Sunday, April 17, 2011

Invest in Gold and Silver - Yes and No

Gold and silver maintain there value during times of localized crisis; by which I mean up to nation wide disaster. Yes it is also a solid hedge against inflation and it is also easy to carry away if you want to flee and start a new life in a safer better place.

In the case of epic failure of society in a larger scale (insert TEOTWAWKI here) in the sort term it will likely have almost no value. You can not eat your money. Your money will not protect you against the golden hoard. G&S has had value through out history and the value will have value again as soon as there is any surplus of anything to be traded or stored.

So what would it be worth? I suggest that it will be worth a lot less then it is now. The practical technology of 1850s-1870s could rapidly be reestablished. You can see that an ounce of gold would buy 190lbs of rice in 1872 where as today it would purchase more than a ton of rice even at retail prices.

What Did Things Cost in 1872?

In 1872, the U.S. population had grown to over 38 million people, and Ulysses S. Grant had just been re-elected for a second term as President. Luther Burbank developed the Idaho potato from a single seed ball, much of Boston burned during a three-day fire, and an American cargo ship called the Mary Celeste was found drifting in the Atlantic Ocean with no crew aboard. On average, horses cost $60, pigs $5, milking cows just over $20, and goats only $2. A farm worker earned $23 per month, a place to sleep, and meals.

More 1872 prices:

Wheat flour — $12.75/barrel
Corn meal — 1 cent/pound
Rice — 11 cents/pound
Beans — 9 cents/quart
Roasted coffee — 42 cents/pound
Brown sugar — 10 cents/pound
Granulated sugar — 10 cents/pound
Molasses — 70 cents/gallon
Soap — 8 cents/pound
Starch — 12 cents/pound
Roasting beef — 19 cents/pound
Soup beef — 7 cents/pound
Beef rump steak — 29 cents/pound
Corned beef — 10 cents/pound
Mutton chops — 15 cents/pound
Pork (fresh) — 12 cents/pound
Pork (salted) — 11 cents/pound
Smoked hams — 13 cents/pound
Sausage — 12 cents/pound
Lard — 13 cents/pound
Butter — 39 cents/pound
Cheese — 17 cents/pound
Potatoes — $1.02/bushel
Milk — 8 cents/quart
Eggs — 30 cents/dozen
Hard wood — $10.19/cord
Pine wood — $7.00/cord
Room and board for men — $5.69/month
Room and board for women — $3.75/month


As quick math the USD was roughly $20.67 to the ounce.

The pound was slightly less then 1/4 ounce of gold. (sovereign) worth roughly $4.70 USD

There were 12 shillings to a sovereign or roughly 0.391 USD
66 in a troy pound of silver bullion. So 4.125 per ounce or 1.61 an ounce.

Ha ha so your face value silver coins you have bought will likely be worth face value ha ha ha.

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