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I've been talking about this with friends and family for weeks now, and I decided I needed to share it with you folks and perhaps get some feedback. Like a good little corporate machine cog, I'll start off with an Executive Summary. For simplicity and easier reading, I use the term "gold" below, but of course these statements can easily be applied to any precious metal or any commodity that retains similar properties to gold. For instance, you might replace the term "gold" with a "huge stockpile of gasoline".

Finally, I'm not an economist nor did I study it in college. However, I do consider myself very intelligent and have sought to analyze this situation in a basic framework. I don't believe a degree in macroeconomics is going to be of much use here. The analysis provided is based on years of observation, a pretty firm understanding of supply and demand, and firm understanding of survival skills, (both wilderness, and urban) and to be honest...humble prayer.

Executive Summary

In these difficult times I advise anyone that they avoid buying gold. Instead, obtain the things you will want to buy with the gold if ever a time came that you need to trade gold for something of more important value. There are several reasons why this is a much more practical preparedeness strategy, namely:
1) In a vacuum, gold is a worthless metal. It can be consumed, made into tools, used to seal or protect anything. Its only value is in relation to the items for which it can be traded.
2) Redeeming your gold for an item of value, whether that item be some form of money, or a commodity like food, water, shelter, or medicine is a time and energy consuming process. Even if it turns out to be a simple and painless task like going to the Bank, that's probably going to be time and energy wasted, that could have been spent doing something more useful in a stressful environment.
3) There are too many variables to define which bring weight to how gold will be valued in the future. In a calm, and relatively peaceful society it is much easier for large groups of people (banks, corporations, even countries) to come to an agreement of what an ounce of gold is worth, and therefore trading gold for that value becomes standardized. In a stressed environment, there are many avenues of communication that most people will not be able to take advantage of in order to know what their gold is worth. In addition, the "global" value of gold will in that you will only be able to trade gold for things of value in a more localized fashion, thereby reducing it's value to those things that it can be traded for locally.



In a vacuum...

Nobody can hear you scream. I mean, come on, if you're in a vacuum you've got bigger problems. You only have about 3 to 5 minutes before your brain is so oxygen-deprived that there's little hope of recovery so you shouldn't waste any of your breath screaming anyway. Of course, I used that line as a joke - but I really want to illustrate a point. If you were on a deserted island, name 5 things you would want to have with you. Now name 10 things...20 things...100 things...1000 things! Same scenario, but now there's you and 9 other people. Half of them are family or close friends, and the other half are basically strangers. Name 10 things you would want to have with you. Now name 20 things...100 things...1000 things! If "gold" or any other precious metal made your top 1000 on either of those lists, you've got problems.

For the rest of you who didn't list gold on your top 1000 (ahead of food, water, shelter, medicine, a knife, a gun, a bow & arrow, etc) why would you want it in a hypothetical disaster environment? The hypothetical could be a natural disaster, war, political upheaval, economica collapse, or some other callamity. In any event, considering person A and person B where person A has $10,000 worth of gold, and person B has $10,000 worth of food, water, medicine, shelter, and protection; at that moment of realization, I would rather be person B. Person A has in his possession an item of value, but that exact value is questionable, constantly varying, and is still bound by the laws of supply and demand. I quote the great William Shakespeare from his play Richard III:

A horse! A horse! My Kingdom, for a horse!

King Richard the third, was willing to trade all that he possessed for a horse. So in his greatest moment of need, with his life in deep jeopardy...his castle, his vast possessions, his Kingdom, and all his power had been reduced in value to that of a single horse. I know this is an extreme example (in addition to being fictitious) but I want you to begin to think about the actual situations you will find yourself in, and imagine yourself "standing" in those circumstances..."holding" your gold and ask yourself if you feel "secure".



Death of a Salesman

So it's finally happened. You're standing on the shore of some beautiful beach looking up at a half-buried Statue of Liberty and you realize that even though you're surrounded by a bunch of talking, damn dirty apes that you aren't on an alien planet but you are (in fact) on Earth and you realize that humanity has destroyed its own planet. Not to worry, though...you have a few pounds of pure gold in varying denominations and you feel confident that you can "buy" your way out of this catastrophe. Your biggest problem right now is trading your gold for the things you really need. You want to get a fair price for your gold, in fact, you'd probably like to gouge every man, woman, and child for your gold because you were smart enough to buy it a few years ago when it was only $1,000 an ounce. The last Bloomberg Commodities report you can remember before Skynet became self-aware and initiated a nuclear holocaust (ok, sorry, I'm mixing up my movie plots) showed gold at about $2,000 an ounce. So you're feeling pretty good. Let's say your sitting on (what you estimate to be) a million dollars of gold. For those of you keeping track at home that's a little bit over 1 bar of gold - at the estimated $2000/ounce price.

