Puerto Rico Without Electricity, Wifi, ATMs Shows Importance of Cash, Gold and Silver

GoldCore's picture

Puerto Rico without electricity, wifi, ATMs shows importance of cash, gold and silver

- Most of Puerto Rico remains in the dark and without power three weeks after storm
- With widespread power failures, Puerto Rico remains cash only with retailers only accepting cash and few consumer having cash

- Shortages of food, fuel and medicine with infrastructure repairs delayed
- Power could be 'out for months' as 85% of people remain off the grid
- Around 75% of ATMs disconnected
- Electronic forms of payment including bitcoin have been rendered non viable
- Puerto Rico's accidental 'cashless society' shows risks of cashless society and importance of holding cash, gold and silver out of the financial and digital systems

Editor: Mark O'Byrne

Aerial photo of flooding in Puerto Rico. Washington Post

Puerto Rico has been destroyed by two savage hurricanes which have plunged the island into darkness and despair. The landscape of ruined homes and entire towns resembles Hiroshima after the man made disaster of a nuclear  bomb being dropped on the city.

More than three weeks since Hurricane Maria hit the island, 3.7 million American citizens are on the precipice of a humanitarian disaster.  The majority of these people are desperate for food, water, electricity and shelter. They are desperate for cash that will allow them to secure these basic necessities.

Over 84% of the island remains without power and 37% of people are without access to water. Without power, much of the population is does not have electricity to charge their phones and iphones. Very few have wifi and this is severely impacting their ability to communicate and conduct their lives.

Inevitably, the future of Puerto Rico now lies in the wrangling hands of government and financial organisations, all of which seem to be pointing the finger of blame at one another.

The territory's government expects to run out of cash by the end of the month.  It has asked Congress for an immediate payment of $6 billion to $8 billion. This is to meet vital expenses including salaries, emergency repairs, and pension payments.

"We will run out of cash as of Oct. 31 of this year," said Raul Maldonado, the territory's treasury secretary. "As of November, we will not be able to operate as a normal government."

Given the country's dire electronic and communications situation, tax receipts are way down which will likely exacerbate the dire economic situation even further.

Problems are not just at a government level. Day-to-day life for Puerto Ricans is also obviously extremely hard and increasingly dangerous. The island is in a cash black-hole with little access to or means to buy essentials.

Not only is there a shortage of cash but the majority of ATMs are down. Even if cash was aplenty, few people are able to withdraw pay checks or access their digital savings and make payments electronically.

It is a stark reminder of how reliant our economies and day-to-day lives are on electricity. It is a stark reminder of how dependent  our modern digital currencies - whether they be public fiat or private crypto currencies - are on increasingly antiquated electricity and power infrastructures.

Today the faith we put in governments that basic utilities will continue regardless is unprecedented. Citizens in Western nations rarely (if ever) question how they would manage if they had no access to electronic money or bank accounts and could make digital payments online or by credit and debit cards.

Puerto Rico should be a warning to us all. No matter how wealthy your country, how "sophisticated' your central bankers and central banking system and how technologically advanced your infrastructure,  we can all be rendered poor overnight by the power of Mother Nature.


'You're broke even if you have money' 

'Cash Only' is reportedly a common phrase across many of the retailers on the territory. The majority of gas stations and grocery stores are only accepting cash payments. Citizens have little choice but to try and find cash.

However, shoppers have the same problem retailers do - they can't get the cash they need. Reports the New York Times:

Fewer than half of Puerto Rico’s bank branches and cash machines are up and running, still crippled by diesel shortages, damaged roads and severed communications lines. Bank officials say they are struggling even to find employees who can get to work when there is no public transportation and gasoline is hard to find.

Across the island, people who have spent their last dollars on an $8 bag of ice or $15 for gasoline are waiting for hours outside banks and A.T.M.s in hopes of withdrawing as much money as possible.

“You’re broke even if you have money,” Mr. Jimenez told the New York Times.

