Dh wants to keep our Emergency Fund in Silver

[Angelorum]

He's been reading and watching a lot of economic things and is feeling paranoid about the state of things. He wants to keep our whole emergency fund in US minted silver coins. He argues that they are easy to exchange at the bank in the case of an emergency, but that the extra step will be a deterrent to dipping in when we don't really have to.

So, what do you think? Good idea? Bad idea? somewhere in between?

[MyTwoAs]

I'm not an expert but I wouldn't keep any emergency money in gold or silver. If the economy collapses, I'm not going to want to give away a good or service I have for silver - I'm going to want to barter for goods or services I need. Silver's value is based on the dollar and if the dollar collapses then silver has no intrinsic value. However, fresh water, gasoline, food, etc become highly valuable.

Just my $0.02.

[mamadelbosque]

I don't think keeping at least part of your emergency fund in silver is a bad idea, tbh. Maybe not the whole thing (depending on how likely you are to 'tap' it in the next few years), but part of it (say, 1/4-1/2), certainly. Silver does have intrisinc value beyond what its worth per dollar - its used in all kinds of manufactuering as is gold, beyond the obviously example of jewlery. I don't know what the price of silver is these days, but it might very well be worth checking into if you have a large amount of cash that your interested in not spending anytime soon (though, I'd also be putting it somewhere very safe, like a safety deposit box instead of just keeping it in your home!!)

[livinzoo]

I cashed out one of my old 401ks that was doing bad and was a pain to transfer over and turned it all into silver. Silver and gold always used to back the doller. But then we went to a system where the doller is no longer backed by anything. The goverment prints it at will and each time they do the dollar value drops even more. I have a combo of bricks, 1 oz coins and old nickles, dimes and quarters. This will allow me to trade for things. Don't put it in a safety deposit box though. If the dollar fails, banks will not be open for you to get your possesions. Find a safe spot to hide in on your proberty, whether inside or not. Also gold and silver have always had a distint spacing between the cost of them. Currently that spacing is a lot larger than it should be so either gold is going to drop or silver is going to shoot up. So silver is a good investment in that respect.

[philomom]

No. You'd be better off with stashes of coffee beans, rice and stuff like that to barter for what your family needs.

[mnnice]

I guess my question is would you really want to schelp 6 lbs. of silver to the bank for $1300 car repair? And are you absolutely sure that they are not going to charge you hefty transaction fee and you really need to bring 7 lbs of silver for a $1300 car repair?

I guess I don't see the harm of having some silver some sort of inflation hedge, but I think a true emergency fund should be more liquid than that. It shouldn't be in silver, (or coffee beans, homecanned tomatos, CD's, stocks or bonds even though I like all of those things just fine too )

[Ianthe]

I think keeping emergency funds in varied forms is a good idea. We keep ours in silver, cash, and food.

[Ianthe]

Originally Posted by mamadelbosque

(though, I'd also be putting it somewhere very safe, like a safety deposit box instead of just keeping it in your home!!)

We got a fireproof safe that we keep ours in, and it is hidden in our home. We also keep emergency cash in our wallets, the safe, our cars, and a few extra hidden spots in our home (never good to keep it all in one place). You never know what people are going to take if they rob your home, your purse/wallets and cars, or if you are in an emergency situation while you are not at home.

[Dad@home]

Hi folks.

My wife alerted me to this debate as she frequents these forums. I'm here to lend a bit of expertise on the state of the economy and the relative wisdom of purchasing precious metals.

To the OP: Your husband is absolutely correct. What's more the time in which you have to buy Silver, food, medicine for reasonable prices is diminishing. He is completely correct that the US economy teeters on the brink. I won't bore you all with info about Municipal Bond ratings in California being rated lower then Kazakhstan (believe it or not its true!), or Credit Default Swap derivatives numbering in the Trillions of dollars or the myriad sovereign debt problems world wide. Suffice to say I know what I am talking about and your husband is dead on. Please get long storage food stuffs as well.

I do not forsee a Mad Max type scenario of total break down of society. I see an event similar to what Argentina went through in the early 2000's.

http://en.wikipedia.org/wiki/Argenti...9%E2%80%932002)

The end of convertibility



--Snip--
The economic situation became steadily worse with regards to inflation and unemployment during 2002. By that time the original 1-to-1 rate had skyrocketed to nearly 4 pesos per dollar, while the accumulated inflation since the devaluation was about 80%. (It should be noted that these figures were considerably lower than those foretold by most orthodox economists at the time.) The quality of life of the average Argentinian was lowered proportionally; many businesses closed or went bankrupt, many imported products became virtually inaccessible, and salaries were left as they were before the crisis.