Here's where it gets dicey. You can do one of a few things. You can "convert" the gold into some other monetary standard. I won't use the word "dollar" here because we're going to assume that if you got to this point that there is no US dollar (USD) and that even if there were - you wouldn't want it anyway. Just think of the word pesos. Ok, so you can

a) convert it to another monetary standard,
b) trade (barter) it for things of value like food, water, clothing
c) hold on to the gold until a future date

Before I disect each of these three possibilities, I want to explain my section title: Death of a Salesman. If you're not familiar with the book...they made it into a Broadway Play...if you haven't seen the Play...don't worry, they made it into a movie, in fact, several movies. If you haven't seen the movie(s), there's a nice quick description of the plot on Wikipedia. Maybe if you'd stop watching reruns of Jersey Shore for 10 minutes you'd have time to read over that at some point. I use the reference here because there are two recurring themes that permeate the story. The first is that the main character, Willy, questions his value system when it comes to his occupation and life in general and seeks to redefine what success means to him. The second is that he struggles with the value system his sons embrace and how their choices make him feel he is a successful or a failed parent. It's a sad story and basically everybody loses. Willy loses because he spent most of his life chasing after things that, in the end, didn't hold much value. His oldest son, Biff, loses because he can't seem to communicate with anyone what he values and so nobody can help him successfully seek after those things.

The point is, the things that you value now - may not be so valuable in the future except...the basics! I don't care if we're talking the year 2000, the year 2010, or the year 2050 you're going to need the basics of survival: air, water, food, and shelter. You can rest assured that if you invest in those things that it won't be a wasted investment. Everything else is a crap-shoot.

Ok, so let's examine the problems with a, b, and c above:

A - Convert your gold to another monetary standard. There are a few problems with this approach, but the most obvious pitfalls are:

You will probably lose value in the transfer. This can be in the form of a fee for conducting the transaction or some other "overhead" on your behalf for making the conversion. Remember, you've got to get your gold to an Exchange (and I use that term loosely). Your time...your energy (read as fuel)...and your focus (read as security - I mean, come on...your transferring gold) are spent on the conversion process. This overhead occurs each time you make an exchange.
You may pay extra in taxes. In a relatively calm society (let's pretend the poop hasn't hit the fan too hard) the local government is going to want to get its hands on as much gold as possible to remain solvent and that means taxes...and believe me, with millions of people suffering, they're going to tax you hard. Nobody likes a bragger, and bragging with gold is especially repugnant so you're going to pay through the nose for your good fortune.
As mentioned in problem 1 above, security. You have to "go out in public" and "stand in line" and "wait in the open"...probably in front of some sign that reads "If you have gold to exchange...stand here!". It's practically a suicide mission, if you don't get robbed this time around, you'll probably get robbed next Tuesday when you come back to do another exchange. It's just not safe. Hey, I never said gold would be worthless...just ill-advised.

B - Barter. All the same problems with A with the added problem of never really knowing if you're getting a good exchange rate on your gold. It's all very subjective and prices fluctuate all the time so the few pounds of rice or beef you're getting this week may cost 3x as much next week. In addition, this assumes that there is anything to barter for. Your assuming that there's some magical Farmer's Market just waiting to exchange the life giving goods these people have worked so hard to produce or accumulate for your lifeless hunks of metal. Remember that deserted island? All the gold in the world isn't going to help you there, so don't plan on there being a constant supply of resources when everything goes South.

C - Hold onto it. You're probably thinking - who in the H-E-double hockey sticks is going to do that? That's the last thing you want to do. Well, you're right - I mean, I did put it as C on my list. You'd be surprised, though. Gold (especially) makes people do crazy things. I've never really had a huge attraction to it. I don't own any gold jewelry and I can't picture myself getting anything that's gold plated. It just doesn't hold any appeal to me. However, history is replete with examples of people going to extraordinary measures to obtain gold. I won't go into the many details, but I'll just throw out: Christopher Columbus, California Gold Rush, and Three Kings (ok, another bad movie reference - but you get the idea). Getting to the point, you worked hard for many years to obtain all of this gold and now, when the time comes to part with it - you will have a very difficult time letting it go for anything short of "the highest dollar" and you'll see that this will be your undoing. Gold is poison - it poisons the mind first, and then the soul. You'll pretty much become a cliche' version of Gollum in Lord of the Rings. Think I'm kidding? History has proven otherwise.

Think Local, Spend Local

This is probably the least thought about negative aspect of trying to use gold as a monetary standard in a crisis. You simply won't be able to sell or trade your gold on a large scale. Communication...transportation...cooperation will all be diminished or nonexistent. You're probably thinking "cooperation"...what? Large companies and even countries cooperate together to agree on the value of gold. As these institutions communicate less, they will be less willing to cooperate, thereby driving the value of gold down. You're going to basically be stuck with trading/selling it locally which drives down the value even more. Why? Supply and demand. You may be one of a few people in the general area that own gold...but that may not be because of a supply problem, it's probably because nobody wants it. If supply is low, and demand is low...cost (or in your case value) is low. As mentioned before...you can't do anything with it. Why mess with the middle-man? Everyone is just going to go get the stuff that they need like food, water, & shelter. They're not going to want to get gold...to then go get the stuff that they need.