But is there really a cash shortage? Zoime Alvarez, vice president of the Association of Banks of Puerto Rico told the New York Times that not only was there already enough cash on Puerto Rico but there was more arriving to meet what the New York Federal Reserve called “extraordinarily high demand.”

Does this matter though when there is electricity failure across the island? This isn't the only problem - transport networks are down and organisations are struggling to deliver goods and services.

The infrastructure issues are unlikely to be fixed soon.

Already in a bad way

It's no secret that prior to Hurricane Maria, Puerto Rico was already in a poor financial state. Private creditors were circling looking for the $74 billion that has been lent to the island in recent years. Now the cash situation is set to get even worse.

A federal government bill is set to increase the island's liabilities by a further 14%.

In addition to the country's $74 billion in bond debt, there is also a further $49 billion in pension obligations.

With this sorts of liabilities its unlikely creditors are going to put much faith in the future of the island. Whilst Congress is likely to agree some funding, it will not help the territory with its long-term finance issues.

This will no doubt exacerbate increasing unemployment numbers and criminal activity.

Cash and electricity shortages are forcing some residents into a bartering and others into borderline criminal activities as they seek out ways to find more cash.

Mr. Jimenez, who waited in line outside Scotiabank, said the cash shortage forced him to get creative and tiptoe into the black market. Here in his eastern hometown, Fajardo, he was able to use his credit card to buy several packs of Newport cigarettes from a big-box retailer before the store ran out of diesel and had to shut down.

He and his wife traversed their neighborhood, selling packs of cigarettes for $10 each. Mr. Jimenez said he was not trying to make money — just to stockpile cash to use at the gas stations and markets that now accepted nothing else.

“I’m like a drug dealer,” he joked.

Prior to the hurricane residents were warned to stock up on all essentials, but few could have realised just how important cash would become.

Few people appreciate this. In times of disaster like this, cash becomes king. Followed closely by gold and silver which can be traded for cash or used as deposits or for payment for life's necessities.

Most shopkeepers who are struggling to sell their merchandise as they cannot take electronic payments and whose potential customers do not have cash will gladly accept small gold and silver coins and bars as payment in lieu of cash.

Coin dealers, jewellers who buy from the public and pawnbrokers in Puerto Rico have been very busy since the crisis as people exchange gold and silver jewellery and bullion coins and bars for cash.

Ironically, less and less governments want us to have access to cash, let alone to gold and silver, and this is making us more fragile financially.

Our economies are more vulnerable than ever in this regard and the modern drive to embrace all forms of digital currencies and the cashless society is setting ourselves up for an even bigger fall.

No cash transactions means no transactions

The Puerto Rico problem will only get worse. Not only are ATM and banking networks down but employers and government cannot make payments they need to make to individuals' accounts.

In the long-term this is a problem likely to be faced by many nations that rely solely on electronic systems for all payments.

We have previously discussed the push by governments and banks to a cashless society. In the United Kingdom, 89% of the total value of consumer payments are non-cash payments. In Canada, it's 90%.

Disasters such as Puerto Rico do not appear to be considered by banks and governments who claim cashless societies are better for all. Reasons for going cashless include clamping down on tax evasion, illegal cash activities and increased spending.

However, when an electricity and overall infrastructure crisis hits (as we see in Puerto Rico) the 'convenience' of a cashless society quickly falls flat on its face.

This is also the situation for anyone who was hoping bitcoin (or 'insert another cryptocurrency') might be the answer when banking systems can't operate. However bitcoin transactions require electricity, a lot of it, and wifi. As with cashless fiat transactions they are as problematic when there is no power.

This is why in times of such crisis there is such demand for not only hard cold cash but also for gold and silver. None of them can suddenly become inaccessible thanks to power shortages or the inability of a government to sort out local infrastructure.

Too late for cash?

For now the Puerto Ricans are 'fortunate' that their currency is the U.S. Dollar. This means the value of the cash in their accounts is unlikely to be majorly affected by Hurricane Maria and the resulting crisis.

