Physical precious metals such as gold and silver have always been popular as stores of wealth. Investors big and small have used precious metals as safe havens to protect wealth from market turbulence.
Historically, gold and silver bars weighing 10 ounces or more have been popular because they fit conveniently in a safe, but recent trends point to more people hoarding portable precious metals like coins and jewelry. Even Golden Wrath backed by precious metals stored in vaults have seen a rise in smaller utility coins and bars rather than bulkier bars.
There are two main reasons for this recent change. In recent years, mobility is becoming more of a focus as people move from cities to rural areas or from state to state. Even those with multiple homes want to take some or all of their precious metals with them to keep on hand in case of unforeseen circumstances.
Then there is the rise of the “prepper” mentality. Once derided as “doomsday preppers,” today's average prep-minded American doesn't live in a bunker or on a farm. They live in the suburbs or on newly purchased land in rural areas, having left behind cities with rising crime, crowded streets and skyrocketing costs of living.
The modern “lifestyle prepper” wants precious metals that they can take with them at any time. Even though the economy is forcing people to cut back on spending, precious metals in the form of jewelry still sell well. But jewelry poses two challenges. First, they sell at a premium, often 500% above the melt value. Second, they can attract unwanted attention from criminals.
Utility bars are a growing method of bringing wealth. With a much lower markup than jewelry and the added benefit of not being seen in pockets or purses, utility bars like the Prepper Bar can be broken into smaller pieces to allow for quick settlement or exchange.
By far the most popular option is coins. They come in a wide variety ranging from rounds that cost a few points over the spot price to collectibles and numismatics that sell at a premium because of their potential upside.
Unfortunately, many Americans are unaware of the value of precious metal coins. A viral video A couple of years ago, a popular podcaster offered random people on a street in California their choice between a one-ounce gold coin or a $20 bill. These videos are selective with the examples they show the public, but it was still surprising to see dozens of people opting for cash over coin.
Ironically, the podcaster was recording the video while standing outside a coin shop. He told those who asked that they could sell the coin to the store behind him for $1800, which was around the spot price at the time. Of course, he only told them after he had opted for the cash.
Although anecdotal, it highlights one of the challenges of currencies if emergencies arise and exchange becomes necessary. Because most Americans see coins as having little value, it can be difficult to find exchange partners who appreciate the value of the precious metals they hold. This is why utility bars and gem sales increase faster than coins.
Concerns about the economy arise from multiple angles. Inflation, interest rates, the border crisis and rising crime are at the fore. De-dollarization, central bank digital currencies, the growth of the BRICS and looming bank closures are on the back burner.
Then there is the upcoming presidential election. Before, during and after the election, it seems very likely that there will be unrest across America regardless of who wins. This has been the main reason many Americans are moving wealth and retirement accounts into physical precious metals.
The rise of portable precious metals may be a fad. But if anxiety continues to rise, we may see portable precious metals become the de facto stores of wealth.
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