Reworking my numbers on the value of gold and silver

I’m looking at historical value of gold and silver.  Historically 1/2-1 oz. of gold will pay for your living expenses for about a month. If you go with silver figure about 5-15 oz.  should cover most needs for a month. This is a low ball estimate of the average cost of just needs like food, energy, water and shelter. I’m thinking about is value and not the cost in FRN’s and what is the value of basic need items in relation to gold and silver. Now historically the silver to gold ratio was 10-15 oz. of silver was equal to 1 oz. of gold. But today that ratio is about 50:1 and I believe silver may become even more valuable than the traditional ratio but at this time silver is very cheap in relation to gold.

If we look at the value of certain bulk foods in relation to gold and silver you can see a huge disconnect between value and price.  For example: family of four to eat for 2 months would need to buy 50 pounds each of rice, beans and lets add 2 types  grains such as wheat and dent corn would cost about $150.00. Now lets add in about 80 pounds of meat at an average cost of $2.50 per pound for that family of four would add another $200.00. Okay now we add in 15 pounds each of veggies and fruit at about $1.00 per pound for about $30.00. Last but not least dairy items like eggs, cheese and yogurt say about $40.00 that’s enough for a dozen eggs and a gallon of milk per week  for $20.00 and you can get cheese or whatever with the other $20.00.  So far we have spent about $420.00 on just food for a family of 4 but we need to get a few other items like soap, toothpaste, toilet paper and those other items that you put on your shopping list so lets budget $500.00 for groceries for a family of four that will last two months. Or about $250.00 per month on average for a healthy diet and a little extra for sales and some treats.

Now if we imagined the store accepts gold and silver along with FRNs  and using a value of $1700. 00 per oz. of gold and $35.00 per oz. of silver. The food is actually much more valuable historically than either gold or silver based on what you need to live each month. Because the food cost in gold is under 2/10 of an Oz. of gold or about 14 oz. of silver at today’s prices. If silver was valued at the historic value of 15:1 with gold or about $110.00 per oz. the numbers change quite a lot and go back to 1/10 of an oz. per day of silver for 8-12 hours of work. Now historically everyone in the family worked as soon as they were capable so let’s figure a family of 4 could work and bring in a value of about 2.5 oz. of silver per day.

As many folks point out you can’t eat gold or silver and many seem to forget you can’t eat FRNs either.  Though FRNs tend to have a broader acceptance than silver or gold in trade. But if we go back to the historic cost of living as well as the intrinsic value of silver and gold, 50 pounds of rice, beans  and 100 pounds of grains is actually worth about 3 oz. of gold or about 15 oz. of silver at today’s ratio of price if not value and you can get that food you know you will use for under $250.00 each month.  Fiat money will always return to it’s intrinsic value which is nothing especially in the age of digital money!

Silver is a great bargain but long term food storage is an even better bargain. But look at why you are storing anything of value such as food, water or fuel:

  1. You will always need food to eat and there is no substitute for food although it has a limited shelf life. If you can store bulk items like grains, beans and rice properly they will be good for 10-25 years. You can grow more food or supplement you diet with what the land provides via game animals, wild foods, gardens or even some small  farm animals.
  2. Safe drinking water is a must have. If you have no safe water to drink you will be dead in 3 days on average and 1 day of dehydration can be life threatening.  I live in the high desert and even I was stunned by how much water you could collect on average via rain barrels just from the surface area of my roof. Even here in the desert you could collect over 3000 gallons a year via a roof of 1200 sq.ft. home.  That is a fairly small home in the desert based on average yearly rain fall.  Sure you will need to filter some of the water to make it safe to drink and cook with but as long as you have a way to collect the water people could get by without using a well!
  3. Energy/fuel: This is a big item for me because while I can buy ahead of need as well as get many different types of fuel. I really don’t have the space for any type of  self sustaining power plant. Solar energy is about the best overall option and even at that batteries wear out and panels get damaged by weather. I’m physically handicapped/disabled whatever,  but I can’t do as much work physically as I used to because of my disease. I could do nothing or I can figure out another option such as solar energy and work in a little gas generator, propane, charcoal and solar ovens to try and survive for a few months to a year.

This an approach to value that  I have been working on and it seems to for me.  Sometimes  I feel like I’m taking advantage because people give me the stuff I need for little pieces of paper conjured from thin air.

3 Responses to Reworking my numbers on the value of gold and silver

  1. Mike says:

    4/10 oz silver/day=4 laborers/day
    thanks for your perspective
    ps. to help with your disability

  2. The disconnect between silver and gold is due to manipulations within the commodities brokers. That word has been going round for a couple of years now and still nothing doing within the framework of the law to correct those at fault. IE one of the big boys has/had been selling silver certs for bullion they do not have.
    Anywhooos, I have a been a big fan of silver and have even held a job or two that paid in silver. Junk silver but it still has a value. No, you can’t eat it, but there is a likely a time where that will be an easement on barter systems. And junk silver has a face value that people recognize and can adjust to the ‘new normal’ better with.
    The other barter items will be, of course, seed stock or sustainables, Vice items like coffee and tobacco (both right and left handed types) alcohol (made from those grains and why farmers in the Appalachia did the still thing. Much easier to transport a few casks of corn licker than 100 bushels of corn over hill.) and the inevitable: Bullets. .22 will become the new ‘dime’ and people will be willing to deal when those start to run out. And the ubiquitous 22 is the universal tool around the farms, quite like a hammer. In the right hands, a .22 LR will even take down a whitetail. (the poachers near my dads use them exclusively, because the sound doesn’t travel near as far as a .223 or .308 or .30/30 )

    • Jamie says:

      dio: I am a big fan of silver too and have been buying a little junk silver every month. I think silver is undervalued in today’s market, but I think long term bulk food is even more undervaled compared to silver or gold. In America we have very cheap food compared to the rest of the world but as a country we have very little in reserve, as well as being idiots by burning it in our cars. I think this year we could see a huge increase in the price of food possibly of 50%-100% if we don’t have a superior harvest or if the drought continues in the Mid-west. It won’t matter how much “money” you have or loaded on the EBT cand, if the PTBs start rationing, price fixing or the store shelves are empty.

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