Let me discuss some ideas that I consider to be rather bad, but which are expressed frequently online, or they exist as a custom, at least regionally.

The first such idea is “stacking silver”, basically converting part of your monthly income into silver and adding it to your stash, as a form of inflation-proof savings. This makes sense in countries where there is no additional tax on the purchase of silver bullion. In the EU, there is up to 25% of VAT on silver, which makes it an enormously bad idea as a form of saving money, since you lose up to 25% of your income on every transaction, and that doesn’t even account for the losses you will incur on sale. Silver is for Americans, and since the majority of silver-stacking youtubers are Americans, that might seem as a good and commonly practised idea; in Europe, it is not. There is a catch, though. There is no VAT on pre-owned silver, so that might be a good idea to buy, but generally speaking, you need to see what makes the most sense in your country and region.

Things that make sense in America are suicidally dumb somewhere else. For instance, investing in the stock market in Croatia is almost guaranteed to give you a loss; I looked at the investment funds managed by the banks here several times and they all reported negligible or negative income. Investing in stocks in the USA is a sound financial advice, at least until the stock market crash wipes you out. Don’t just listen to advice online and think it’s universally applicable. Also, you can’t just put money somewhere and expect it to do well. You need to actively manage it, for instance if you hold investment papers, you need to always have an eye not only on the stock market, but on the overall state of the economy as well, and you can’t just have someone manage it for you, because you need to know when to get out, and I’m sure the investment fund managers aren’t going to tell you that.

There’s a regional custom of giving your children gold coins, usually for religious or educational milestones. I buy mine new computers, because guess what, gold in the amounts I could give them is useless, and computers, in today’s world, are how you learn to create income. You first need to learn how to make money, and for that you need to invest in yourself, in new tools and in acquiring marketable skills. The same goes for your children. You can’t just send them to school and hope they will magically learn something marketable there, because guess what, almost nobody does. For learning how to take care of yourself, in the sense of creating an income stream, school is worse than useless.

My kids tell me they are all communists there and tell them incredibly stupid ideas such as “you need to do the things you love as a job”. How about no. You need to learn how to do many things, have diverse skills, and then figure out which one of the things you can do, or can quickly train yourself to do, will make you the most money, and then make that your job. Avoid things people would like to do, or which they do as a hobby. That’s the financial red waters, places with many sharks or crocodiles in not much water.

Another horrible idea is saving money; not universally, but if you start too soon. If you’re a teenager or living on small income, don’t buy silver or gold coins with your pocket money and think you’ll have a huge stack of money when you’re older. No, you’ll be poor and stupid. Invest in your skills, buy the tools you need to do jobs, instead of buying silver every month rent an online server and learn how to write code, and then sell services online, or something like that, something that will get your income started, something that aims at the broad global market. Don’t listen to people who tell you to mow lawns or wash cars for money. That’s what they did, and it might have made sense 30 or 50 years ago, but it no longer does. You need to establish a global presence, learn to swim in the great ocean immediately, because all the smaller waters are red with blood and sharks. Everybody there is competing with the global market anyway, so the money you can make is terrible, basically your prices are globalized and your marketplace is local. The worst combination you can have. You have nothing to lose from going global immediately. So, for the greatest part of your career you need to avoid saving money; you need to invest it in yourself and your business, because you don’t have a good income yet, and saving a percentage of almost nothing is, well, less than almost nothing every month. Keep your money in your business, in your tools, and in growing your abilities and business contacts. Of course, that will only get you so far, so there’s no sense in overpaying for tools because that won’t get you anywhere, but if you really need that new iMac because you’re writing iOS code, then you need that new iMac. That’s the core tool of your business. But if you’re writing PHP code in Linux, just get a good monitor, mouse and keyboard, and you’ll save lots of money on hardware by not buying a Mac. It all depends on what you do. As a rule, it makes sense to buy the cheapest tools that will get the work done, but not cheaper than that. Depending on your business, you’ll know that point where overpaying for tools no longer makes any difference in your performance, and just decreases your profitability. So, at that point it might make sense to invest that money in hiring people, instead of just throwing it into equipment. That way you can gradually get your business to the point where it’s working even if you’re not. Which brings us to the most important point.

