Good morning Fernando -
I have read your book and many of your blogs. I still have a couple of questions. Most of the "prepper" investment advice is directed towards people with tens of thousands of dollars, so I would appreciate more everyday Joe advice. I also have a couple of questions as to how investments/precious metals can actually be used or how they an be used to obtain money after a collapse.
I am in the US and my husband is in the US military. We only have about $5,000.00 in savings and about $15,000 tied up in an IRA as we are always moving for orders and, face it, the military doesn't make much money.
1) Since we are government paid through direct deposit, do you have any ideas on what we should expect when SHTF as to disruption/stop of pay? I can play it both ways in my head - government is bankrupt so no pay or government needs military to maintain itself, so it does pay the military. What happened in Argentina as to the military pay?
2) If money withdrawal becomes restricted, then how is it beneficial to invest in precious metals (aside from physically buying them)?
3) Along that line, if you have an offshore account how does that allow you to physically get your hands on that money? What I mean is if you can't get any money what does it matter if you "have" money in an investment account. Also, if a stronger currency (i.e. the USD in Argentina vs. the peso) is what I have in that offshore account, but it is made illegal - then how does that help me?
4) If you buy precious metals to have in your possession then how do you use them (i.e. say I have an ounce of gold and need groceries)?
5) With such little savings (yes, we are putting as much away as we can), is it more important to start keeping it out of the banks and on hand or work towards investments such as metals or offshore accounts?
I apologize in advance if these questions are ridiculously basic, but it I tend to over-think things and cannot find these answers. I have asked others who have bought precious metals and their answers on how they will "use" them are, at best, illogical and, at worst, stupid.
Thank you, again, for your book and ongoing blog.
Hi Susan, thanks for your email.
1) If SHTF as in serious economic problems (default, stock market crash, bankruptcy of larger corporations) and bank holydays are declared you are pretty much left with what you have at home, so everything we talk about here all the time applies: Food, water, emergency gear, weapon, lights, alternative forms of heating and cooking, etc, including emergency cash and some precious metals.
In general countries will keep paying their police and military because they need them to sustain order during troubled times. That doesn’t mean you’re completely safe. What will happen most likely is that wages for police and military will not go along with inflation. As life gets more expensive, the salaries of most LE and military personnel will hardly keep up, decreasing you purchasing power and standard of living. That’s what happened in Argentina and what has happened in other countries that have gone through similar crisis.
2) I always recommend physical precious metals at hand, kept home in a safe or very well hidden. Read the chapter of my book called“The Importance of Precious Metals”, page 185. If ATMs run dry and it becomes hard to find cash, your PM (precious metal) will become a valuable commodity.
3) With a foreign account and a card attached to it you can in some cases use that money even if the local banking system is severely restricted. Today as I write this, there are many countries that have rules for their local banks that don’t apply to foreign ones. In these countries locals have many restrictions while foreigners are spared form these rules, mostly so as to not scare away tourists and investors. Even if you are local, your account is foreign, so it may be unaffected in terms of how much you can spend or how much money you’re allowed to get out of the ATMS. For example, in Argentina you can get more money out of ATM than the local legal limit if using ATMs at the branch of your foreign bank account. In a worst case scenario, if you have to leave the country entirely your money is already abroad and you don’t have to leave without it or leave with the cash which may be seized by the police when going through customs. During normal times none of this would be a problem, you can just transfer money from one country to another. Try transferring money into or out of Argentina and then tell me how that worked out for you. In troubled countries and during troubled times all these problems come up, problems that don’t exist in normal places.
4) Since you already have my book, read the chapter called “Using Gold, Silver and Foreign Currency after the Crisis” page 215. There you’ll find a much more complete answer than anything I could write here at this moment. Basically you don’t use a 1oz gold coin to guy groceries, you sell it to a broker first. Besides that, you may want to keep a small amount of “junk” gold and sivler as PM of smaller denomination. Already in USA there’s an understanding of junk silver and pre 65 coins.
5) With the kind of savings you have, I’d keep about two thousand at home and, once your other priorities are covered, start working in building up a precious metal stash little by little. Silver Eagles are nice because you can get one every month or two and before you know it you have a bunch of them, but remember that silver gets heavy fast (too much volume and not as compact as gold) and this could be problematic if you ever had to evacuate, maybe even hide your PM on your clothes. Its much easier to hide a gold coin in your jacket than 40 silver coins.
I would open an offshore account too, and leave a small amount of money there. The important thing is to have the account in the first pace. That way if you ever see things getting worse, or rumors of a bank run spreading, you’ll already be ahead of the game and can transfer you money away while most people don’t even have a foreign account to begin with. Its not hard or expensive to open one( but it does require time), its just than most people don’t care or bother with it. Timing is of course crucial, a day too late and your savings may get stuck in the country’s collapsing economy.