After the collapse.. what's next?

[DSAbug]

Ok.. You've survived... You have your gold and silver and the bull market is frothy. So frothy you know a bubble has not only formed, but is likely to burst.

What do you do with your gold and silver? What assets do you trade it in for? I'm assuming this is beyond 2015 so let's assume that all the necessary sovereign defaults have occurred.

 

[KMS]

Gold would be used to buy more land. My silver would be used to buy smaller tangibles, like new boots/shoes for the family. Maybe a few new head of livestock. Adding more ammunition and firearms to the arms room, etc.

I would never completely liquidate, even if a burst was imminent. Not sure if this is what you mean, but it is what I would use my gold and silver for. You say that the market is 'frothy' and 'bubble bursting soon' moment is in the scenario. In that scenario I'm guessing gold might be worth 20k and ounce then? Haha.. we can all dream, but really, with not knowing where you think the prices might be at in 2015 with collapsed sovereigns and a bubble in PM's... I'm just making the first stab at this.

 

[pmbug]

That depends a lot upon society and politics and just how much of a breakdown we see in the worldwide economy. What do you mean by "collapse"?

 

[DCFusor]

If you waited for full recovery and renewed froth, you already missed the good trades, I'd guess. But like PMBug says - the usual unsatisfying answer "it depends". How bad did it get, and what's going on at the time are the determinators.

Times right after disasters are when the truly wealthy planted the seeds to become that way, the prices are low and about to rise very fast as humans find ways to muddle through - we're better at that than say the guys over at ZeroHedge want to believe. You'd want to be in the thick of that, but again, it depends. Did we have a nuke war? That'd change things a lot. Major loss of population? Or just a slow, grinding depression. Would we be trying to recover existing tech, having lost it, and infrastructure, or did those more or less come through alright. Would there have been a major psychological/social change along the way, with the old ways being rejected in disgust by the survivors?

Any future plan looks like a computer programmer's tree - it will have a lot of branches, and probably more than one way to get to any one node (so it's a sloppy indeterminate tree from a programmers POV). A really good plan for going down and coming back up is thus not just one plan - it's a sheaf of them. The best way to make up such a plan is to identify every possible node set you can think of, and try to draw the lines - this won't fit on a single sheet if you do a good job, and what's at the root is "now". You may even want to go multi-dimensional with it, as it's going to be hard to map all the important things onto one set of nodes. And of course, you'll have to figure out what those important things ARE.

This is basic training for intelligence analysis, don't ask how I know, I'd have to kill you.

Remember that what lead going up is probably not going to be the leader in the next up - or down. That's why in addition to the PM's I do other readiness stuff, in short.
You can't tell - and it's intellectually lazy to entertain there's a simple set and forget answer to everything anyway - what exactly is going to happen and in what order, the systems of humans and resources are simply too complex to compute in full.

And it should be that way. Otherwise, the smart, ready, and hardworking honest wouldn't have a better chance than those that aren't.

 

[DSAbug]

Let me rephrase... For investment purposes, where is the next bull market going to be? Once you are done with the gold trade, where do you put your money then?

I don't think owning land is the way to go personally.. Mostly because I think governments are going to be taxing everything but especially property. We only had a real estate bubble 4 years ago.. Usually it takes 15-20 years before a bear market has run it's course..

 

[pmbug]

It would appear that your definition of collapse is much tamer than mine. If my worst vision of a collapse happens, there won't be any paper market trading happening. If my best case vision of a collapse happens, I'm not done storing excess wealth in PMs until a new monetary system has been stablished and the world economy has stabilized. In that case, I'm likely looking to invest in my own "engines of wealth" (companies / ventures). But I'm by nature an adventurous self-confident control freak, so I'm more comfortable betting on myself than others.

 

[DSAbug]

It would appear that your definition of collapse is much tamer than mine. If my worst vision of a collapse happens, there won't be any paper market trading happening. If my best case vision of a collapse happens, I'm not done storing excess wealth in PMs until a new monetary system has been stablished and the world economy has stabilized. In that case, I'm likely looking to invest in my own "engines of wealth" (companies / ventures). But I'm by nature an adventurous self-confident control freak, so I'm more comfortable betting on myself than others.

Engines of wealth...

Places you think you can invest your capital and expect to gain more capital for your efforts. Where do you plan on putting it?

Will you be buying the newly minted government bonds that yield 15%? Will you be investing in IBM or Apple? Farm land? What will be your business?

