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Letter Re: Advice on Gold and Silver Coins as a US Dollar Inflation Hedge

Jim,
You recommended that I use Swiss America for some gold purchases, which I did. What would you recommend for bartering purposes exactly, as far as gold and precious metals are concerned? I'm confused by all the "collectors" coins and such which are more expensive. Do you have any specific types of coins that you think would be ideal for trading? I purchased some collector 1 ounce coins for their easy-liquidation (and no tax paper trail on gains) as a hedge against inflation, but I'm looking to get some good barter gold for long-term post-SHTF security (especially now that gold is correcting a little)! Thanks, - Rob A.

JWR Replies: First, I must re-iterate: Get your food storage, water filtration, non-hybrid gardening seed, defensive firearms, and other key logistics squared away before you consider investing any extra funds in precious metals.

As I've written before in both my novel ("Patriots") and in this blog, I consider gold coins too compact a store of wealth to be practical for barter in a post-collapse economy. Circulated pre-1965 mint date US dimes and quarters are both more widely recognized and a more realistic unit of value for day-to-day barter. The current silver-to-gold value ratio is around 54 to 1 (It presently takes 54 ounces of silver to buy one ounce of gold). So there are very few barter transactions for which even 1/10th-ounce gold coins would be appropriate. So I recommend that you budget first for one full $1,000 face value bag of pre-'65 "junk" silver coins for each family member. After you have that in hand, then you might consider buying some 1/2 ounce or 1 ounce gold coins as a long term inflation hedge.

While your silver coins will be useful for barter, the gold coins would be your long term store of wealth, designed to parlay back into tangibles (or perhaps a new specie-backed redeemable currency) on the far side of an economic crisis. As I've written before, I think that the risk of another Federal gold confiscation--like that in the 1930s--is low, so there is no need to buy numismatic coins. Instead, buy low dealer premium Krugerrands, American Eagles, or Canadian Maples Leafs.

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