How Much Will Gold Be Worth if Society Collapses?
Join us on this thought exercise that explores a purely hypothetical question: In a post-apocalyptical world, will gold still be worth anything? The answer to this question is as much philosophical as it is economical. While we, of course, can’t predict exactly what will happen in the future, it’s perfectly reasonable to make assumptive leaps based on historical events, logical deduction and calculated reasoning. Clearly, if society collapses due to war, disease, natural disasters or by some other phenomenon, life as we know it will cease to exist. Anyone who is lucky (or perhaps, unlucky) enough to survive will, most likely, already have been prepared for such a calamity. Others with great survival instincts and survival skills will be the next to most likely carry on. Everything will change, and money will not be nearly as useful after society collapses. If you have access to what people need to survive, you’ll be in a better position to barter and negotiate.
What Will Society Look Like After The Collapse?
It’s all about survival, and depending on the circumstances that caused the calamity in the first place, the value of every resource will change compared to how things are now. In the days and weeks following the collapse, a bleak scenario starts to emerge. The grocery stores will be stripped clean. All gas stations will run dry. The power will go out everywhere. No Internet, no phones, no postal service. No jobs, no schools, no entertainment. Life will revert back to primitive times where every second of every day is dedicated to finding food and staying warm and dry.
What Will Society Use As Currency?
Regardless of the type of catastrophe that leads to society’s theoretical collapse, the most valuable forms of currency will arguably be fresh water, food, fuel, and ammunition. Following that, batteries, tools, weapons, medical supplies, drugs and alcohol will be highly valued. Anything that can be used to improve one’s chance of survival will be highly sought after in this new economy. Furthermore, any such item can potentially be traded for other valuables if needed. We know that bartering was the first system of commerce that humans used, and there’s every reason to believe that bartering will again become the primary way goods are exchanged if things go sideways.
Will Gold Help Anyone Survive?
The problem with gold is that nobody needs it to survive, at least not at first. Predictably, after an initial period of violence and chaos, power imbalances will eventually start to stabilize, good leaders will rise up and alliances will likely be formed. One of the greatest attributes of humans is that they can work together and accomplish incredible feats. If society collapses, it’s an almost certainty that humans will team up again, this time to ensure everyone’s survival. These alliances will logically start with an emphasis on improved trade outcomes that result in more efficient food distribution and a better marketplace for sourcing raw materials. Successful alliances will evolve into broader networks that may start to resemble the beginnings of a new society. Safety, peace, quality of life; these are luxuries that can once again enter into our thoughts once survival becomes easier. It is then, after a new society emerges, that Gold will make it’s comeback as a primary way to store value and wealth. And, if you find yourself with the ability to grow an entire crop of potatoes, eventually you’ll not need the items available to you from traders who want your produce, and this will give rise to the need for a new way to store that value, a new currency.
Why Gold Will Be The New Standard Of Currency
Why will gold, and not, say, tree bark, or, bags of sand become the new “gold standard”. For starters, I suppose we should consider the fact that any currency is assigned it’s value only after it is commonly accepted and believed by all that the currency is actually worth something. Whether we’re talking about a Canadian Penny, a United States One Hundred Dollar Bill, or a gold Krugerrand coin, the value only exists because we all agree that it exists. Monopoly money, conversely, is essentially worthless because we all agree that it does not constitute legal tender.
We should also factor in the elements that make something a good candidate for currency. A good currency has several key attributes, such as:
- Able to store value in the near term, and hold it for a long period of time
- Durable, not easily destroyed by elements such as fire or water
- Easily transferrable, and widely accepted, so you can carry it with you and spend it when needed or pay someone for a hired service.
- Standardized value that is easily measured as it is based on weight or minted denominations. (For example, a nickel is always worth five cents.)
- Difficult to counterfeit
Gold and Silver are very strong candidates for currency because they meet all of these requirements. Tree bark, not so much. Bags of sand would be too easy to counterfeit. Let’s explore some additional reasons why gold might feasibly become a currency in the future:
- Gold is one of the most ancient forms of currency.
One of the reasons gold will become valuable again is simply because it became valuable before. Gold has been used as currency for thousands of years, and for good reasons, such as its rarity, durability, and intrinsic value. Few things are better than metals like gold and silver at withstanding a fire or flood, but also are easily crafted into beautiful jewelry or coins with a shiny allure.
- Gold is what is used when modern economies collapse.
If we look at economic collapses that have occurred, there is a precedent for societies returning to gold as a currency, even in modern times. Venezuela, Argentina, and Turkey are all current examples of economic collapses leading to a devaluation in currency. Once these people lost faith in the value of their money, they reverted to gold and silver as a means to trade for goods and services. Historical examples of crashed currencies, Germany and Zimbabwe in particular, also have reverted to the use of gold as a currency when their own currency failed. - Preppers Swear By it
Costco recently started selling bars of gold. Why? They have a key target audience that will buy them: Preppers. If the people who have devoted parts of their life to building bunkers that can withstand nuclear war believe that gold will be the currency of the future, then it stands to reason that this will likely be the case. If all the people with the best chance of survival think that precious metals like gold and silver will retain their value and be useful for the acquisition of future goods and services, logically we can deduce that gold is a good investment, even when all else is lost.
So, in conclusion, we can deduce that gold will not be as valuable in the early days of post-apocalyptic human survival, but later, once things have calmed down again, and a new society starts to stabilize, that’s when you crack open your secret stash and become wealthier and more powerful than you’ve ever imagined.
Thank you for joining us in the thought experiment. Next time, we’ll propose a new question that ponders a world where everything works out for the best: How much will gold be worth in futuristic utopian society?