It's nice to know the "end game" but even, life isn't over. There is an end to the gold trade. I'm curious where people think they will put their money after we've reached that point.

Where will there be an opportunity?

 

[pmbug]

"engines of wealth" can mean many things - a business, royalties from a book, movie, patent, license, etc. as well as an investment like rental assets (property, equipment, etc.).

Equities, bonds and their derivative paper products (index funds, etc.) are not the only places to invest.

 

[DCFusor]

This just points up what I said about a sheaf of plans - and those plans will be different because the input will be. The same words about if "it's going down" brought forth two very different visions of what "it" is - and that from basically like-minded people!

Further, these guys have different takes on what input they have going forward - PMBug is more like me - a guy who sees investing primarily in his own talents, using money as a force-multiplier as the main good bet (and if it isn't, why not? Do something about that!). I like that because then it's not a roll of the dice - you get to control the odds at least somewhat.

If "it" is merely a steep downturn and quick recovery (such that there's still such a thing as an Apple - then the bets would be different, pointing up the idea of that sheaf of plans made ahead - no one plan could ever predict all that could happen, even all that would likely happen to any confidence level worth worrying about.


And anyone who says otherwise is either vain, an idiot, or a liar.

So no single answer is good, or even smart - we can't tell if there will even be those things that derek is asking about buying, or not. Only rule of thumb is, whatever was king in the last bull, is rarely that great in the next one. You'll just have to depend on your own or the group judgment - once we all know what it is we're judging, not before.

That comes back to investing in yourself. There's no set and forget way to do all this. You can't run a race once, and then declare "wins for life". You can only become the best all around athlete possible, and keep your eyes on the prize.

 

[DSAbug]

"engines of wealth" can mean many things - a business, royalties from a book, movie, patent, license, etc. as well as an investment like rental assets (property, equipment, etc.).

Equities, bonds and their derivative paper products (index funds, etc.) are not the only places to invest.

I realize.

At the point where gold is fully valued or over valued, there must be a better place to put your wealth to work. The question i'm asking is "where"? Something more specific than "a business". What KINDS of businesses should do well?

At some point we will come out of this mess and there will be light at the end of the tunnel. While it's a horrible time to be investing in those types of assets now, I think it does some good to discuss under what conditions we'd trade in our gold and what we plan to trade it in for.

Otherwise, it ends up being a broken clock type of situation.

 

[DSAbug]

And anyone who says otherwise is either vain, an idiot, or a liar.

I'm just Brain storming... Figured it would be a good discussion to have.

Obviously there are a lot of unknowns.

 

[pmbug]

Listen from ~11:00 on as Ned Naylor-Leyland is asked a similar question to the one posed in the OP:

http://commoditywatch.podbean.com/2011/11/15/ned-on-silver-and-gold/

Press the > button to listen.

...
What KINDS of businesses should do well?
...

Well now, that's the real trick, isn't it? People have enough trouble figuring that out when in the midst of an unprecendented credit boom. Way too many variables to answer with such an open ended scenario as posed in the OP.

I might argue that a specific answer isn't terribly important. Entrepreneurship is an attitude. The ones who embrace it look for opportunites and aren't married to a given prospect forever. Failure and perseverance is often a big part of the process.

 

[DoChenRollingBearing]

I too am trying to cover a variety of "After the collapse..." scenarios.

If we get a big, bad and fast one (serious nuclear war, bad EMP) than we are pretty much longer term toast (unless, perhaps, we get to Peru in time, where we do have assets and her family)... My wife does not want to become a farmer. We are not well located to do that anyway. We do not have nearly enough supplies of food nor the ability to produce it (in quantity, we live in a condo).

If we get something milder (Great Depression II), then we are in pretty good shape. I am partly gunned up. I have "adequate" gold & silver. No debts. A business in Peru paying down its debt to me.

Hyperinflation would be a problem, but the gold and silver would help us ride that out probably reasonably well. FOFOA believes that a hyperinflation scenario of one sort or another is likely.

If we get to a FOFOA-like price of gold of $55,000 (non-hyperinflated 2009 US$), at THAT point I would indeed look around at investments as mentioned by PMBug and DCFusor. In my case, I would buy our town's only two gas stations... Trust me, I know what having a monopoly is like!

---

I like DCFusor's notion of putting to paper a variety of ways this could play out.

And then, set a (rough) probability to each scenario! (Probability * effect on you) would help guide you in defending yourself against the downsides of the various possibilities.