In summary, I know there are some prominent people who seem to be advising gold as a solid investment. I'm going to go ahead and call a couple of them out: Glenn Beck and Rush Limbaugh. I'm a conservative, and I listen to these guys all the time - but you need to understand that they run a business and they need to pay their bills. If some company wants to pay them thousands of dollars for air time and sponsorship - they're going to take it. I would. But that doesn't mean that you need to buy gold. To be fair to Glenn Beck, if you listen to his sales pitch carefully, he's trying to warn you that this may not be for you. He even kinda' throws in a left-handed compliment that "the way I buy gold is the most expensive way". I love it, because as a middle-income American - I hear that and think to myself, well I'm not going to do that - I'm not rich, I can't afford to do this the most expensive way. However, to the rich, they hear that and think it's an invitation to an exclusive club. They're almost too happy to drop their money on the barrel head for some gold - and if they paid a little too much, who cares? They're rich! They can take it!

Whether you're single or married with children, you are going to need resources for your survival as well as the survival of your loved ones. Take my advice: gold isn't it. It's a pitfall. In many ways it's almost like alcohol. There are some people that drink throughout their lives with little problem. They always keep it in check, and it never seems to hurt their married life, occupation, or health. However, in stark contrast - there are millions upon millions who find their lives destroyed because of it. Gold is no different. If you're like most people, it will cause much more trouble than it will ever be worth. My advice: just avoid it.
 

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on the contrary, after the SHTF I will gladly trade you 5lbs of rice for a gold coin....in essence your gold can be eaten, after you flip it for food.

I am holding PM's (purchased AFTER purchasing necessities of survival) as a store of wealth, if/when the dollar tanks...all of my dollar based assets will be crap, but all of my hard goods, food, real properties and PM's will retain value. In my case as I think for most, PM's (both silver and gold) are an insurance policy.
 

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Discussion Starter #4
Again, I think the concept of flipping gold for food is untested. I mean...try it now. Seriously? Take some gold and trade it for food now. If it's difficult (or next to impossible) now, then why would it be so much easier in a SHTF scenario? Why...because it "just has to be easier"?

It also comes back to timing. There may be a time (post incident) that trading gold for food becomes possible, but it could be months or years after the incident occurred in the first place. What are you going to eat during that time?

I could almost see buying gold "after" you have bought all your necessities but even that seems vague. You could always buy more. I'm never going to say to myself. I have enough ammunition, so I'm just going to stockpile gold now and buy ammo later if I need it. Or, I have enough soap, toilet paper, medicine, water purification, food, clothing, knives, tools, alternative energy, etc....I'm just going to start saving gold.

And don't forget, just because you have gold doesn't mean there are going to be people willing to sell. I don't want your gold - I'd rather have the things I need. You can keep it. I really feel most people will feel the same. Nobody is going to want gold. Why would they want it? Because they have too much food? Too much water? Too much security????
 

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Food OR gold? There is no debate. Buy food! Food AND gold? Ok, that's better.

Precious metals DO NOT take the place of proper preparations. They augment them. If you can't afford both, you buy preps. Simple as that.

Most of the precious metals arguements that I've seen here always start because people can't seem to get past the either/or mentality. As if people buying metals are not buying preps. Anyone who buys metals INSTEAD of preps is a fool.
 

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The only reason I have for keeping any gold (and it was not bought recently - have had it as an insurance 'policy' for about 30 years now and it is not much) is in the hope that, should things go bad and we have NO money or money has NO value, I might be able to use a piece a year (for a couple of years) to pay my property taxes.

Some states are now beginning to talk about making gold and silver legal currency again, for at least some uses. If mine does that, it is conceivable that my idea of paying taxes with it, would be a good one. Under really bad conditions, taxes would be about my only ongoing (need cash for) expense - but, if I cannot pay them, we could lose our fully paid for property and I don't want that to happen if possible.

On the other hand, I couldn't bring myself to sell it anyway, at any price - even though its worth now is apparently more than 50 times what it was originally purchased for. And it is not in the form of coins either - unless the state recognizes it, I would have to go through a bank to convert it anyway. And, I have food already - always could use more of course - but, to sell this little bit for more food at this point seems less sane than keeping it.

But, that said, I would not recommend anyone buys gold right now, especially if they don't already have a full larder, etc. Silver, in very small amounts, perhaps.
 