But if Puerto Rico were an independent nation then it would almost certainly be experiencing a fall in its currency. At this point all of the goods and services it needed to import in order to help it to recover would be increasingly expensive - as seen in the UK after Brexit.

Meanwhile gold and silver would be accepted as they are borderless currencies that do not operate within the confines of a government, central bank or electronic system.

Gold and silver often get a bad rap when it comes to discussions about their role as money. Both are pushed to the bottom of the pile when you consider the convenience of spending them compared to the likes of electronic cash, paper notes and bitcoin.

But one thing that is guaranteed with them is that you know you can use them in times of crisis. They are highly durable and highly desired. That is not the case with fiat or bitcoin when it comes to the crunch as seen in Puerto Rico in recent days.

No matter the town, city or country you find yourself in, times such as these pose multiple threats whether military or natural.

We all assume that governments are competent and will look after us. We cannot bring ourselves to imagine electricity systems and our banking systems including ATMs going down and not having access to our hard earned savings.

But it happens, all too many times as this last hurricane season has demonstrated. Prudent savers who like to be prepared should consider the magnitude of disasters such as Hurricane Maria - food runs out and electricity goes down.

You think you are wealthy and then suddenly, you have nothing.

You need cash and means of exchange in order to survive.

Diversifying your emergency funds should be a priority, this means hold some cash and gold and silver coins and bars to ensure you can survive and thrive with or without government's help.

Best to hope for the best but be prepared for less benign scenarios.

The people of Puerto Rico would attest to the power of this today.

News and Commentary

Gold rally pauses ahead of U.S. inflation data (Reuters.com)

Dollar Snaps Four-Week Rally as Stocks Consolidate (Bloomberg.com)

Inflation weighs on yields, dollar; stocks lackluster (Reuters.com)

U.S. producer prices increase; weekly jobless claims fall (Reuters.com)

Bitcoin Breaches New Milestone by Smashing Past $5,000 Mark (Bloomberg.com)

Bitcoins surges to new record over $5000. Source Bloomberg

Five things to do when every investment is too expensive (MarketWatch.com)

Stocks will beat houses over the next few years – Frisby (MoneyWeek.com)

Three ways that China’s big political congress matters to investors (StansBerryChurcHouse.com)

Bob Corker Is Just the Beginning of Trump’s Tax-Cut Problems (Bloomberg.com)

Yellowstone Supervolcano’s Nasty Surprise: Only Decades To Prepare For An Eruption (Forbes.com)

Central banks hedging against geopolitical risk with gold (Nikkei.com)

Gold Prices (LBMA AM)

13 Oct: USD 1,293.90, GBP 972.88 & EUR 1,093.73 per ounce
12 Oct: USD 1,294.45, GBP 977.96 & EUR 1,092.26 per ounce
11 Oct: USD 1,290.20, GBP 978.62 & EUR 1,091.90 per ounce
10 Oct: USD 1,289.60, GBP 977.77 & EUR 1,094.61 per ounce
09 Oct: USD 1,282.15, GBP 976.23 & EUR 1,092.01 per ounce
06 Oct: USD 1,268.20, GBP 970.43 & EUR 1,083.93 per ounce
05 Oct: USD 1,278.40, GBP 969.28 & EUR 1,086.51 per ounce

Silver Prices (LBMA)

13 Oct: USD 17.20, GBP 12.94 & EUR 14.55 per ounce
12 Oct: USD 17.20, GBP 13.06 & EUR 14.50 per ounce
11 Oct: USD 17.15, GBP 13.00 & EUR 14.51 per ounce
10 Oct: USD 17.12, GBP 12.98 & EUR 14.53 per ounce
09 Oct: USD 16.92, GBP 12.86 & EUR 14.41 per ounce
06 Oct: USD 16.63, GBP 12.73 & EUR 14.20 per ounce
05 Oct: USD 16.66, GBP 12.64 & EUR 14.19 per ounce


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Col. Leghorn CSA's picture

There is literally no more boring comment section than one dealing with PM as SHTF currency.

