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

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

Recent Market Updates

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Please share our research with family, friends and colleagues who you think would benefit from being informed by it.


post turtle saver skbull44 Sat, 10/14/2017 - 10:36 Permalink

mmm *chomp chomp* these silver ingots sure are tasty today *chomph chomph* I can't wait for my bowl of gold coins for lunch *burrrp*...what, the people down the street were well prepared and are eating actual food they had stored away? fucking losers, don't they know only gold and silver will get them through this? where's the ex-lax...

In reply to by skbull44

Hikikomori Hikikomori Sun, 10/15/2017 - 01:37 Permalink

Downvote me all you want - kindly show where this article demonstrates gold and silver being used as mediums of exchange in Puerto Rico?  It does not.  It says cash is being used, then goes on to fantasize about precious metals.  Fantasies are not reality, no matter how much you may wish they were.  Then go back to your survivalist fantasies.

In reply to by Hikikomori

Latitude25 Hikikomori Sun, 10/15/2017 - 07:04 Permalink

No evidence needed.  Just go visit a very primitive country where prople live off of the land with little or no electricity.  There you will still find enterprising Asians who will barter for your PMs.  Hell I even sold some Chinese some shark fins to get new fishing lures.Puerto Rico is what disaster in America looks like, NOT how the rest of the world operates.

In reply to by Hikikomori

Latitude25 Sat, 10/14/2017 - 09:14 Permalink

So is Puerto Rico in a zombie apocalypse or is there law and order?After Irma I personally witnessed a tendancy towards anarchy but then responsible citizens stepped out and took control and established order.Don't underestimate humanity.

Cloud9.5 Demologos Sat, 10/14/2017 - 10:19 Permalink

I am not deriding the importance of stacking in preparation for systemic collapse.  There is plenty of evidence the world over that demonstrate precious metals can buy you a ticket on the last boat out.  People in Florida, Louisiana and Texas have lived these short term events.  From experience I can tell you that water, food, gasoline, propane, flash lights, batteries, a generator and cash are the assets that you need to get you through these short term crises.Puerto Rico may be a long term event.  If it is then it may serve as a laboratory to study the real impact of long term grid collapse.  I suspect such an event will depopulate the island.  Nobody wants to live in the 19th century when the lights are still on somewhere else.  

In reply to by Demologos

Kina Sat, 10/14/2017 - 09:38 Permalink

Get out a set of decent scales, a good hard knife, and start slicing tiny pieces off your gold when you shop. If you are a business a good time to make easy money by allowing pure gold as currency - of course you set the rate.

bh2 Sat, 10/14/2017 - 09:39 Permalink

"pension payments"It's a literal national emergency. Most people have no jobs at this point. The island is financially broke beyond belief. Making pension payments for government workers whose employment and cash to live on is assured is a moral affront.

NoBillsOfCredit Sat, 10/14/2017 - 09:47 Permalink

"Meanwhile gold and silver would be accepted as they are borderless currencies" No they are not "currencies". They are metals which can be used as money. Money and currency are not the same thing. Currency is a note that is due and current. We will never Escape the bonds ov our ignorance until we stop being ignorant and stop using words incorrectly. The banksters want you to think that currency is money when it's not. They can be used as money but it is not the same thing. The script that is now circulating pretending that it is dollars saying that it is a Federal Reserve Note is being used as money but it is not money. It is not a note that is due and current anymore as it used to be. Go look at the old notes they say they are redeemable in lawful money.

jin187 Silver Savior Sat, 10/14/2017 - 14:06 Permalink

Anything over 20% is pretty much just betting on the economy to end.

The thing to remember is that if for some reason, paper currency goes completely tits up, with thousands of percent of hyperinflation, the value of your gold will also increase a thousand fold to match the weakened currency. When things get better, you buy back the currency with your gold, and end up with a windfall.