Avoid types of jobs where each additional unit of money means you need to do an additional unit of work. That’s what my father did for a living, and that’s how I learned it’s not good. He was/is a sci/tech translator, and for each 10 EUR of income he had to translate a page of text. That’s a very reliable way of being poor and at a huge long-term financial risk, because when you’re sick or when you need to retire, you’re basically fucked. You need to create passive income, things that produce money even when you’re not there working. You don’t want to be unloading watermelons from trucks and being paid per watermelon or per hour. You want to be in a position where you own a company with ten workers, five of which write/maintain code, five of which sell, give user support and do paperwork, and you want to be in a position of finding other areas to branch into, thinking of ideas about future products, and while you’re doing it, code gets written and products get sold, and nothing had ground to a halt just because you had a flu.

Also, if your parents aren’t wealthy self-made businessmen, you need to understand that everything they taught you was probably wrong, and school didn’t help a bit. I was in such a position regarding finances and earning money; everything I knew about it was wrong, and produced costly mistakes, but I had to stumble along and learn things the hard way, until I got to the point where I’m teaching my kids the things you can learn from wealthy people online, but which I didn’t listen to because everything I knew was wrong and I didn’t know it was wrong. That’s the most dangerous position to find oneself in, because when you think you know how things work, and you’re wrong, you don’t feel like shutting up and learning. Also, while I was learning it the hard way there wasn’t really anything useful on the Internet.

Now comes the strange part: break those rules whenever necessary. Do completely non-profitable things just to help others whenever you feel like it. Save money if you don’t have an obvious investment path ahead of you, and then you’ll have the means to exploit an opening when it does occur. Do incremental work until it’s possible to generate a passive income stream, and even when you have a passive income stream, just to complement it, because income streams fail. Listen to the experienced people, but have in mind that things change and the world today has opportunities and openings much different from those before, and don’t be afraid to plunge into something new and untested, especially if you’re young enough and you can afford the experiments. Do things locally if there’s a good business opportunity, and especially if you can extend it online and create a broader market later. Basically, when listening to advice, including mine, use your brain first, and see what’s actually applicable and useful for your specific situation.

Let me clarify a few things about buying gold.

Imagine you have a hybrid car. The car can run either on gasoline or on electricity. It is not a plug-in hybrid that can be charged from the grid, it can only be filled with fuel at the gas station. In that analogy, you are the car, refilling at the gas station is your pay check, the amount of gas in the tank is the amount of money you have, and the LiIon battery is gold.

Gold is something you buy when you want to store the excess money that you have, instead of keeping it in the bank where you would get a negligible interest rate that doesn’t cover inflation. In order to have extra money to buy gold, if we’re talking about non-emergency, normal-inflation times, debt generates financial loss as a function of time. Debt, however, is sometimes necessary, because there are worse things than incurring a loss over time. You can gain utility that covers the loss and even allows you to increase your profitability. Debt can sometimes save you from disaster. Reasonable debt, such as a fixed-interest mortgage loan, can be a good long term strategy for getting yourself a place to live. I’m not going to preach against debt here, because people who do usually didn’t have to choose between debt and a terrible disaster, as I have many times. However, when you are maxed out on your credit cards, when you have a mortgage loan and you drive a car bought on credit or leased, it might be a very bad idea for you to buy gold with what little extra money you have. You need to pour concrete into those holes in your finances first. Get yourself to the point where you pay everything cash, have no revolving credit and the only loan you have is a mortgage for the place where you live. At that point it makes sense to put extra money into gold, because then you can actually say you have savings. Before that point, you’re just deluding yourself, because that money you poured into gold would serve a better financial use if you poured it into your credit pit, to make it generate less interest every month.

As I said before, this is the state of things in case of a normal economy. In a hyperinflatory economy, there is a good chance that your debts will be erased by the combined effects of the collapse of banks, state and global economy. This is what happened prior to the collapse of Yugoslavia, during the hyperinflatory phase, where all mortgage loans were expressed in local currency, and hyperinflation reduced them to nothing within months. Basically, the banks were ruined and people got apartments for free. Be quite sure that won’t be repeated quite the same way, because they learned on this experience and all the loans now have a foreign currency (usually EUR) clause. However, I’m quite sure they are not protected from a large EUR devaluation event. If your income grows due to inflation, and your loan doesn’t, you will be able to pay it off rather quickly in the hyperinflatory scenario; however, considering how the banks and the states are known to conspire against the citizenry, they are more likely to be allowed to completely fuck you over and declare an emergency event whereby they will confiscate your collateral (read: house) and evict you. This is of course a point where massive upheaval will take place and the state will likely collapse. Your property rights will remain questionable, until a successor-state forms and settles the matter in some way or another, which doesn’t guarantee anyone any safety. Even if you have perfectly clean property rights, you are likely to be forced to sign it over to mafia at gunpoint and be evicted.