Everything has been said a million times for years now

Latitude25's picture

Sheesh people are stupid.  PMs are not for use during a crisis, although some deals may be made with a future benefit, like gold for distressed waterfront property.  PMs are primarily for getting your wealth through a crisis, from one system to another, intact.

didthatreallyhappen's picture

if electronic banking is unavailable and you have run out of cash, would you use your silver quarters to buy food for your hungry family?  Me thinks so.....

Hillarys Server's picture

During a catastrophe the best use of silver is to see who is paying for their groceries in silver.

And to follow them home and steal their silver.

That will be everyone's main occupation during a real mad max scenario.

Stealing people's guns, bullets, food and silver. 

didthatreallyhappen's picture

maybe true in PR but in the US, what % of people w/silver have guns as well?

DIGrif's picture

Somewhere very near 100% I would expect. Try and steal my silver and you will get my lead....guaranteed.

idontcare's picture

G&S are great except for when your stack is washed out to sea when the storm surge comes in through your area.

Weiss's picture

Seriously?  I can't think of anything in my home that is freaking HEAVIER than my stack.  If it's washed out to sea, that means the whole dang house is gone with it, so forget PM's and start praying

One of these is not like the others..'s picture

Instead of the rich paying for thousands upon thousands of displaced people to be shipped around the world, how about someone who has more disposable income than me shipping a container full of solar panels and the matching inverters over there? Would need a bit of thought put into teh wiring but from one master generator (or solar cell feeding a sine wave inverter) and a shedload of feed in inverters you could have basic power back on (at least during daylight hours) in a very short time indeed. 

OH, and a couple of mottos for the future..

"Settle it with Silver?" or "settle it with silver!" depending on how optimistic you are..

"Guarantee it with gold" for when things get serious.

And anyone who thinks they might need to trade for food in post apocalyptic society should find that a big box of refillable lighters plus some attachments to allow them to be filled from a bigger gas bottles shoudl be exchangeable for a few square meals at first then later they'll be worth their weight in gold...

 

freedom1798's picture

Spics.  What do you expect?  

aloha_snakbar's picture

I have an empty milk jug full of Bitcon I could send them...

American Snipper's picture

What was that, bitcoin is not working in PR??? Hmmmmmmmm...........

GodSpeed_00's picture

So where is the evidence of people using gold and silver to buy things there?

Montana Cowboy's picture

Exactly. That is an unsupported claim. And if cash is so short, how do the metals dealers get it?

litemine's picture

Could it be that those diversifing from their savings, spending some, just to survive might not want to advertise this fact?

You Sir didn't offer a sarcastic note.

GodSpeed_00's picture

Some proof would be nice. Other than that all you people are doing is speculating. Bartering in a situation like this is more likely going on than trading food and goods for metals.

Silver Savior's picture

It just happens. I figure since I would trade in metals some other people would do it to. Gold and silver being used as money for thousands of years has something to do with it too. There is no doubt that's what they are doing. 

Heck trade with me today without there being a crisis. Gold or silver. I would gladly take it as payment as long as the trade is fair.

jafo2me's picture

I don't understand..  You are looking for a video?  You don't think you can use silver or gold to barter for goods in an economic crash?

The unbacked paper dollar has been around for 100 years.. Gold and silver which is and has always been real money has been exactly that for over 2000 years.

 

Lucky Leprachaun's picture

Whatever else goes down we know for sure that the bond holders and the borrow-and-spend Puerto Ricans will be bailed out with the American taxpayer and/or the Fed printers coming to the rescue.

