The Role of Precious Metals

gold and silver rounds
Gold and Silver Rounds

It’s seldom mentioned, but in a highly inflationary environment gold and silver can be the debtor’s best friend (subject to a word of caution below). Consider the case of someone who buys four ounces of gold at today’s price of roughly $1300 per ounce and which, during a time of hyperinflation, increases in value to $130,000. That gold can then be converted to $130,000, which can make a lot of mortgage payments (or even completely pay off a mortgage). Meanwhile, as was the case during the Great Depression, neighbors who have lost their jobs are being evicted from their homes and left homeless and destitute.

Beyond the use of precious metals to erase debt, physical gold and silver make an excellent “worst case savings plan”. Because metals are normally not as easily converted back to cash as other assets there is a natural tendency to hang onto them “through thick and thin” (something I’ve learned from personal experience).

NOTE: Whenever I refer to metals I’m referring to owning the physical metals, and not paper certificates.

I did mention a word of caution above, and by that I mean the danger of government confiscation of precious metals (for which there is historical precedent in the US). This is probably a minimal risk because many of those who make the laws will almost certainly themselves have their own precious metal holdings. If confiscation did take place it would quite possibly, as it did previously, take the form of a government “buy-back program” that will allow those holding gold to retain some of their gains.

NOTE: Our book, “When There is No FEMA” – available for preview and to order at –  has an appendix that covers many more important aspects of acquiring and holding precious metals.

Photo Copyright: ghoststone / 123RF Stock Photo