Buy Gold Coins to Ride Out Disaster? Advice to a Daughter

One of my kids asked me how to buy gold coins in case the economy collapses, and how *many* to buy for that purpose.

My response:

You get them from Coin Shops, which you can find in the yellow pages under, I think, Coin Dealers. You would buy American gold coins (American money), once ounce each coin, price is the market price for one ounce of gold plus a small markup (so if the price is $895 you might have to pay $925, for example). You are NOT buying "numismatic" or collectible coins – you are buying so-called Bullion coins.

How many would you need to ride out the collapse of the economy? There's no good answer to that – as many as you could afford. Even one or two might help. To survive a period of insane inflation, you'd need as much in gold as you'd need in present-day dollars to survive – in other words, if you needed $9,000 to survive for six months of collapse, you'd buy $9,000 in coins (10 coins) – the dollar would go nuts and inflate 10,000 percent, but your gold coins would still buy what $9,000 would buy today – but in this disastrous future, your $9,000 in gold coins would be worth $90,000 in dollar bills --and would still buy what $9,000 buys today.

I think the chances of this kind of disaster are vanishingly small. Even inflation, which might very well start going up soon with all this money flooding the system, won't go to Weimar Republic levels because the Fed knows how to keep the lid on runaway inflation – now they know, anyway.

So if you could manage to squeeze out enough to buy ONE ounce of gold now; then each year or so buy another one, maybe as a birthday present to yourself – you should be fine.

More immediately relevant would be to have a fistful of CASH (dollars) on hand in case of natural disaster – in Houston during the hurricane last month, power went out and people couldn't get cash out of their ATMs and the banks were closed and the credit-card machines in all the stores didn't work. So I have a thousand or so in ones, fives, tens, and twenties in a box here, for spending money for a week or two or three if and when the Big One comes. I think tucking away some twenties now and then is your best nearterm protection...... 

(Just don't hide the box in the places where burglars know people always hide their cash.)

dad

JK Rowling: The Fringe Benefits of Failure [aka: "I had an old typewriter"!]

This is excerpted from the wonderful speech JK Rowling, author of the Harry Potter series, gave as her commencement address at the Annual Meeting of the Harvard Alumni Assocatiion on June 5, 2008. The full text can be found here.

Rowling talks about how she had hit rock bottom--divorced, with a child, jobless, and in poverty--when she took up the work that would become the first Harry Potter book. This quote gives a good sense of her:

"What I feared most for myself at your age was not poverty, but failure....

"So why do I talk abut the benefits of failure? Simply because failure meant a stripping away of the inessential. I stopped pretending to myself that I was anything other than what I was, and began to direct all my energey into finishing the only work that mattered to me. Had I really succeeded at anything else, I might never have found the determination to succeed in the one arena I believed I truly belonged. I was set free, because my greatest fear had already been realised, and I was still alive, and I still had a daughter whom I adored, and I had an old typewriter and a big idea. And so rock bottom became the solid foundation on which I rebuilt my life..."