Kendle C's picture

SIMPLE BASIC JUST SOLUTION:

Immediatly freeze and impound all funds on and off shore of the Clinton Foundation (Haiti "houses"). Hit the Red Cross if possible. Select a agency with unimpeachable integrity (if such still exists). Directly purchase and deliver what these American citizens need, fucking hand out cash "Debt Free Money" immediately. Chop the international banker off at the knees if need be and those that squawk the loudest. Then monitor and arrest profiteers, looters, various grifters, carpetbaggers, would be authority figures, puffed up assholes. 

Lost in translation's picture

And guns.

They left out weapons.

Txpl9421's picture

Cash?  Sure. 

Gold and Silver?  Really.  And what would you get for change.  Smaller pieces of gold and silver?

If you are willing to use even the smalled US gold coin, you are still looking at spending about $140.  Not really practical is it?

Regular coinage would be just as valuable in a world where people KNOW that the power is going to come back on, sooner rather than later.

Its a nice try.  But its bullshit.

 

DIGrif's picture

You are a damned idiot for a couple of reasons

1. There is no cash....regular coinage is in short supply or non existant you fucking idiot.

2. Lets say I am willing to sell you a bag of groceries for an ounce of silver (currently about $17 USD) You think it should cost a little less, and I agree. So I throw in a couple of cans of soup or something until you and I agree the trade is fair.

Now do you understand dipshit?

Weiss's picture

"Regular coinage would be just as valuable in a world where people KNOW that the power is going to come back on, sooner rather than later."

Oh, and how does ANYBODY "know" that the power is going to come back on?  When is it going to come back on in Puerto Rico, do you "know"?

Or what if it comes back on in, say, the year 2019?  In an indefinite-power-outage scenario like an EMP, or California's inevitable "big one" EQ, those few paper dollars people will be using will crumble to shreds before they get more.  You think gold and silver won't be used?  Hell, people will find ways to slice their Double-Eagles into small pieces if need be...

Silver Savior's picture

I am in the position to make change. I can give silver dimes, quarters or half dollars as change. But I will have to charge a small premium because I can make change. lol.

Working on getting a good stock of fractional gold so I could do it with gold if I had to but I would need a bigger premium making change in gold. 

Not sure why the average Joe does not constantly think about how he will make change with metals. It's important.

joego1's picture

1 oz silver is about 20 bucks, would work just fine as it has for 2000 years or so. What if lil kim turns the lights out for years? Some say it can't happen right?

bluskyes's picture

Don't be so obtuse. How did USA (and kanuckistan)  use silver coinage until the late 60's?

libertyanyday's picture

only because PR is an isolated case, the rest of the world uses us fiat and isnt sufferring the effects of a nat disaster

fiats come and go..........gold and silver are STILL being used and coined..........for a couple thousand years.

 

BidnessMan's picture

Pre-1964 dimes would be very useful. 

Silver Savior's picture

I am buying a lot of those right now. I am cleaning the weak hands out. No literally I am buying all of some sellers stock of them.

Vuke's picture

Interesting discussions on what to hold for emergencies. My take it's almost everything as a barter system will arise.  Meds, whole grains, tools, PM's, solar panels (think cell phones), good oils (palm, olive and coconut), cans of fuel gases, paper cash and yes, guns, in case it gets really, really bad.

libertyanyday's picture

if you dont own guns the rest is mute, you are just collecting stuff for the man with the most guns on your street.

VWAndy's picture

 Yep thats how I see it.

Unwashed's picture

If anyone is curious about Puerto Rico's recovery, 

this website tracks their progress:

http://status.pr/Home

AKKadian's picture

It's a case study. From here on out it will be, remember Katrina, remember Puerto Rico, not only did they not have cash, they did not have guns.!!! 

VWAndy's picture

 Hardware such as screws, nails, tarps, plaster, cleanning suplies would be very barter friendly about now.

Anteater's picture

Your precious 1898 Morgan silver dollar in mint condition that you paid

$75 for will buy you one quart of gas, ... as soon as they get the pumps

turned on again. At the grocery store, which only has rice, beans, Ramen,

Spam and Pepsi until the electricity gets turned on again, they will refuse

to take your $1200 golden eagle that you paid $1800 for in 2013, because

they don't have $1,185 in change, even if you could talk them into taking it,

since it's NOT currency. The only people who could cash you out are the

drug dealers and pimps, and they'd roll you in an alley trying to fence it.

