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Mind on Money: Gold, silver and the apocalypse

Mind on Money: Gold, silver and the apocalypse


Thinking back to the dark days being stuck in my “bunker” during the dreadful COVID quarantine, and still sympathizing with those in our communities experiencing on-going extreme anxiety over the possibility of contracting and spreading this virus, I can now brashly state that apocalypses are not fun.

Our schools are confused, major cities are descending into chaos and now no Big Ten football. When the idea of a pandemic was still in the realm of the theoretical, I could muse that I never wanted to experience one, now that I have experienced a pandemic, albeit a mild one, I can definitely say I never want to experience one again. So no, apocalypses are not fun.

But that doesn’t mean preparing for the apocalypse can’t be kind of fun.

Case in point, firearm sales. According to NPR the FBI processed a record 3.9 million background checks in June. This represented a whopping 135% increase over June of last year, and even more interestingly 40% of these purchasers were first time firearm buyers.

I can envision this process in my head. 2015, Husband, “Honey can I get a gun?”, Wife “No”. 2018, Husband “Honey can I get a gun?”, Wife “No”. 2020 comes along, Wife, “Honey maybe we should get a gun”, Husband “That’s a great idea”. I could offer commentary on the logic of purchasing a weapon for the first time without the time to become proficient, when ammunition is hard to find, but I don’t think logic has much to do with this conversation. But I can also offer insight on the process of going to the gun shop to buy a gun. It’s kind of fun.

Beyond the new firearm enthusiasts in our midst, I think most people are now reassured that during an apocalypse in America, we still get to eat pretty well. By this time in my house, we have mostly eaten our way through the panic-purchased food from early March. The teenagers have laid waste to the 25 frozen pizzas I had hoarded, gone are the pot pies and frozen gyros kits acquired to keep us alive, and it's highly likely I will smoke the final Armageddon pork (a huge slab of baby back ribs) this weekend. As proud survivors I can now say, apocalypse meals are kind of fun.

Which brings me to the furthest recesses of apocalypse prep and the subject I get the most questions about nowadays. At the true “end of the world as we know it,” everyone who has ever read a survivalist blog or watched William Devane commercials on cable news knows the U.S. dollar will become worthless, and in order to conduct vital transactions we will all need the “only true money,” silver and gold, for things like milk, eggs and auto repair services, or so the theory goes.

So, is it any surprise, like ammo and occasionally pork, the price of silver and gold have also gone through the stratosphere in 2020? Charts on show gold prices are flirting with $2,000 an ounce and are up 33% in 2020. Silver however, is the real headliner. After flat-lining for years, the price of the gray metal is up nearly 62% in 2020.

People hear about this performance and get understandably excited. They ask questions, and admittedly I am no expert on precious metals. So, I do research, I read everything I can online, I even watch William Devane commercials on YouTube.

The internet “experts” say it’s because of the money supply expansion due to COVID. They say it's about the weakness of the U.S. dollar. They say it's because the luster has come off cryptocurrencies.

Maybe it’s all correct, maybe it’s not. Of course precious metal investing involves greater fluctuation and potential for losses, but the real rub about precious metals is the only ones who profess to know the answers are selling the stuff, relentlessly wrong in their predictions and obviously biased.

My theory is simpler. Anyone who has ever held a silver or gold eagle in their hand knows these coins are heavy, shiny and pretty. In short, they are fun to hold. Sometimes preparing for the apocalypse can be fun. So like guns, frozen pizzas and pork, gold and silver have theoretical apocalyptic purpose, and are also flying off the shelves. Of all these items, only the metals are priced in a spot market in real time. While America is having fun preparing for the apocalypse, can we really expect their prices to not go up, until they don’t?

Opinions are solely the writer's and are for general information only and are not intended to provide specific advice or recommendations for any individual. Stock investing involves risk, including loss of principal. Marc Ruiz is a wealth advisor and partner with Oak Partners and registered representative of LPL Financial. Contact Marc at Securities offered through LPL Financial, member FINRA/SIPC.


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