity and value is almost impossible to assess in the field. So I would buy 90% silver coins first. If I still had some extra money I would buy silver rounds in either 1oz or 1/4oz weights.

Gold – I like gold for a couple reasons, mostly just because of the “feel” in your hand or when it “clunks” on a hard stone surface. I would only recommend you buying US Mint coins. Yes, coins from South African, Australia and Canada are reliable and high quality, but I only want the US Mint stuff. And I don’t like full 1oz coins because they are so expensive to acquire. But mostly I am not crazy about them because when trying to make

Not actual size.

A deal after grid-down you have a full ounce of gold and do you really think you are going to be buying or bribing for something that valuable? So my solution is 1/10oz US Mint “eaglets.” They will run about 11% of the cost of a full one ounce coin and worth every penny. But, if I had enough wealth that I was going to try and transport then I would use the 1oz Eagles.

Now, how much precious metals to buy and have on-hand –

I will look at this as 100% valuation regardless of the $ amount. So it doesn’t matter how much money you have to purchase precious metals, I will go by percentage of that amount.

The first $3,000 – here is my step-by-step method of acquiring precious metals:

1. 60% in junk silver, mostly dimes, then quarters, then fifty-cent pieces.
2. 15% in 1/4oz silver rounds.
3. 15% in 1oz silver rounds.

Any amount after the first $3,000 – here is the step-by-step:

1. 50% in 1/10oz US Mint gold eaglets.
2. 25% in in junk silver, mostly dimes, then quarters, then fifty-cent pieces.
3. 20% in 1oz silver rounds.
4. 5% in 1/4oz silver rounds.

This gives a very well-rounded cache of precious metals. But notice that the first $3,000 purchased is all in silver. Then after that $3,000 I would include some gold. And finally finish it off with more silver.

Tips:

• • Don’t buy it all from the same place or dealer.
  • Don’t buy it all on-line.
  • EBay is a decent place to buy silver coins and rounds if you watch for deals.
  • Don’t store it all in one place.
    • Some in the gun safe.
    • Some in the garage.
    • Some in the ground.
  • Don’t tell anyone but your spouse where you have hidden it.
  • Buy it with cash whenever possible.
  • Do not use credit cards or go into debt to buy precious metals.

Almost final thought – I think there will be a small window of opportunity after a grid-down event when precious metals are worth the most. I am thinking maybe after the 3 – 7 day time-frame but before the 30th day of grid-down for sure. After about a month I think its value will go down considerably or trying to use it to bribe and buy may become very dangerous. Then, after the worst of TEOTWAWKI is over, I think precious metals will become valuable again. But it could take years for that to happen, if it does. And then there is always the possibility that even owning precious metals could become illegal and they would be confiscated. Yes, it has happened before in the United State under a radical Progressive socialist President.

Final thought – Precious metals should be the last thing you purchase for prepping. You should have your guns & ammo, your medical supplies, your water filtration and storage, your food storage (for at least a year), your communications gear, and your 3-year seed bank before you buy any precious metals. Once all that (the basics) is taken care of then you can consider precious metals as a “prepper” item. Until then…stay the heck away from precious metals, it isn’t worth the risk.

A wise man once said “You can’t eat gold.”

That was a question that was posed by a website visitor not long ago. Thank you John for asking that question, I appreciate it. John wrote that question as a “comment” on the website lately. His question was pointed and deserved more than just a casual reply. Hence, this dedicated article to the subject of “junk” silver.