In our case, I am OK with what appear to be the tamer "Collapses", which seem to have the highest probabilities. We are NOT OK with the really ugly and fast TEOTWAWKIs, and it is hard to see how we could be solidly prepared.

Even DCFusor himself, with his land, skill sets, solar panels, water supply, good neighbors, guns, somewhat mild climate, etc. has advised us that HE does not fell ready for every possibility!

 

[DCFusor]

Right. Just as an example - if we have a depression like crash, without population loss, it will temporarily depress all commodities a lot, or at least the ones we need to eat and to build, and they'll then recover and boom bigtime since we really are running out of most of them. But if "it" causes huge population losses for whatever reason - war, plague, asteroid - then it will be a different story entirely. They'll be cheap and stay that way while the few left recycle what's already out of the ground, mostly. And so on and so forth.

Definately not trying to be a broken clock, not hardly, and I'm barely enough of a bug to qualify at all here myself. I just think that while it might be fun to discuss, it might also be unwise to make a specific prediction and concentrate on one that might be completely wrong, too soon in the game. Better to map out things like the above - if this, then we take that fork in the plan, else we take a different one, and you can work that to any level of detail you want. When its as twitchy and open-ended as it now is, there's still a pretty good chance you wind up down a path you didn't identify even with a lot of that thinking upfront, however. So, like the unsatisfying boy scout motto, the best you can often do is "be prepared".

Or as Heinlein put it:
At least once every human should have to run for his life, to teach him that milk does not come from supermarkets, that safety does not come from policemen, that "news" is not something that happens to other people. He might learn how his ancestors lived and that he himself is no different – in the crunch his life depends on his agility, alertness, and personal resourcefulness.
–Robert Heinlein

Or another goodie from the same source:

"A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects."

If you don't know who Robert Heinlein is, you need to do some work on that one. Besides some really good sci-fi, he wrote about a bunch of post-"it" scenarios and how they might play out. My kind of conservative.

 

[DoChenRollingBearing]

Well you have to look at the other side of the trade too:

"Everyone has a plan. Then you get hit."
- Mike Tyson

"Only the gods live forever. Our days are few in number and whatever we achieve is a puff of wind."
- Gilgamesh, to his friend Enkidu

 

[DSAbug]

Well.. this isn't the first depression or economic collapse. Maybe it's the Moses principle all over again (Alf Fields) and we need to look at history to see what happened previously..

I think that in the USA, rental properties will likely start having high yields once again. I remember after the savings and loan crisis, you could buy a $25,000 condo that you could rent out for around $800 a month. Maybe those kinds of opportunities will pop up again...

Or..

Maybe it all goes mad max and we are going to be fighting over water and food.

Regardless.. I think it's smart to keep the perspective that eventually the gold bull market will end and things will get better again. It might be another 5+ years but I certainly plan on living long enough to see it. There will be opportunities somewhere at some point and I am trying to figure out where they will be an how to exploit them.

 

[ancona]

In a complete monetary collapse, or a worldwide loss of confidence in a system based upon trust and credit, gold and silver will rule as medium of exchange.....right behind food and medicine. In the case of collapse, I think my 'group' will be well placed to control a sizable area. Those who have prepared will be rewarded with relative comfort and relative health. Those who did not will be punished, it really is just that simple.

That said, there are logistics and OP SEC that one must consider and include in preps. Simply owning a battle rifle and a couple of handguns guarantees nothing. The "entitled masses", AKA Zombies, will be looking for "you" and your food stash. They will be hungry and will have no qualms about killing you for food.

Any plan must include like minded preppers, folks who will be willing to relocate themselves much closer to your AO, and assist in patrolling, gardening, chicken maintenance, chick propagation, goat herding and all the other shit we will have to do to survive. To that end, I have a 6K s.f. community garden that is in it's fourth rotation since inception and construction. We have solid OPSEC and supporting preps.

Just remember, the best laid plans of mice and men........

Anyway, we are entering a time where it is best not to openly discuss preps and stacking any more. The time to utilize those preps and implement your survival strategy is nearly at hand.

Good luck to us all.

 

[mmerlinn]

One of the outcomes of severe economic crises is war. WWI and WWII were both the result of extreme economic crises. There is no reason to believe that the same scenario will not happen again. In fact, since history has been repeating itself for millennia, I would absolutely count on war as a result of this mess, but hope for no war.

Therefore, I would plan on a major world wide war at some point down the road.