(emphasis mine)

A bank holiday (closure) followed by a severe devaluation of the dollar. This is due to the enormous and unsustainable debt of the US government. Our bailing out of the banks was the nail in the coffin, now it's just a matter of time. Expect to see a new round of stimulus and bank bailouts in the near future.

I urge everyone on this board to put no less then 15% of your savings into Precious Metals in addition to stocking up on long lasting foods you enjoy eating. Make sure it is stuff you like so you can rotate out the old stock. I recommend a couple of months supply of food and either water jugs or water filters.

Again this isn't Doomsday, but it could see you go from middle class to poor overnight if you have no way of protecting your savings. I also highly recommend getting out of any adjustable rate debt whether credit cards or mortgages.

This isn't a joke, I'm quite serious and the prudent squirrel types on this forum know exactly what I'm talking about. If you don't understand what I'm saying I recommend Aesop's Fable about the grasshopper and the ants.

Good luck and god bless. We will see through the coming storm and be a better country for it. Luck favors the prepared!

Edit: definitely store your metals at home in a safe or concealed safe like you see here: http://www.google.com/products?q=in+...ed=0CDAQrQQwAg

The banks will drill your safety deposit boxes, and give you cash for the value at the time of the seizure (before the devaluation). Many in California and England lost their safety deposit box contents due to raids by the banks and the state for supposedly being non-active. Look up ABC News story about California and Safety Deposit boxes.

One last thing. Banks are paying virtually nothing in interest to save with them. Look at the Price of Gold since 2001.

http://www.kitco.com/scripts/hist_ch...rly_graphs.plx


Your savings from 2001 have gotten maybe 10% per year. Gold has gone up almost 500% in the same time period.

[weliveintheforest]

I would keep some cash for emergency money, but if I could invest in silver as well I absolutely would.

[Denvergirlie]

I like to prepare for as many scenerios as possible.

We have silver, gold, cash, and food as our emergency fund.

All in silver? Not me personally. As others have mentioned, it can be difficult to transfer and access when you need cash fast. And today's current realities is that cash is king per se.

However, there comes a day when federal reserve notes will crash. Might not totally be destroyed, but it will devalue. This has happened the world over since the advent of fiat money, the US will not escape it. It might not happen in the next few years, but it will happen sometime.

I personally believe I need to prepare for all scenerios that I can. Thus we have a mix of precious metals, federal reserve notes, stockpile of food and a berkey water filter.

[Dad@home]

Originally Posted by Denvergirlie

I like to prepare for as many scenerios as possible.

We have silver, gold, cash, and food as our emergency fund.

All in silver? Not me personally. As others have mentioned, it can be difficult to transfer and access when you need cash fast. And today's current realities is that cash is king per se.

However, there comes a day when federal reserve notes will crash. Might not totally be destroyed, but it will devalue. This has happened the world over since the advent of fiat money, the US will not escape it. It might not happen in the next few years, but it will happen sometime.

I personally believe I need to prepare for all scenerios that I can. Thus we have a mix of precious metals, federal reserve notes, stockpile of food and a berkey water filter.

Those are the kind of preparations I'm talking about. A wise mix of dollars, food, medicine, water filters and precious metals. Gold to preserve your wealth. Silver as a medium of exchange and also a potential investment that will increase your relative wealth. This will be especially true once a recovery takes hold as silver has numerous industrial uses for which no substitute is known. If you are rich go mostly gold. Conversely if you have less money a great amount of silver makes sense for a variety of reasons.

Also since this is a Mothers forum, you can store some wealth in jewelry as well. It needn't all be in boring coin form. Coin form is the most liquid however. Others suggested bartering goods such as coffee. That isn't a bad idea either. Again buy extras of things you already use that have long term storage capability.

[MissinNYC]

Originally Posted by MyTwoAs

I'm not an expert but I wouldn't keep any emergency money in gold or silver. If the economy collapses, I'm not going to want to give away a good or service I have for silver - I'm going to want to barter for goods or services I need. Silver's value is based on the dollar and if the dollar collapses then silver has no intrinsic value. However, fresh water, gasoline, food, etc become highly valuable.

Just my $0.02.

But then what do you propose putting emergency cash into? I mean, if the economy collapses, silver or gold are definitely worth more than cash, and if there is rampant inflation, gold retains value very well. I agree that water, food, gas, are good for trading, but no one is going to put 5000 or more (an emergency fund) into food or water or gas, right? It's got to go somewhere, and even keeping money in the bank is a risk.

