If Society Collapses and Violent Mobs Rule The Streets, Could My Secret ‘Goldbug’ Plan Help You Survive?
Have you ever thought what you’d do if the financial system went into total meltdown?
I don’t mean how you’d go about placing trades to profit from it –
I’m talking about day-to-day survival here.
We’ve seen a few incidents in recent years that could probably give a taste of what you might expect to happen…
Remember the run on Northern Rock bank back in 2007?
People queued for hours to withdraw their life savings, genuinely concerned they wouldn’t see their money again.
People fought each other as tempers flared and sit-ins were staged inside the bank’s branches until funds were transferred beyond Northern Rock’s grip.
It gives you an idea of how quickly even word-of-mouth concerns can escalate into a serious financial problem.
And what about the London riots in 2011?
It began as a protest over a police shooting incident in Tottenham but soon developed into a thuggish campaign of looting and arson. Bad behavior spread virus-like to cities at the other end of the country!
Even the allure of cheap electronic gear is just too much for some people. They completely lose control of themselves if they feel someone has taken away a bargain they saw as theirs.
I remember shaking my head at the news footage of those Black Friday sales last year. Two ‘ladies’ were ripping clumps of each other’s hair out as they fought over… a discounted iron!
No, it seems it doesn’t take much for mob rule to descend.
So what do you think would happen if the government dropped a real financial bombshell on us… if they confiscated funds held on deposit with the banks, or if they closed the banks for a week and didn’t allow withdrawals, or if hyperinflation reduced the value of the pound to crumbs?
Sounds a bit unrealistic at the time of writing, I know. But it’s already happened in other countries. And if you believe what an element of the financial press are saying, behind the scenes, the UK is in an even bigger financial mess than they were.
So let’s see… take the run on Northern Rock, throw the London Riots on top, and add a sprinkling of Black Friday antisocial behavior.
Pour on a couple of gallons of petrol, throw in a few sticks of dynamite, apply a lit rag and stand back!
That situation would just explode like nothing before, I’m sure. We’re a scrappy, feisty, island nation at the best of times. So can you just imagine…?
Physical Gold – your friend in hard times?
But maybe I’ve been letting my imagination get the better of me a little bit this morning. It all started when I received an email about a company called Karatbars…
If you’ve not heard of them before they sell investment quality gold in very small quantities. You can buy individual grams of gold attached to a small plastic card.
“What a good idea”, I thought, “A perfect and practical way to carry gold in case of emergencies, just the thing for buying a flight to safety!”
Yes, I could scoop up the wife and kids and leave the smoldering wreck of the UK behind. My holdall of Karatbars will secure our passage. I’ll hand them out like sweets to anyone that needs a bit of ‘persuasion’ before offering their assistance.
But not so fast!
When I visited the Karatbars website it seems you need to register as an affiliate before you can even see any of their prices.
Delving a bit deeper I came across a video presentation for the ‘Karatbars 12 week plan’…
“By week 6 you will enjoy FREE Gold. This is with just 2 people under you that also have a Bronze package. By week 12 you are earning $4,500 weekly”
It seems Karatbars is some kind of multi-level-marketing scheme.
Now I’ve nothing against that in principle but it’s not my thing at all.
And like I said, I couldn’t get as far as seeing any purchase prices. But I can only imagine there’s a fair premium to pay above the spot-price of gold if all those on the scheme are to make their $4.5k per week!
And this now left me with an unscratched itch. I really did like the general idea of this product. Karatbars had sown the seed of an idea and I now needed to see my ‘Top-secret Financial Meltdown Escape Plan’ through to its completion.
So I hit Google and went looking for a better alternative.
Now, there really are genuine reasons for keeping a holding of Gold. You should probably treat it as a long-term investment, more of an insurance policy in fact, and prey you’ll never actually need to use it.
Despite day-to-day fluctuations in price (remember, we’re not looking at this as a trading exercise – it’s strictly long-term) you can use gold as a storage vessel for part of your overall wealth.
It could help protect you against the ravaging effect of a rapidly devaluing pound, and also mitigate against the risk of the government doing something fishy with your savings, your property, or your other assets.
You might even consider holding some gold offshore. Those in power have been known to come and make a grab for the yellow metal itself!
Franklin D Roosevelt outlawed the ownership of gold coins, bullion and gold certificate in 1930’s America. US citizens had to hand over their gold on pain of 10 years in the clink and a $10,000 dollar fine.
He did at least pay them $20.67 per ounce for their trouble. But do you know what he did next? He devalued the US dollar by reissuing gold at $35.00 per ounce.
He effective stole almost 50% of his own people’s savings overnight!
Yes, governments have been known to take desperate measures in desperate times.
So here’s where I’m up to with research for my secret plan…
1) Combibar: This looks like a more workable alternative to Karatbars, as far as my requirements go, anyway.
They issue credit-card sized 50g lumps of gold.
The sheet is pre-scored so you can easily break 1g squares off like bits of chocolate. Perfect for making emergency payments to officials, pilots, armed mercenaries and others who could help affect a rapid escape!
I checked today’s price – they’re charging a premium of 8.7% over spot gold. Not too bad, you’d expect to pay just a bit less for gold sovereigns.
NOTE TO SELF: Buy enough Combibars to fund emergency escape for family of 5.
2) Gold Coins: This is how I’d keep most of my in-hand gold. Choose wisely and you’ll pay a lower premium over spot price than with the Combibars (they’re just for real emergency payments).
South African Kruggerands currently attract around 2.0% over spot if you buy in quantity.
You might prefer Sovereigns (around 5% over spot) and Brittanias (around 4.5% over spot). They’re both legal tender in the UK so don’t attract capital gains tax when you do move them on.
Coins, of course, are a bit more practical to spend than Bullion. You can’t easily saw the end off your gold bar when you need to pay someone! Have a look at Bairds if you’re interested in coins.
3) Gold Bars: 12.5kg ‘London Good Delivery’ Bullion is how most central banks store their gold.
I’m sure you’ve seen pictures of the big bricks all stacked up on pallets in their vaults.
You’d pay the lowest premium of all for one of those but it’s probably a bit over-the-top for most of us. A stash of 1kg bars secreted away at strategic locations around the world, however… in secure private vaults, outside the banking system.
Now that could make a bit more sense!
So think about getting your gold ‘insurance policy’ in place first. And then if it does all kick-off, you’ll be well placed to follow Baron Rothschild’s sage investment advice from a safe distance:
“The time to buy is when there’s blood in the streets”
I do sincerely hope it doesn’t come to that, but it won’t do any harm to stay prepared!
Be Prepared: Market Moving Data Coming This Week (London Time):
Wednesday 8th October 2014:
19:00 USD FOMC Minutes
Thursday 9th October 2014:
12:00 GBP Interest Rate Decision
16:00 EUR Draghi Speaks
Friday 10th October 2014:
– no big reports
Monday 13th October 2014:
– no big reports
Tuesday 14th October 2014:
09:30 GBP CPI
10:00 EUR German ZEW Economic Sentiment
I hope you enjoyed our look at physical gold today.
I’m sure I saw a Christmas special on those Combibars… now where did I leave my list for Santa Claus…