I see a lot of debate among investors about having a gold and silver emergency fund.
Some swear by it while others claim that you shouldn't bother.
US dollars are fine for an “everyday” emergency, but let’s face it – it’s likely you are prepping in the first place because the dollar is failing.
How Real Emergency Funds Can Save You in a Crisis.
Let’s cut the hype and I’ll show you how real emergency funds can save you in a crisis.
1. Keep it Accessible.
An emergency fund won’t work if you can’t get to it. That means no banks or safety deposit boxes. In a financial crisis, your bank will be the first place to close.
And last I checked, you can’t get gold from an ATM. So store your gold and silver emergency fund at home or at another trusted, accessible location.
Your fund must also be portable. If you have to bug out, don’t try to carry 75 pounds of silver on your back. For one to four people, 100-200 ounces of silver and a few ounces of gold should do the trick. Scale up for larger families.
2. Keep it Valuable.
One question for your gold and silver emergency fund – how much? The total value (in today’s dollars) should be about $5000 to $10,000, depending on family size.
And you’ll need both gold and silver. Silver is the workhorse and will be used for everyday purchases, like food or fuel. Gold will be used as a store of wealth and portability (1 oz. gold = 5 lbs. silver).
3. Keep it Secure.
Don’t hide it under your mattress. A quality burglary-fire safe is the best protection. Don’t buy a cheapo model from Home Depot. And most gun safes aren’t up to the task, either. Good ones have a UL security rating.
For more information, check out this safe ratings guide. Even a heavy safe can be removed by a couple of strong thieves. So bolt your safe to the floor in a concealed location. Avoid the master bedroom – it’s the first place thieves look.
4. Keep it Expendable.
If you hold a large amount of gold or silver, you may become a target for thieves… or government confiscation. So keep your emergency fund limited to what you can afford to lose.
Remember, the crisis won’t last forever and it’s not worth being murdered because you wouldn’t give up $100,000 in gold sitting in your safe. Lower the stakes and stay alive.
5. Keep it a Secret.
The best protection from thieves starts by not letting them know what you have. Usually, it’s the wrong person overhearing an innocent conversation that tips a thief off.
So don’t talk about your emergency fund out in public or with anyone outside your most trusted circle of family and friends.
And when you do tell someone, maybe because you are trying to help them do the same, emphasizing the importance of secrecy.
6. Keep it Spendable.
A common mistake among preppers is to buy gold and silver at the lowest possible cost. Bullion bars may have a slightly lower premium than bullion coins, but you will pay the price later.
Bars often require an assay to verify purity and weight. Bars are also easy to counterfeit by silver or gold plating low-cost metals like tungsten.
So set up your emergency fund with 1-ounce bullion coins minted by large governments and purchased from a reputable dealer. Examples are the American Eagle, Canadian Maple Leaf, and Austrian Philharmonic.
These are recognized worldwide and are more difficult to counterfeit (though there are fakes made in China – check out Mike Maloney’s video on how to avoid fakes).
Another option is so-called “junk” silver. Most US coins minted prior to 1965 contain 35%, 40% or 90% silver (http://en.wikipedia.org/wiki/Junk_silver).
In an emergency, you want to keep things simple. So my first recommendation is to stick with 1-ounce bullion coins. But if you want some “junk” silver to supplement your fund, get a bag of 90% coins.
7. Keep it Easy When You Buy.
Do some research to find a reputable, competitive dealer. Don’t buy on price alone. Some dealers hound you with pushy sales calls and are just not worth the hassle. Others may be out of stock, putting your order on hold for weeks… or even months.
And worst case is they may have counterfeit coins. You can buy locally or online. Reputable online dealers (like Kitco.com) will ship in discreet packages that are fully insured with verified genuine coins.
If you are unsure about a local dealer, test them with a small order first, then ramp up if they do well.
Want to know more? Check out these related posts:
- Prepping for Financial Collapse
- How to Retire Comfortably After A Financial Crisis
- The Day All Cash Disappeared
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Editor’s Note: This post was originally published on June 20, 2014, and has been updated for quality and relevancy.
I have been saving silver coins. Fact is, I just can’t afford to buy gold coins! I’m retired and living on a very fixed income. I tried to buy gold coins a little at a time each month, but all the companies I checked with wanted more each monthly payment than I could afford! Gold is just too darned expensive.
Fred, thanks for your comment about the affordability of gold. For your emergency fund, silver is more important because it will be used for everyday purchases, like food or gasoline.
So don’t worry about the gold for now and just keep adding some silver like you are already doing!
“safety deposit boxes”? No such thing.
Ringo, you are right on with that. There is no safety in a safety deposit box!
So, where do I go to buy silver and gold coins without being “ripped off”? The US Mint?
Chris, great question!
First, remember that gold and silver dealers have to make a living and they do that through the “premium” that is added to the spot price.
Secondly, the “spot price” is the price of what I call “paper gold” and silver. It’s the price paid by futures traders (another name for gamblers) and is not the real market price for physical gold and silver.
The key is to compare the premium to find a competitive dealer. For gold it’s usually around 3-5%. Silver is in such high demand now that the premium is running around 10-20%. Be careful of “collector” coins that have premiums of 50% to 1000%!
Kitco.com is one of the largest and most reputable online physical gold and silver dealers and is a good place to compare prices (they do have a minimum order of $2500).
The US Mint is expensive (the government doesn’t have to be competitive). You should also avoid “cash for gold” type dealers.
Another great source is Mike Maloney’s GoldSilver.com. Their prices are slightly more than Kitco, but the minimum order is smaller ($500).
I have no affiliation with Kitco, but if you buy from Mike Maloney, I may get a small commission. It won’t change your cost, though.
I can’t afford an expensive safe, I got a Cannon. I don’t want to put all my golden eggs in one basket. I was thinking of having several small stashes around my property. I would keep a small amount in the safe as well, that way if someone breaks into it and steals that, they won’t look elsewhere for the real stash. In hidden parts of the house/shop, buried underground.