Junk silver is a misleading term, although popular and used to identify a whole class of precious metals available to folks. In my opinion there is essentially three types of silver available to the average person; 1) silver bullion, 2) investment grade silver, 3) junk silver. I will give a brief description of each that is my opinion:Silver bullion is silver that has been mined, refined and poured into some shape, usually bars. The mine or refiner will stamp into the bar the weight and the assayed purity. You can also call this type of silver “bulk silver” because of its form. The purity for silver bullion is supposed to be .999 but there is no guarantee of that beyond the reputation of the seller.           Investment grade silver. These are the silver rounds available from well-known, well-respected mints with extremely good reputations. I include the government mints from the US, Canada, Australia, etc. There are some excellent private mints as well. But for the purpose of discussing “investment grade” silver I will stick with those that I know and trust. This type of silver can be used to fund an IRA; which means that there has to be a high degree of trust and confidence in the purity and value of the silver. Most of the investment grade silver comes in the form of one ounce silver rounds. An example is the US Mint Walking Liberty coin (a.k.a. American eagle). These are widely regarded as the number one silver round in the world in relation to investment grade silver. The US Mint also makes quarter ounce Walking Liberty rounds as well.Junk silver. This covers a wide range of options spanning over 100 years of US coins. As I said earlier,junk silver is a misnomer. The coins I am referring to are coins minted by the US government to be used as currency. Prior to 1964 the US government actually made coins that had value to them, not just some vague fiat currency promise that is used today. The coins I am speaking of were made from 90% silver; the other 10% was copper.

So let me explain what I think of each in terms of buying for emergencies, disasters and for “grid-down.” I won’t go into explaining why or how much, I already wrote an article on that called “Silver & Gold…..Really?” < Click here to read the article >

First up, bullion; Don’t buy it; Yup, just that simple. In my opinion you have no idea what you are buying. How do I know? I bought some. Remember, I don’t write about anything I haven’t done, tested and have personal experience with. I want to speak from personal experience. Back to silver bullion…So a few years ago I bought several “bars” of silver, a couple of 30+ ounce bars and a smaller 10 ounce bar. I liked them, they looked kinda cool, not perfect, a little rustic looking. They had cool imprints on them stating the purity and exact weight in Troy ounces. I liked them.

Then I started thinking about it, how did I know that they were actually what they were represented to be. The guy I bought them from had a good reputation and I trusted him. But how did I know who he got these from had a good reputation. In other words, I didn’t know what I didn’t know. So I sold the silver bullion off. The guy I bought it from had a money back guarantee from me. He is totally satisfied with the deal he got, and so am I.

So bullion bottom line…I don’t feel that I would truly know what I was buying. In the worst case scenario, grid-down, I try to barter/buy with by silver bullion and it turns out to be virtually worthless. How so? Well, there was a case not long ago (2012) where gold bars had been drilled out and back-filled with tungsten. Gold and tungsten have about the same density/weight that gold does. It supposed fooled a number of people till it was found out.

There is such a thing as silver plate. That is a process where they fuse a coating of silver over another metal. It appears to be silver, coz it is on the outside, but the inside is another, less valuable, metal. I have no idea how I would be able to tell the difference. So the bottom line for me and silver bullion is…I just don’t and won’t buy it. Nor would I accept it in a barter situation during grid-down.

Next up is investment grade silver. I love this stuff! Yeah, I am a little obsessive about investment grade silver, I just love Walking Liberty rounds. They are beautiful to look at and have a certain “feel” to them that just lets you know that you are holding something of value. But beyond the feel, the Walking Liberty rounds are recognized around the world as the most trusted silver coin. So you know you have one Troy ounce of 99.9% pure silver…and that guarantee is backed by the US government. Come on, don’t snicker.It is easy to spot these coins and if you ever held one, you can easily spot another. Yes, they could be forgeries, but would be hard to copy the quality, weight and workmanship. To me that means that you would know exactly what you have and have confidence in that fact. And I think it would be virtually impossible to create fakes once the grid fell.

Come time for grid-down and you were trying to barter one away you would know you have true value. That in turn would give you confidence in your position and give you a strong hand in the deal. If you were the one who would receive the coin you would have a high level of confidence that you were receiving a high-quality, verifiable value for the goods/services your were trading to the other person. But there is a drawback, not all is perfect with the one ounce round.

Suppose your deal didn’t come out exactly to the ounce? I mean that you were trading 1 pound of wheat for 1-1/4 ounce of silver. The person buying your wheat has US Mint Walking Liberties and you are willing to take that in trade. So you get one, one-ounce coin, but what about the 1/4 ounce?

The two of you decide to use a cold chisel to cut a round, removing ¼ of it to finish the payment. Do you get exactly a quarter of the coin?

