Gold's Power When It All Goes Down

Prepper Paradise: Gold's Power When It All Goes Down

Via SchiffGold.com,

Society’s linear march forward is used to justify numerous seemingly innocuous lifestyle choices. The assumption that the way things have been is the way they will continue to be is the unquestionable tenet at the root of a carefree ideology that can lead to horrid unintended consequences when it all goes down.

People in developed western countries, particularly in the past 80 years, have experienced a level of stability and growth that has rarely been seen. This extremely small sample size of history has led many to bank on the success of their country as a grounding point for all other predictions of the future.

A small dive into the past could show that most nations fail or have changes of ownership fairly often. Nothing in this world is certain, but governments are particularly frail. 

While governments in general should not be given our blind faith, we should be particularly wary of governments that seem to fit into historical patterns of pre-failure. The classic arc of strength to moral laxity and decadence to destruction is one to be particularly wary of, because of how many times it has occurred.

Americans and western Europeans with eyes to see could have very easily noticed how many boxes we check off when it comes to this particular type of societal degradation.

We seem to mirror the fall of Rome in particular with great accuracy. 

The general carefree spirit of the enlightened “world citizen” causes little reflection when choosing investments.

The only question that is asked is, “in the circumstances of the recent past, which investments and type of investments have gained the most value?“ 

Stocks typically do quite well when individuals ask such a question. The gains of all stocks lose some luster when they are multiplied by the probability of societal collapse. The punishment for seeking the highest return possible will be meted out on the judgment day when returns become meaningless in comparison to food and water. 

If society were to fall apart, most lucrative investments would be quick to disappear. Our society’s progression of wealth is primarily based on the fact that we have an incredible degree of specialization. The amount of communication and shipping needed to sustain this is not durable to the problems presented by any sort of collapse. The systems of commerce that we currently know are finely tuned and designed around governmental regulations. Even significant changes in regulations have proven problematic for many industries. Imagine how much more powerfully they would be impacted if they had neither the protection of the government, nor the ability to curry favor and limit competition. Some industries would be completely destroyed, such as subsidy-driven soy farming (not to mention that the demand for their crop is nearly fully based on the processing possible through intense specialization). The benefits of rapid gains in the stock market should be tempered with the knowledge that it is fundamentally a gamble on the success of our current institutions. 

When the world rearranges based upon some huge shock to government or industry, few parts of our society will be recognizable.  Churches and social clubs seem to be the most durable historically, because their existence is not predicated on any one type of government or industry. There’s no guarantee that any specific state will still treat a neighboring state as an ally. Shipping from farms in the central valley to the southwest could be restricted and millions would be forced to migrate or die. Depending on how much of state government remained intact, some necessary treaties could be made. City and town governments would have to step up into the sort of role the founders intended them to play. The only thing that is certain is that commerce would be much more local and specialization would be limited. More durable industry like small sustainable farms or local arts and crafts could arise in cities where property rights were enforced. All hell could break loose in cities that failed to fulfill their role as the safeguards of civilization. 

In any of these scenarios, gold would provide a durable store of value. People who question its value in time of crisis have clearly never been to an unstable country. Gold is valued particularly highly when all other investments have hit the floor.

It does have use value in a way most investments don’t, yet it also is so universally accepted that it could allow for migration to other more stable countries if need be.

While some other investments may have flashy short term gains, gold can help protect against the overnight devaluation nightmares of so many assets when the world as we know it rearranges.