What happens if the world economy implodes? All debtor nations would be in a world of hurt, and the U.S. is currently the largest debtor nation in history. In the 30s the U.S. was the world's largest creditor nation, so one thing we can absolutely know is that things will NOT be the same for the U.S. now as they were in the 30s. Since America's finances are now different, that is one part of history that CANNOT repeat.

Look at America in the late 30s. America did not owe anyone money. America, even though economically weak, had the money where she could be militarily strong. America did not need to borrow money from anyone to fund a military.

What do we have today? We have an America that is economically weak and we have no money to keep us militarily strong. Consider the consequences if we need a strong military after a collapse. Where would we get the money from? Our enemies? Not likely. Most likely our enemies would turn the screw tighter basically leaving America defenseless.

Or consider this. In the 30s, even with a weak economy, America was an industrial nation churning out untold numbers of products. Today, our industry has left and leveled most of the factories. When America entered WWII, America was able to convert those factories into factories producing military equipment in a few short weeks. Today that is impossible. Our factories are gone. It would take months or even years to get military production up to speed. By then it would probably be too late.

Mexico has never truly been a friend of America. Even during WWII they were plotting with the Germans to invade America from the south. Today Mexican overlords are in cahoots with Hezbollah and Hamas, again with the intent of destroying America. What happens when the monetary system implodes? And our military is stranded overseas or dismantled because of lack of money in the States? Do you think that the millions of illegals here won't take up arms against Americans because of real or perceived past grievances? And how many agents of Iran, through Hezbollah and Hamas, are already here waiting?

It is fairly common knowledge that the Eurocrisis is getting worse and worse because the strongest economic power in Europe, Germany, is deliberately dragging her feet and demanding concessions that the rest of Europe is resisting. But why? A failed Europe is not good for Germany. Could it be that she wants to drag America into the European vortex and when America is committed beyond the point of no return, then suddenly step in and "solve" the crisis leaving America holding the bag?

In other words, pull the rug out from under America leaving her helpless to a military blitzkrieg. Considering that Germany has had an air force base at Holoman AFB in New Mexico since 1996, this must be considered as a real possibility. Add to that the German/Mexican collusion in WWII, the millions of illegal Mexicans in America now, and the drug wars that America is currently funding on American soil and you have a dangerous potential should the American debt load cause us to collapse.

I don't need to go into other economic possibilities in a collapse. Most already have a good idea of the potential just by watching how Katrina turned New Orleans into a living hell for her residents. That was only one small area of the country. Imagine if every major city in America was in the same boat at the same time.

Yes, this is an extreme view. However, those who prepare for the worst are those who always win even if the worst never happens. If the worst happens, those who have not prepared for the worst will not survive.

 

[ancona]

Well said.

It may be an extreme view, but it is one I happen to share.

 

[bushi]

Hello,

My 2c: life will go on. IT always did. We might have a war, I hope we don't. But people will adjust. The ones who will be prepared - they will probably do best. Prepared - I mean food, water, fire, shelter. Yes it will go to basics in the near-future.

WHen fiat monetary systems collapse (and I am not saying "if"), people will turn to the stores of wealth that ALWAYS worked as a REAL money - gold/silver. Gold for big transactions, silver for everyday "wellbeing", and I suppose barter for small things. NOBODY will give two sh.ts about paper money anymore, it was always like that (just google/wikipedia hyperinflation, and see the outcomes. Also, my grandaprents are old enough, and I've seen/read enough of history/memoires of people who survived the WWII under Nazi's occupation in my country (Poland), and the gold was the ultimate money. Risky, though - obviously, especially when you were considered "ein untermennsch", and your life weren't worth much more that one of a dog. But if you were careful and played your card well, you might have a chance)

Our today's globalized economy is incredibly non-resilient, to any systemic disruption. So I presume, there will be a full-scale meltdown, to the point where basic utilities will not be there to use.

What to invest in? Low-tech green energy, skills and trades required to rebuild the economy from the ashes - literally... Know how how to make your local economy thrive. Also, setting up TODAY your local barter networks, invest in your local community. Invest in some form of transport that doesn't require oil (check LPG installations for cars, and your options to get LPG locally - I do not fully believe in electric cars - although in the new economy, much more localized, they might be a viable option - especially, when you consider the possibility of recharging them yourself from renewables. Batteries will remain a huge problem, though, and to my knowledge, "new, EV-capable batteries" were just around the corner since 70's, and the anecdote has it, they will be in the same place in the next 20yrs. Or never, taking into account that for high-tech to be able to proceed, we need stable and sophisticated economy - which IMHO we are just about to loose in 10years timeframe at best).

