From time to time we will post articles written by others that we think are of value…and hopefully you do too. For those of you old enough, reading the name “Vietnam” evokes a much different image than it does for the youth of today – thankfully.
By Doug Hornig, Hard Assets Alliance
They sewed the gold into their clothing, grabbed only what they could carry, and hoped for they weren’t caught…
Vietnam 1975: As the Communists marched south, countless terrified Vietnamese – mainly middle-class business families who were ideologically opposite to the approaching forces – fled for their lives.
The well-to-do, the well-informed, and the well-prepared had seen the writing on the wall earlier than most. They arranged safe passage and had already moved themselves and their assets out of harm’s way.
Now though, as their country looked set to fall to communism, it was the middle classes who feared imprisonment, torture, and execution if they stayed in their homeland.
They were pouring out of the country in any way they could.
Many left had to be airlifted out – 125,000 of them in the spring of 1975, just prior to the fall of Saigon.
Before they left, those with possessions of worth – primarily the middle-class business community in Saigon – sold everything they had.
Every vehicle, every stick of furniture, piece of art, and family heirloom. Sold.
Even their clothing, save what they wore or could stuff into a single suitcase, was sold at whatever price they could get.
Because owning gold, while making them a target, also meant escape and survival, while those around them perished.
They let everything go. They knew they were not coming back.
Of course, they didn’t want local currency. They realized it would have been senseless to expatriate with bags of the local paper currency that had no worth elsewhere.
Nor did they want stacks of US dollars that were bulky, easily damaged, difficult to conceal, and effortlessly stolen or confiscated.
They needed something that was light to carry, easy to hide, and would have significant value regardless of where they resettled.
They wanted gold.
Gold is portable. That’s important, because you can carry your wealth with you in an emergency.
An emergency such as war, like Vietnam’s… a natural disaster… or a financial meltdown in your home currency. If you own gold, it’s more likely that you will survive where others perish.
In Vietnam, as the middle classes prepared to leave, they exchanged all their worldly goods for kim thanh – small gold “leaves” of about 1.2 troy ounces that are commonly traded in the Far East.
They sewed thin, leafed gold into their clothing, they took what they could carry, and hoped for the best.
Gold means security, even as the most life-changing events overtake you.
To the Vietnamese, gold meant not arriving in an unfamiliar land utterly impoverished. It meant having the means to start a new life.
When owning gold meant a new beginning
The middle-class Vietnamese who arrived in the US with the tangible assets to begin again have done well.
For the most part, they have become middle-class Americans.
They’ve prospered in places like Orange County, California and Silicon Valley, starting businesses, sending their children to college, and gaining political power.
It’s a subculture built initially on the back of gold bullion.
America hasn’t experienced the kind of civil strife these Vietnamese faced at home in nearly 150 years.
But disasters come in many forms, including economic ones. And the US has had its share of those.
You’ll already know, of course, that in times of economic crisis, people turn to gold just as much as they do when they are fleeing the devastation of war.
That’s precisely what happened during the recent financial sector meltdown in 2007-’08.
At that time, demand rose so much that scarcity became the order of the day.
Buyers were forced to pay between 9-15% over spot to buy coins… if they could find them. And not all had the right sources of information to buy gold at the time they needed it.
Shipping delays of one to two months were the norm, and lags of as much as four months were not uncommon.
There were days when dealers were being told simply, “don’t sell” by their suppliers, because no one could promise when, or even if, orders might be filled.
Many dealers got squeezed hard at what should have been their most profitable time ever, as demand went through the roof.
But they couldn’t sell what they didn’t have.
Much of the supply shortage, according to dealers, was caused by large-scale buyers in the $1+ million category.
When dark clouds are in the skies, wealthy people bolt from paper currencies to gold, quickly taking big lots of physical metal off the market.
Had the financial system not stabilized when it did, however shakily, gold might well have become unavailable and almost unaffordable.
And these buyers don’t want any of the paper substitutes, either.
Even at the depth of the Wall Street catastrophe, there was no problem buying paper gold in the form of ETFs or “metal” in unallocated accounts… which tells you all you need to know about the relative desirability of paper versus physical gold.
The historical lesson could not be more clear.
Understanding how to invest in gold bullion remains a key part of wise investing, simply because gold remains a storehouse of value when the worth of paper money hits the skids.
Consider the precarious nature of the fiat-currency system the world over.
The widespread, massive money-printing and the concurrent currency dilution means the likely eruption of high inflation or even hyperinflation. Both are a reality.
Consider too the shaky foundation of many large banks and their financial products.
We are never more than a step or two from the next crisis. And the next one is expected to be worse than the last.
The wrong way to buy gold. For protection from impending crisis, many investors – unsure of how to purchase and store physical precious metals – are turning to paper gold and silver.
There’s a right way and a wrong way to buy gold. That’s the wrong way to do it.
Many confuse an ETF with physical holdings.
Rather than providing protection from financial collapse, ETFs (like GLD) expose investors to a lot of risk.
So it is more critical than ever to have exposure to physical gold and silver that is under your direct control.
But buying precious metals can be as easy as logging on to your computer.
To find out how to do it with the same convenience as an ETF but without their inherent risks, read our free report, Precious Metals Breakthrough Takes Down GLD.
At some point, it will be too late to buy precious metals, for all practical purposes. You can’t buy insurance to cover losses after the flood has already happened. And you probably won’t be able to even find gold for sale after the next financial crisis.