[NMPRN]

I didn't want to sidetrack PrepandLive's thread on 'prepping necessities' when the subject of precious metals came up so I'll put my rant here on a separate thread.

NOTE: This isn't a debate on the value of PM's after the SHTF, that poor dead horse has been beaten enough. It's just a rant on how PM's are being used now to hedge against stupid decisions being made by the FED and stupid ideas coming out of the WEF.

Beyond the regular "beans and bullets" kind of prepper there's a growing number of 'financial' preppers trying to create a "shadow market", ...people who are trying to move all of their financial transactions completely away from fiat currency and any sort of digital or electronic currency and create a completely independent financial system. The hope is: when the current financial system collapses or gets absorbed into some form of global monetary system, there will already be an established system in place, outside the current system, that will still be functioning.

This shadow market isn't any sort of secret club or anything, it's just people who prefer to buy and sell using PM's for part or all of the transaction. There are some big players in the effort but most are small fry like me who only spend $20'ish a month worth of PM's. ...maybe $100 worth at a gun show

More people than you realize are willing to take PM's instead of cash. Next time your in a mom and pop store and the clerk tells you the tab is $10, ask them if they take gold or silver. If they laugh or say no, laugh and pay in cash. Once in a while they'll say yes. If they ask you what your talking about, pull out some junk silver or some Goldbacks and talk to them. The worst that can happen is you let them know there are options to the fiat dollar. Maybe they'll google "junk silver" or "Goldbacks" and start taking PM's next time.

One big hurdle with this system is "stackers" like me. We want to accumulate PM's in case the SHTF so we're not willing spend any of it in a day to day transaction. If we're not making transactions the "market" doesn't grow and if the "market" doesn't grow big enough to meet our current needs we'll have to keep relying on the clowns at the Federal Reserve and the World Economic Forum to decide what's best for us and our money.

Gold is tough to use for small day to day transactions. Junk silver is a lot easier to use and the most common but Goldbacks are getting very common also (at least in my area).

I always keep a few GB's in my wallet and some silver halfs and dimes in my pocket. Unless I'm at a big box store, I usually offer to pay in PM (unless the person behind the counter looks like a complete doob). I'm surprised by how many people say yes.

...not every possible SHTF scenario has to end with everyone living in a wasteland trying to buy stempacks with NukaCola bottle caps.

 

[Back Pack Hack]

I've never asked anyone if they'll accept PMs, but when asked what methods I prefer to get paid for when doing work (I'[m self-employed), I respond with "Cash, check, card, gold or silver". Never had anyone take me up on the PMs, but I'm willing to accept it... even adding a modest premium.

 

[stowlin]

When I do face to face sales or purchases here in the states or in Ireland I can’t once say I’ve been asked to do so with PMs nor have I offered. Add to this that many of these kinds of purchases and sales are prepper items you’d think it might happen, but it does not.

 

[Jurgis]

I have many neighbors from Argentina, Venezuela and other half- or full shithole countries in South America who are now happy to live in semi-socialist Spain, where life for them is so much better. Their currency halves in value every month or couple of months. So I talked to some of them, about metals, as they have already experience with a system what we will see in the near future.
And guess what, the metals are known to have value, but they are not in use neither for paying nor saving. When they wanna buy or sell a house, they use US$, nobody would want metals.
The same attitude I see from 99% of normal people in Europe.
So my guess is that if there is very little chance in the western world for acceptance of metals as payment. The affinity for gold has been successfully washed out of their brains. After a crash of currencies, people will quickly believe in a new currency or crypto scam rather than in metals.
Completely different is the situation in Asia, where in many countries, every little 5 000 souls town has at least one gold shop.

 

[NMPRN]

...many of these kinds of purchases and sales are prepper items you’d think it might happen, but it does not.

I've been buying "prepper stuff" for 40 years, I didn't know people were doing it until a few months ago. I didn't know it was a more than just a few guys on the "fringe of taxation" until a few days ago. Like I said in post #1, it's not really the "beans and bullets" kind of preppers who are doing it.

I have many neighbors from Argentina, Venezuela....
...the metals are known to have value, but they are not in use neither for paying nor saving.

Maybe you need to talk to the Venezuelans who are still in Venezuela

Venezuelans Break Off Flakes of Gold to Pay for Meals, Haircuts

• Hyperinflation has stripped the local currency of its value
• Dollars, pesos, reais and euros are also common alternatives

-------------------

Gold is being used as currency in Venezuela

 

[Demitri.14]

Toilet paper is probably being used in Venezuela as currency.

 

[Kauboy]

I like the idea of a side market running parallel to the fiat currency market in case the fiat crashes. It just makes sense.
But I have two questions...