All this doesn't make me particularly happy with my professional skills of an enterprise-systems developer, I presume it will be worth about as much as paper money

Just my humble 2c.

PS. Oh, and I doubt there will be renewed "investment" market in the same form as we do have it today - or shall I call it a real name, and call it a "speculation" market. Why are we calling daily trading an "investment" market, where it is pure, undiluted speculation on price fluctuations?

What I'd consider as an "investment", would be putting one's money into something that you understand, and firmly believe, will benefit from access to one's money, and expect that to flourish in the (more or less distant) future. But buying cheap with the whole purpose to sell ASAP, as high as possible, and calling it an "investement" - it is just not giving things their proper names.

No offence to any traders meant, it is what it is and if someone is making money in the process - well, good for him, but let's not skew real things by giving them funny names

So at least, putting some caps on the shortest possible investment times, would be in order - and I'd say caps measured in at least weeks, if not months, would largely eliminate reckless trading and speculation.

But I guess it is too obvious for anyone to dare to implement, there's too big vested interest in leaving things as they are, for as long as physically possible, and lastly, quoting Einstein - "only two things are infinite, the Universe and human stupidity (and I am not 100% sure about the former)", it might never actually see the light of a day - unless we hit hard some Mad Max scenario...

Just my regular, optimistic self

 

[pmbug]

... Invest in some form of transport that doesn't require oil ...

Living in the burbs as I do, a bicycle (with a carry basket) gets me to the grocery store in about 10 minutes. It's a bit of a pain when the weather is bad, but it's better than jogging with a backpack.

My sister-in-law raises horses, so if SHTF in the worst case, I'll probably be asking her to teach me some riding skills.

 

[DCFusor]

Well, as far as the equity markets go, I'm a dyed in the wool, run and gun, cowboy trader - nothing else actually has worked for quite some time now - even if you made paper money as an investor in that game, inflation wiped that out handily.
I can't wait over a 20 year timeframe - I'm having to use my profits to eat.

Whether short term trading is good or bad for this rigged game, I don't think I know enough to have a good opinion on - I kinda doubt anyone does, there are always those unintended consequences when you jiggle things in any significant way. I make money by being better at it than the bots, and the people in the big houses used to having the game rigged in their favor all the time - they think they know how to trade, but as someone said about one of the political candidates - born on third base so think they hit a triple. Nah, when it comes to honest trading, they're not really that good at it.

As far as investing - as a serial offender business owner and entrepreneur, heck, stay out of these markets and invest in yourself and your own business. If you're not your own best investment, then you need to do some serious self-examination and maybe some real work on that one. It's the one place where YOU get to roll the dice - and perhaps control how they are loaded. That's just a no-brainer to me.

My "investments" other than my own businesses (of which the trading is one, but not the main one) - Land - fertile, rural, water on it. Solar power since '80 and growing the system. Housing and infrastructure on that land, built by me. Woodlot for heat, maintained by me. A Chevy Volt which needs very little petroleum to keep going - charged off my solar system a few times since I got it recently, even near winter solstice. Good food in storage just in case - and a good trade as I'm eating on a few months ago prices. A machine shop, an electroplating line, a very complete electronics shop, computer network - all enabling things I might desire even more than now if things go nasty. And of course, as a gunsmith, I have a few specialized tools...And too many other things to mention here...I buy capabilities not so much specific things, and then try to get the capabilities I have to pay off, usually with success. So for the last pretty long while, rather than say buying a better metal chop saw for the shop - I buy some tool that lets me do something I couldn't do at all before - perhaps in my case what was the vacuum film deposition stuff (yeah, in theory I could make transistors, solar panels, and lens coatings now). Sure, if anything looks like going real profitable, and getting overloaded, upgrade, but till then - diversity - maybe even just books on arcane topics, like Asimov's Galactic Encyclopedia - hard to say what you might wish hadn't been lost in the future.

 

[DoChenRollingBearing]

O/T, but so what. DCFusor, I just noted you became a PMBug supporter. Bravo!

Now get back to your duties of turning lead into gold. Or would it be better to turn your some of your lead into tungsten (better penetration)? Hmm, some questions can be very hard to deal with...

Or even tungsten into gold? Oh, wait, the Chinese have you beat there!


EDIT:

Another great thread! With great responses. Lots to think about. I´ll be home before too long and can get rockin´and rollin´again.