[Ianthe]

Originally Posted by Dad@home

The banks will drill your safety deposit boxes, and give you cash for the value at the time of the seizure (before the devaluation). Many in California and England lost their safety deposit box contents due to raids by the banks and the state for supposedly being non-active. Look up ABC News story about California and Safety Deposit boxes.

I just looked this up : OMG

[MissinNYC]

My concern is not a doomsday type scenario where food and water become scarce and bartering is necessary. I think that's sort of silly. But I think that inflation is a very real risk, and keeping some cash in metals might be a good option. Gold is not going to give you a great return- if you look at the prices from the 70s or 80s until now, there's not a great return. But it's a good hedge against inflation.

[JTA Mom]

Originally Posted by Dad@home

Also since this is a Mothers forum, you can store some wealth in jewelry as well. It needn't all be in boring coin form. Coin form is the most liquid however. Others suggested bartering goods such as coffee. That isn't a bad idea either. Again buy extras of things you already use that have long term storage capability.

Actually, coin is the least liquid form of gold. Using Argentina as an example, the banks valued the peso a lot higher in regards to gold than was the real market value. As such, you'd lose money exchanging a gold coin with a bank. However, the gold dealers (the ones in pawn shops and such) work a lot with 'junk' gold aka jewelry and the trade value there is closer to market rate. They won't give you the real value of your coin, not having really dealt with it before, so you'd lose money there.

However, most people can judge the value of a gold chain or ring quite easily, so it's much more liquid in that sense.

Ami

[Dad@home]

Originally Posted by MissinNYC

My concern is not a doomsday type scenario where food and water become scarce and bartering is necessary. I think that's sort of silly. But I think that inflation is a very real risk, and keeping some cash in metals might be a good option. Gold is not going to give you a great return- if you look at the prices from the 70s or 80s until now, there's not a great return. But it's a good hedge against inflation.

I'm going to have to strongly disagree with you here.

Gold was $35 an ounce in 1970 and is currently trading at $1200 range right now about $1190/

Dow is at about 10,000 in 1972 it was 1,000.

Gold has risen 34 fold while the DOW has risen 10fold.

Whats more your gold in hand will not disappear in a puff of smoke from some Wall Street wizardry. No, the beauty of Gold is you have zero what they call counterparty risk. That means no one else can somehow take your wealth other then by force, with which any wealth could be taken. Gold will never default on you, it's held up for 5,000 years. Fiat currencies ALL die all of them. And when they do Gold and Silver retain value until a new currency ( for example it might be a newly restored dollar, perhaps backed partially in gold) replaces the old.

It's the value of the dollar that fluctuates not gold. When you understand that you will understand how money really works. Federal Reserve Notes are simply a promise to pay a debt at a future date It is a fiat currency with nothing backing it, but the "full faith and credit of the USA". It's actually worse then that for us citizens due to interest owed to the FED, but I won't get into that here. We once had a gold standard for our currency, then the Nixon Shock happened. Our money has steadily devalued against gold ever since.

[marimara]

subbing. I'm very much interested in this right now. We are 100% debt free and on the brink of a major investment and I'm suffering from analysis paralysis.

[~Boudicca~]

Dad@home, thanks for your input. I agree with you on pretty much everything you're saying.

[amyamanda]

Originally Posted by ~Boudicca~

Dad@home, thanks for your input. I agree with you on pretty much everything you're saying.

I agree also.

As for Emergency Funds, I think it's important to consider what you are planning to use that fund for.

I would (and do) keep half my EF in cash in a safe (varied size bills), primarily in case of an extended bank holiday or temporary (days/weeks) credit system shutdown, which is a distinct possibility in our economy.

I keep the other half in my bank account as "overflow" in case my checking gets accidentally overdrawn and also so I can have easy check/debit access in an emergency. This only works if you can be disciplined not to use it.

I also recommend putting savings into PMs of both kinds. I wouldn't consider this an EF in the traditional sense, but more of a long-term "prudency fund." As others have mentioned, silver can be used as a good substitute currency if/when the dollar fails, and gold is an effective long-term store of wealth with a very high return over time.

And I recommend maintaining a deep pantry and a source of water (stored or a filter system, as Dad@home said). Also thinking about what your family will need in the coming months and years and trying to provision in advance (at today's prices). I think of my pantry and provisions as a non-dollar-based emergency "fund."

For anyone who is new to these concepts, I highly recommend Chris Martenson's blog and website.

I have a question for anyone who has bought silver. What is a reliable and effective way to buy a relatively small amount of "small change silver" - not 1 oz coins or half dollars, but dimes/nickels/quarters? Where can you get it, what are the general minimums, how to get a good deal, how not to get scammed?