I’m basing my assessment on past events of that kind, which were quite abundant in recent history. If such a disaster takes place where you live, the logic according to which real-estate is a safe long-term investment might prove quite fragile; real-estate wasn’t worth shit in 1991 Vukovar. If you have gold, you can leave the country with it and use it to start over somewhere else. If you have to start somewhere else and you don’t have gold, you are in an incredibly difficult position, because you’ll basically be a refugee who will not be distinguished from the social parasites from the Middle East and Africa. Running away is therefore the last thing I would recommend, but sometimes it is actually the best option, if things get incredibly bad. Why am I saying “gold” instead of “money”? Because if your country is at war, that country’s money is usually in a hyperinflatory phase and is for the most part worthless, especially outside the country. Inside the country it is usually useful for buying day-to-day things and barely making by. The money you have in form of gold is the only actual money you will have. Gold is not practical for buying things on a daily basis, because you need to convert it into paper first, so it’s not something I would recommend during normal times, but in times of a terrible crisis you either have it, or you are fucked.

So, there are basically three forms of gold you might own. First is the gold jewelry, second are the gold coins, and third are the gold bars. Gold jewelry is terrible investment because large portion of the price is not the actual gold, but labour and bullshit.

If you already have it, fine, but don’t buy it with the rationale that you can always sell it later if push comes to shove. It’s a bad idea, because it’s always worth less than you think, it takes up lots of space, is very visible and therefore makes you vulnerable to theft, and you always overpay for it.

The gold coins exist in two basic forms: 1 oz and fractional. 1 oz coins are large enough to be considered mini gold bars. One such coin is around 1300 EUR.

This is the amount you would use in a crisis to buy guns and ammo, to bribe border guards to let you out of the country, or to buy a cow. Those are your safety net in case of a crisis. Consider the amount you would need per family member, and plan accordingly. In the EU, 1 oz Vienna Philharmonic gold coin is the cheapest per unit of mass and therefore the way to go.

Fractional coins (basically ½, ¼ and so on of troy ounce) are the kind you would buy in the EU instead of silver, to pay for the small expenses, as 1 ducat Franz Joseph gold coin is around 150 EUR.

You want to buy the kind that is most common, most recognizable and therefore easiest to trade in your area. The one I mentioned, the 1 ducat Franz Joseph gold coin is the way to go in Croatia, for instance. They are very small and don’t seem like much, but 150 EUR is just that kind of money that makes sense for medium-sized trading, for instance you might get a gun for five of those, or quite a bit of ammo or food for one.

Gold bars are a different matter entirely. You wouldn’t use those as bribe, on the black market to buy food or anything similar. You would use them as money when you want to buy a house. Normally, the bigger the bar the less of a premium you pay per unit of mass, but this function ends somewhere around 250g, and 500g costs exactly as much as two 250g bars, so 250g bars are the way to go.

This is serious money, as one 250g bar is around 10000 EUR. If you can bring enough of those out of the country or region that is impacted by a crisis, you can start anew, but not from zero. Just remember those people carrying their belongings in nylon bags during the Yugoslavia civil war.

That’s what you’ll be able to carry with you if you have to relocate quickly under weapons fire. You’ll have a backpack and two bags. If you have 250g gold bars in your backpack, and each member of the family has five of those, when you arrive on your destination you use those to buy a new house; you are not a poor refugee with only some clothes to his name. However, if you have gold bars, you would be wise to also have some gold coins, for small trading, bribing and getting your family out of trouble on the way. You don’t want to be forced to bribe a guard with a 250g gold bar just because you don’t have 1 oz coins with you. That one bar is ten thousand fucking euros. That’s a nice used car.