1. If PMs are always valued based on their market equivalent in fiat currency, how will they be valued if that fiat collapses? How will the new standard be determined? Use a sandwich for example. $5 fiat or $5 silver. But if the fiat goes bust, how much silver for the sandwich? Is it then arbitrary based on whoever has the sandwich?

2. If a shop owner takes PMs, how does he cover taxes and inventory resupply? He still has to rely on fiat at some point. If they're just selling the PMs they receive for fiat, they're not really operating in a side market of PMs. They're trading currency. If they sell to a trader who then turns around and sells for a profit, they're decreasing the original value of the PM comparatively speaking.

How can the side market become self-sufficient and sustainable? Standards are required that disassociate PMs from fiat. How is this being handled? I'm truly ignorant to this concept, and that results in natural skepticism. Educate me.

 

[Back Pack Hack]

I like the idea of a side market running parallel to the fiat currency market in case the fiat crashes. It just makes sense.
But I have two questions...

1. If PMs are always valued based on their market equivalent in fiat currency, how will they be valued if that fiat collapses? How will the new standard be determined? Use a sandwich for example. $5 fiat or $5 silver. But if the fiat goes bust, how much silver for the sandwich? Is it then arbitrary based on whoever has the sandwich?

The same way the price is set using fiat... the burger builder has to figure out how much the material, labor, overhead and profit is to price the burger.

2. If a shop owner takes PMs, how does he cover taxes and inventory resupply? He still has to rely on fiat at some point.

Of course. PMs aren't legal tender in most places, so to pay for things like utilities, taxes, payroll etc, they use fiat.

If they're just selling the PMs they receive for fiat, they're not really operating in a side market of PMs. They're trading currency. If they sell to a trader who then turns around and sells for a profit, they're decreasing the original value of the PM comparatively speaking.

You can only resell something with a mark-up only so much. If the going rate for a PM is $100 per unit, and you're buying it at $115 expecting sell it for $120, then you're making poor decisions.

How can the side market become self-sufficient and sustainable? Standards are required that disassociate PMs from fiat. How is this being handled? I'm truly ignorant to this concept, and that results in natural skepticism. Educate me.

There are places that will accept PMs, but they're few and far between. But once the dollar becomes toilet paper and cigar lighters, the market will become more acceptable for other forms of payment.

JMHO, though.

 

[Kauboy]

The same way the price is set using fiat... the burger builder has to figure out how much the material, labor, overhead and profit is to price the burger.

So starting out, it will be completely arbitrary until the market settles on a price.
Surely this would force a devaluing of PMs if there was no end exchange to a fiat. The people in Venezuela, for example, can trade PMs because someone can eventually exchange for fiat, and that exchange trickles the value down to the rest of the economy. But if no "final exchange" rate exists because all fiat is trash, PMs will no longer have a standard to weigh against.
This is the part that has always bothered me.
How would the burger builder even begin to know what his labor is worth in silver if he only had silver to reference?
Hopefully smarter men than I will have a means to resolve this. I'm just not seeing it.

 

[Back Pack Hack]

So starting out, it will be completely arbitrary until the market settles on a price.
Surely this would force a devaluing of PMs if there was no end exchange to a fiat. The people in Venezuela, for example, can trade PMs because someone can eventually exchange for fiat, and that exchange trickles the value down to the rest of the economy. But if no "final exchange" rate exists because all fiat is trash, PMs will no longer have a standard to weigh against.
This is the part that has always bothered me.
How would the burger builder even begin to know what his labor is worth in silver if he only had silver to reference?
Hopefully smarter men than I will have a means to resolve this. I'm just not seeing it.

Let's first establish the conditions in which we're referring to. Are we discussing a total collapse of the dollar, the current economy, or somewhere in between?

 

[Jurgis]

Maybe you need to talk to the Venezuelans who are still in Venezuela

Yeah, I actually prefer not to , no desire to go there. Apparently crime rate is very high now.
I have read similar articles. It appears that they use gold in some mining towns and you can pay in the shops there with gold dust.
But from the people I talked, it is neither used in Argentinia nor Venezuela, and both countries have big currency issues for decades.
Even from 1920 to 1923 in Germany, when people got paid every day a big pile of paper money. (in then end, a letter stamp would cost billions of Reichsmark) Even then, gold or silver was not used as "parallel" currency. Only the rich ones would keep theirs for big transactions. And everything was evaluated against the US$ and pound sterling.
So my guess is that once the $ f..x up, very little people will pay with gram or milligram amounts of metal but they will be presented or find another paper alternative to believe in.

 

[Kauboy]

Let's first establish the conditions in which we're referring to. Are we discussing a total collapse of the dollar, the current economy, or somewhere in between?