Honest to G-d, goldbuggerers are the most gullible people on the planet.

libertyanyday's picture

NO. run a tab against that 1400 dollar oz of gold,   has been done for hundreds of years.  We still do it today, we use CC..........

VWAndy's picture

 Yep. But trade they must. Cleaning supplies and the stuff to put your life back together will trade at a priemium.

VWAndy's picture

 Renting hand tools by the day in barter would be a nice deal for everyone. Being able to charge batteries for cordless tools would also be good. A posting wall for goods and services to trade would also be nice.

Lucretius's picture

Andy, you're presuming that these people actually want to do something for them selves. You or I might do something like that in an emergency event, but it is my belief that Ricans are living the fat lazy life on a tropical island without a care for tomorrow! Allowing their pols to spend into infinity, wanting statehood, and expecting their food stamps every month. PR is simply an offshore haven for pharma, a huge military base, and a bunch of welfare recipients.

 America needs another welfare state like PR like we need another Chicongo! FFS.

 

VWAndy's picture

 There are some that can keep up with me. Not many. Those cats will come out standing they always do.

TeddyBear's picture

Here's the real deal. Gold and silver and Bitcoin are just not working well in Puerto Rico at all. My friend tells me that the gold shops are paying $50 for 1 oz of gold and $1 for one ounce of silver. And they will also buy a full Bitcoin for $100. So if you're saving up gold and silver thinking it's going to get you through you are definitely not saving enough. But on the other hand cigarettes and whiskey and beer are selling like hotcakes. Their value has jumped way up. You can get a full tank of gas from one bottle of whiskey. And also add that the hospital ship that is there is not accepting people who need medical care. It's only accepting people who are favored and Republican Party directors. They have plenty of food and drinking water on the hospital ship. Look it up don't take my word for it this is coming from high up and it's being left for the people to fend for themselves and the higher-ups get all the luxury. Just letting you know gold and silver is not cutting it its trade value is very weak right now. But if you need paper money its value has skyrocketed. allegedly

joego1's picture

The coin shops may be cash poor as well. I don't consider that barter. If your neighbor has a bunch of tools and you have none he might consider trading something like gold or silver for them. Agreed that initially cash is king in a natural disaster but what if the disaster was a financial one and the dollar bit it? In some countries gold may work better than cash if it's hard to deal with a foreign currency. What I am saying is one size doesn't fit all.

VWAndy's picture

 The more messed up things are the more barter becomes the smartest move. Skills barter best of all.

Global Douche's picture

If it's really THAT fucked up, hodl'ers should take along extra $$ and certain in-demand supplies, get a private flight chartered to San Juan, then start buying the "$100 Bitcoins" because when the receiving parties refuse to sell (they WILL) expect those cheapy cheap prices to become File 13 history. The locals there ain't stupid, they talk and will immediately catch on. Personally, such sharks deserve to be dumped home where they belong; in the Atlantic. What will really happen is a riot, because someone's apple cart gets turned over. I strongly agree cigs & booze are always good for barter and I quit smoking decades ago! Bitcoin is not much understood on the island or these prices you cite would've never happened, no matter how desperate they've become.

I smell CRIMEX & LIBOR in the same metals manipulation. It's way worse than the septic situation in PR.

Otherwise, this story is excellent and why people should wake the hell up and never allow the War on Ca$h to progress another day. This may be America's ONLY chance to take that shit down. 

Kendle C's picture

If a pawn broker is giving $50 for an ounce of gold he needs to be tied to a cinder block and chucked into a swollen river.

Anteater's picture

No, YOU need to be rickrolled in some alley for being a stupid

goldbuggerer cunt.

Dirty Bumn's picture

you sure do sound stupid