And yes, despite gold, you should always have paper money with you, the local kind, no matter how worthless. Always. It’s for paying small expenses in daily situations without attracting attention to the fact that you own gold, because if you’re in a vulnerable position, gold is a liability, beside being an asset.

Gold price is up:

It’s the highest it’s been since the panic-spike in 2011-2013, both in EUR and USD. However, if we remove that spike from the graph and see what it looks like then, we can see something else. I’ll show you another graph, this time in USD, to make it clearer:

Let’s get some painfully obvious things out of the way. First, this is not the price of gold. It’s the value of paper currency over time, measured in gold. Some people have calculated that gold and silver can be used as a very steady marker of value from Roman times up until today, measured in things like a good suit, lunch or a goat. So, essentially, if a good suit cost you the same amount of gold in ancient Rome as it does now, it’s not gold that’s getting more expensive over time, as the graph seems to indicate. The graph shows inflation.

Another obvious thing on the graph is that paper currency doesn’t just fluctuate randomly. There are patterns: times where it keeps steady value, and inflatory spikes. Unfortunately, the graph doesn’t show the Nixon shock in 1971, where “the dollar plunged by a third during the 1970s”, or the “Executive Order 6102” from 1933, which “made gold clauses unenforceable, and changed the value of gold from $20.67 to $35 per ounce, thereby devaluing the U.S. dollar”, to quote Wikipedia.

The third obvious thing is that we are on top of a very nasty-looking inflation trend, and although one would naturally attribute that to the financial crisis of 2007-08, it appears to have started some years before that, and it’s possible that the crisis was a consequence of inflation, not the other way around. You see, the crisis was triggered by sub-prime mortgage loans market collapse, but what if the root cause was in the reduced purchasing ability of the homeowners due to inflation, triggering defaults? This is an interesting thesis that would require some deep data mining to prove or disprove.

Now we are getting into the realm of the non-obvious. Something seems to have happened around 2002 that gradually reduced the purchasing power of the populace in real terms. There are many candidates: globalization and outsourcing, printing money to finance wars, but the date itself is indicative of 9/11. Whether the event itself triggered other events that were harmful, or it was used as an excuse to implement harmful things that were being prepared in advance, that I can’t tell, because it’s probably a combination of both. However, the graph indicates that the purchasing power of EUR and USD measured in gold are continually falling on a steep curve, and my hunch says we are approaching a hyperinflatory phase of a complete economic collapse.

Let me show you another graph, of Bitcoin price over time:

My interpretation is that the post-9/11 restrictions on the financial markets and all kinds of Fascist policies with newspeak names had the result of people hysterically trying to rescue their money and the so-called crypto-currencies appeared as an alternative to the banking system, SWIFT and the credit card mafia. Bitcoin price is not a great indicator because it behaves like a high-risk investment paper, and not like a financial safe-haven, but apparently if you want a safe haven against America and the banking system, crypto is not at all bad, if you can get out of it in time, because crypto is a financial version of the Schroedinger’s cat: you can think it has value based on some graph, but you only get to learn what it’s worth when you want to sell it, basically at the point of collapse of the greed-curve.

My general recommendation is that the greatest losses in any financial crisis will be suffered to the investment papers with the highest level of abstraction. Essentially, the farther away from the real thing, the greatest the danger, because bullshit, hype, greed and deception always hide in the high levels of abstraction, which can also be read as “bullshit”. The historic lesson with complex financial packages based on bad mortgage loans should be obvious. In times directly preceding a crisis, bullshit-papers create bubbles and trick investors into buying, but when the panic starts, the value of something is always determined by how much someone is willing to pay you for it, not by what you paid for it, and when a bubble bursts, there are no longer any buyers. At that point, everybody hysterically tries to save money by putting it into safe havens, but by then it’s too late.

Essentially, buy precious metals when everybody buys high-risk, high-reward papers, and when everybody goes crazy because the bubble burst, do nothing. Wait it out, then convert metals into a rational wealth-generation plan. This is essential, because as good gold is as a store of value, it doesn’t actually produce additional value by just sitting there, and you need this generation of profit in order to be able to pay for your expenses. This is what my advice would be if this was just another big bad crisis. However, other indicators show that it’s not just about the monetary system, or the economy. The western civilization itself seems to be in its death throes, and we haven’t seen anything that bad since the fall of the Western Roman Empire.