246 THE BiG DROP
3) Would you recommend buying silver in addition to
gold?
Silver has a place in investors’ portfolio. I don’t believe in
a fixed silver/gold ratio. A lot of people put stock in that con-
cept but silver’s harder to analyze because it’s a precious metal
and also an industrial input so it moves on different vectors.
That said, if gold’s going to $7,000 per ounce, which I expect,
silver’s going to go to $100 or more. So silver’s along for the
ride and I think silver has a place.
By the way, I do recommend the monster box. The mon-
ster box comes from the U.S. Mint. It’s 500 1-ounce American
silver eagles. That’s good to have because if the time comes
when they shut down the ATMs and you need precious metal
for walking-around money to buy groceries for your family,
you’re not going to want to hand over a gold coin. A silver
coin’s probably enough. Having a monster box is a good in-
surance policy.4) Do you think inflation or deflation is more likely?"
I think they’re both likely and that’s what makes it so chal-
lenging for investors. Again, I go back to our friend Warren
Buffett. He owns hard assets as his inflation insurance. But he
also has $55 billion in cash — the most cash that Berkshire
Hathaway has ever had — that’s his deflation insurance.
Buffett understands that both are possible.
I think we’ll end up with inflation but we could go through
a deflationary episode first. That’s why investors need a bar-
bell approach so they’re ready for both outcomes.5) Is money safer in a small local bank or a big “mega-
bank”?
Small local banks are good if they’re highly rated. Some
of them are solid and some of them are not. I don’t want to
get into the business of recommending banks because I don’t
know every investors particular circumstances. But there are