That said, the end of the economy also means the end of society. If you really want to create a hedge against the worst, after you've got your 10-20% in gold, you should focus on guns and property. They don't depreciate, and will help you in the event of a total catastrophe where people won't even take gold as payment.

In reply to by Silver Savior

Anteater FIAT CON Sat, 10/14/2017 - 17:14 Permalink

The fool is a fool, not because they are a fool, but  because they don'tknow when to shut up and stop letting everyone know they are a fool.Your PM blanks are worthless. Your PM coins are worth face value only.You will have to have four Morgan silver dollars to buy one gallon of gas.You need a bag of 500 Mercuriy dimes to buy a couple bags of groceries.NO AIRLINE OR COMMERCIAL BUSINESS ACCEPTS CCs IN PAYMENT.There is noone who will cash you out of your PMs except pimps and dealers.They will follow you home and torture you until you give them all of your PMs.You can't eat PMs, and BTCs don't even exist in reality.You were fooled by the goldbugggerers, you bought at $1800, and got dicked.

In reply to by FIAT CON

NoBillsOfCredit FIAT CON Sat, 10/14/2017 - 20:53 Permalink

Gold and silver are no more money than steel is a hammer. Yes money made of silver and gold gets its value because of the underlying metal. However until it has been coined into a specific amount of understood and guaranteed Purity and weight they are just bullion. Money is a tool. The question is what is the tool made of? And if you don't believe me think about the fact that you use Federal Reserve notes everyday for money. They just make crappy money. If you're not on the creation side.Oh, and the creation side is a complete and total fraud. 

In reply to by FIAT CON

Montana Cowboy NoBillsOfCredit Sun, 10/15/2017 - 03:44 Permalink

"Yes money made of silver and gold gets its value because of the underlying metal."Then how come, when they removed the precious metal from the money, the coins and paper continued to function as money and the precious metals did not?It seems that the coinage got its value, not by precious metal content, but because it was government approved as payment for debt by law (which is what 'fiat' means by definition).

In reply to by NoBillsOfCredit

jin187 NoBillsOfCredit Sat, 10/14/2017 - 13:57 Permalink

Money, or currency, are nothing more than abstract objects assigned value, to help facilitate the trade of goods and services where bartering would be unfeasible, or inconvenient. The only different between precious metals and paper currency is the finite supply of precious metals creates different scenarios of supply and demand, and thus value, usually opposite of paper currency.

In reply to by NoBillsOfCredit

Dwain Dibley NoBillsOfCredit Sat, 10/14/2017 - 14:53 Permalink

You should seek out the person who taught you the idiotic notion that "Currency is a note that is due and current" and slap the shit out of them for filling your head with such nonsense.Currency is money in broad economic circulation, a primary medium of exchange.The current official legal tender currency of the United States is Federal Reserve notes and U.S. coin.Debt-free public money.

In reply to by NoBillsOfCredit

NoBillsOfCredit Dwain Dibley Sat, 10/14/2017 - 20:42 Permalink

You need to go study the etomology of the words. Modern usage has tricked the people into using the term incorrectly. Notes can be "current" i.e. "due and payable" or not i.e. "not mature". Currently produced Federal Reserve Notes are neither notes nor are they due and payable. The word "Currency" is a misnomer when applied to the script called Federal Reserve Notes that the banksters are issuing today. You have fallen for the deception. However there's always hope for everybody.

In reply to by Dwain Dibley

joeyman9 Dwain Dibley Sun, 10/15/2017 - 00:21 Permalink

It  says on it it is a Federal Reserve NOTE.  A note is a debt insturment.  All currency issued by the treasury is issued after the Treasury sells bonds which pay interest to the fed.  One Million dollars of bonds issued by the Treasury equals One million dollars worth of cash issued by the fed.  All federal reserve notes are issued with an interest rate attached, that is why we have an income tax...to pay the interest on the currency the fed allowed the Treasury to issue.  Coin has no interest rate attached as that is issued by the Treasury indepenedent of the fed.

In reply to by Dwain Dibley