So there is the problem…coming up with exact amounts that are less than one-ounce increments. But, don’t worry there are some solutions to that as well. The US Mint also makes “quarters” and they are exactly what they sound like, ¼ ounce versions of the Walking Liberty one-ounce coin. They are not made by the US Mint. They are made by the Highland mint and recognized just as much as their larger 1oz cousin.

A very astute trader during grid-down might know that the US Mint didn’t produce the quarter ounce coin but they will still know it is just as reputable. Now you have the ability to get your purchase/barter to within 1/4oz of silver. If you want to get even closer…there is a solution for that as well.Finally, junk silver; I kind of like the term “junk silver” but the term is misapplied. There is nothing junk about silver. But, I don’t control the English language; I don’t even speak/write it so well, so I just go with the flow. As I was saying earlier, prior to 1964 US coins had a high silver content, 90% more or less. And that gave the coins themselves actual meaningful value. When the value of the silver outpaced the coin’s currency value the government began to lower the value of the silver. Eventually the government eliminated all of the silver from the coin. They just hated the idea that United States currency actually had value in and of itself. Besides, they realized they could mint a 1oz, $1silver coin and sell it for 50 times what its currency value was.

So what about all those 90% silver coins that are still out there? Well, they are still out there for the most part. And they are valuable… Now, remember they aren’t .999 pure silver like the invest grade silver I was talking about earlier. The junk silver coins are .900 pure silver; the rest is copper. And since the silver content is lower, the value is lower. Here is a chart of how much silver each coin contains –

Silver Dollar (pre-1936)                   : .77 – .78 (troy ounces)
Silver Half-Dollar (1964 and earlier): .3617 (troy ounces)
Silver Quarter   (1964 and earlier)   : .1808 (troy ounces)
Silver Dime (1964 and earlier)         : .0723 (troy ounces)

But, it is still silver!! You, as John did, might ask, “Why buy ‘junk silver’ when you can buy good silver?”

Valid question and there are a couple of reasons:

1. Junk silver coins are already broken down in $1, half-dollar, quarter and dime denominations. That makes it really easy to identify sub-1oz amounts. When the value of your trade/barter/deal needs a specific value in silver, using coins (junk silver) makes it easy to identify that exact amount. I can imagine that post-apocalypse folks identifying values in “silver dimes” as a standard valuation.
2. Investment grade silver usually carries a hefty premium over the spot price of silver. However, junk silver coins can be bought below spot if you are watchful. What I am referring to is eBay. Search for eBay auctions that are for junk silver coins. Look for two kinds of auctions; 1) auctions that end at weird times like 2am on a Weds, 2) odd combinations of coins like 2 quarters, 10 dimes and a half-dollar. These auctions are often time passed over by the folks trying to scoop up larger quantities and a little more professional in their approach to buying silver. The “odd time” eliminates a lot most of the folks that want to bid right at the end to avoid driving the price up. And that should be a great hint for you as well; wait until the very last couple of seconds before submitting your bid. That avoids running up the bids. But make sure you submit your “maximum” amount the first time. EBay will only run it up to your maximum but also, only enough to win the auction. So you might get it well below your maximum bid. I would go with spot price as my maximum bid.

So there you have my case for buying junk silver. Now, remember that I have also bought investment grade silver as well. I think there is a time and place for each. The investment grade stuff is for protecting my retirement. It is the hedge against inflation or the dollar getting ruined. Yes, it will be very useful during grid-down and I explain all of that in the article “Silver & Gold…..Really?”

I hope that answers your questions and explains my philosophy on junk silver.

One interesting little side-note: if you look at silver dimes they are supposed to have a serrated edge to them. There was a time that some folks would scrape the serrated edges off the dimes and collect the silver from those scrapings. And then continue to spend the dime when they were usage as coinage. In today’s world I think there are some folks who still think they can get away with it. So when buying silver coins look closely at the edges to make sure they are intact and no one is trying to sell you a less than full-weight, intact coin.

Related Articles –

• Silver & Gold…..Really?
• Greek gyro and great lessons learned…