Sunday, December 18, 2011

Guest Post: Should We Keep 3-6 Months' Cash on Hand in Federal Reserve Notes, or Phyzz?

Submitted by SD reader F

I sympathize with SilverDoctors' reader T, who was forced to liquidate two-hundred ounces of his physical silver because of an accident that was no fault of his own and ties in with what I wanted to discuss.
Many of us know that stackers, survivalists, preppers, etc advocate keeping three to six months cash on hand in case of an emergency situation, a bank holiday or an economic collapse. At a glance this seems to be good advice and sound logic. After all, if something does come up we can liquidate the paper and not our metals. But upon further reflection I am faced with the stark realities of how debt-based paper money differs from physical silver and gold. Life is full of uncertainties and it seems that problems arrive in packs when they do come around.
At first I thought to myself, "maybe having $10,000 cash on hand should be sufficient?" And then I thought well that will not go very far, a break-up, a transmission, a relocation, a sick family member, possible job loss? Your $10,000 will not go far. Would $20,000 go far? How about $50,000 or $100,000? It really seems as though there is not much difference between having $10,000 and $100,000 cash on hand. Our lifestyles keep us in constant debt and namely our houses, our vehicles and our societies addiction to cheap electronic gimmicks that last for twelve or eighteen months at best.

Now just consider how far this paper money you saved would get you as the money supply enters the terminal phase of hyperinflation? John Williams predicts this could happen as soon as 2015. The paper money you thought would last you six months one day, now lasts you three months, one month the day after that and two weeks the day after that! Even in the early stages of hyperinflation your chances to get physical metal will already have vanished.

Having thought about this a fair bit for the past months I am convinced more than ever that stacking paper money is an exercise in futility. I keep a few hundred bucks in my wallet and don't keep more than that. Either I am convinced that silver is real money or I am not. Either I buy into the debt-based system or I don't. Either my car is my priority or else having peace of mind when I grow older is my priority.

Do not get sucked down the paper rabbit-hole and keep stacking!