Yes, I can see how that distinction is important.
I suppose this side market concept would be an alternative to a national currency crisis, but may not be adequate for a global one. Is that fair?
In that case, there would be some endpoint trader with connections to the global market. The price of PMs would then be tied to some other currency that the local market may not even be aware of. It would just be whichever nation's fiat did survive (likely one backed by PMs, ironically enough).
That sound right?

For the alternative discussion, if we go scorched earth and assume all economies collapse, PMs likely become wildly varied in value from place to place/nation to nation, right?

 

[Back Pack Hack]

...I suppose this side market concept would be an alternative to a national currency crisis, but may not be adequate for a global one. Is that fair?...

I'm finding there is a growing movement, albeit small, of accepting PMs here in the US. My guess is those who are moving in that direction are seeing the handwriting on the wall... that the dollar is headed to failure. And I tend to agree... Uncle Sam has cranked out over $16trillion in the past 20 years just to pay for all their pet projects and bailouts. Every person in the US, regardless of age or employment status, is burdened with over $94,000 for their portion of the current national debt.

 

[NMPRN]

All the shadow market system is is building a parallel financial path for supply chains that doesn't rely solely on a fragile, failing financial system run by idiots.

It's like homesteading. Homesteaders are just building their own 'supply chains' that don't rely solely on a fragile, failing system. They still have to deal with sources beyond their control when they need to buy shoes and plumbing fixtures. ...you can bet they'd all love to find a shoe store that will take chicken eggs for a pair of shoes. Moving that transaction to PM's just replaces the chicken eggs with something everyone has historically agreed on.
...homesteaders want to get off the grid, ...shadow marketeers want to get off the fiat currency system ("marketeers", I crack myself up sometimes)

Of course, no shadow market could ever replace the, pre-collapse, U.S. fiat financial system. You still have to pay doctor bills and car insurance. But every 'dollar' you trade in a shadow market now is a dollar that's outside the complete control of a failing system. If those 'dollars' are fiat currency you face the exact same risk as you face in the regular market. But if those 'dollars' are disconnected (or can be disconnected) from the fiat currency, at least you have some sort of system to fall back on.

For the alternative discussion, if we go scorched earth and assume all economies collapse, PMs likely become wildly varied in value from place to place/nation to nation, right?

I think the value of PM's will be pretty consistent but the value of commodities will vary wildly from place to place. Corn in Iowa will be worth a fraction of what it's worth in NM. Stolen solar panels will be dirt cheap in NM but might be worth a whole lot in Denver.

If trucks are still moving, prices will be more constant nationwide than if we have to move corn and stolen solar panels on our backs.

 

[Back Pack Hack]

...you can bet they'd all love to find a shoe store that will take chicken eggs for a pair of shoes. Moving that transaction to PM's just replaces the chicken eggs with something everyone has historically agreed on. ...

This is the basis for money. Instead of trying to find one transaction that will net you a pair of shoes for the eggs you have, you are exchanging the eggs for money, then taking the value of the eggs in the placeholder of money to buy the shoes.

The person who sells you the shoes for the PM can now take the value of the shoes that is represented in the PM to obtain whatever they need.

 

[trike lady]

I was looking into the Goldbacks and only 4 states are offering them. Doubt the powers that be in New Mexico would offer them to the residents, if they did I get some. The place where I buy my PM offers them and I may buy some of the smaller denominations.

 

[NMPRN]

I was looking into the Goldbacks and only 4 states are offering them. Doubt the powers that be in New Mexico would offer them to the residents, if they did I get some. The place where I buy my PM offers them and I may buy some of the smaller denominations.

The lunatics in Santa Fe originally liked the idea of allowing PM's because of some "wild west" fantasy they were living in. But as soon as they saw it was the right wing folks who were supporting them they dropped it like a hot potato.

Whether or not a state "offers" Goldbacks doesn't matter, It's only their gold content that matters.
Those 4 states (soon to be 6) have passed laws saying that people in those states can, if they want, use gold and silver (in any form) as tender in their state and the state government is okay with it. The company that makes Goldback just offers a convenient way for people to do it. ...one states GB is valid in any other state that allows gold and silver because it's only the gold content that matters.

People who use PM's outside those states aren't concerned if the state government is okay with it or not. PM's are PM's, GB's are just an easy way to use gold for day to day transactions.

 

[trike lady]

I may get some and I see that 3 other states are going to have them: South Dakota, Alaska & Idaho. I found them at a website called defy the grid. I'll probably get one and fives as they are affordable.

 

[NMPRN]

I get mine from Defythegrid also, they always have the best price. (but the GB website lists 20 other places to get them).

I have a link to the GB calculator on my phone, comes in real handy sometimes.

 

[trike lady]

I normally buy from silver.com and they offer Goldbacks, they tend to be a bit higher on their products. I will probably send an order to defythegrid for my next silver order.