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You must be using voice recognition software, that way you can jerk off while posting this stuff Stormin.
I admit it, I am a silver bug and proud of it. It always has been and more than likely will be a means of wealth protection and barter.
While you hoarders jump on me please understand that while you may have 2 gallons of Aunt Jemima, I've spent a few days boiling down a few hundred gallons of maple sap. So, when you bring your Aunt Jemima or freeze dried corn to me to trade for my potatoes please don't be offended when I laugh you off my farm. You see, I am an avid farmer as well as prepper and holder of PM's. So while I do not have your "expertise" in all areas prepping and PM, one thing I do know is that there are many like me and we do get tired of this nonsense.
 

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Again, I think the concept of flipping gold for food is untested. I mean...try it now. Seriously? Take some gold and trade it for food now. If it's difficult (or next to impossible) now, then why would it be so much easier in a SHTF scenario? Why...because it "just has to be easier"?
It was well tested for the first 6000 years of human civilized existence. A post SHTF scenario, at worst, will be similar to the majority of human history.

Some common unit of exchange is required for an economy. You don't want to drive your herd 20 miles to the local market every weekend to see how many you can sell.
 

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You must be using voice recognition software, that way you can jerk off while posting this stuff Stormin.
I admit it, I am a silver bug and proud of it. It always has been and more than likely will be a means of wealth protection and barter.
While you hoarders jump on me please understand that while you may have 2 gallons of Aunt Jemima, I've spent a few days boiling down a few hundred gallons of maple sap. So, when you bring your Aunt Jemima or freeze dried corn to me to trade for my potatoes please don't be offended when I laugh you off my farm. You see, I am an avid farmer as well as prepper and holder of PM's. So while I do not have your "expertise" in all areas prepping and PM, one thing I do know is that there are many like me and we do get tired of this nonsense.
I guess that's the kind of language I expect from someone from NY. Don't worry, I won't be making any trips to NY to see how you're doing.
 

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It was well tested for the first 6000 years of human civilized existence. A post SHTF scenario, at worst, will be similar to the majority of human history.

Some common unit of exchange is required for an economy. You don't want to drive your herd 20 miles to the local market every weekend to see how many you can sell.
I probably could have stated my position better. The underlying message I was going for was that there are better places to put your money. I mean, honestly - was is the total dollar amount of PM you guys claim to own?

If one of you could come back and say "I own over $100,000 USD in gold and silver" then I think you'd have a leg to stand on. But don't tell me you're sitting on $2,000 worth of gold and somehow you are well protected from financial uncertainty in the US. Your 2 ounces isn't going to pull you through to the end.

Some of the other commenters said it best. Don't choose gold or food. Food first, then "maybe"...gold. Get your storage in order first. Prepare every needful thing, then if you want to buy gold...it's up to you.
 

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I agree with most of the first posting, but not all of it. Just because when I am currently trading or bartering (yes we are doing that already because money just isn't there to buy things), that I am finding some still want silver. If I cannot do any work for them, then I find I have to have silver to purchase what they have for sale. Now, some will take greenbacks, but very few because they know it is worthless.

So as a result of the trade and barter system that has been going now for almost a year, I still have to have some silver on hand to make purchases.
This is not a full blown every day thing, but there are barter and trade markets started up last year and they do sell some really nice things. Even cars.
Now, since this started to get people into the barter and trade ethics, everyone is trying their best to keep it as such and not asking for greenbacks as we are expecting without a doubt the economy will collapse sooner than later.

So if I want a can opener, I have to have silver on hand. If I want a horse, I either have to pay silver or trade something. If I want some help building something, then I have to give my labor in return for theirs in equal hours.

However, as much as I hate the illusion of money, I still have to come up with silver to purchase items with. So I always keep a little on hand.
 

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Some of the other commenters said it best. Don't choose gold or food. Food first, then "maybe"...gold. Get your storage in order first. Prepare every needful thing, then if you want to buy gold...it's up to you.
That's it exactly. If you can't afford to do both, you invest in preps exclusively. Metals are a financial prep.

I will accept them in barter situations. I do that today in fact. Straight barter is horribly inefficient. This was once common knowledge, but we always forget the lessons from the past it seems. As barter becomes the norm, people are once again going to discover this. Every time commerce becomes established, forms of common "currency" appear to make it go smoother. Metals have always been one of them.

I can give you an example where metals can be a valuable prep. I invested back when they were a lot cheaper. They're worth over four times what I paid for them now. In 2009 the economy put me out of business. Between being able to eat from my food storage, and cashing in some of my metals for far more than I paid for them, I've managed to keep things going just fine. They were an indispensible prep item that has come in just as handy as my food storage. Not all SHTF situations involves the entire country. There are personal SHTF situations too. So far, food and metals have come in handier than the firearms I own. I have yet to have to use one of them in my personal SHTF situation.
 

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A buddy and I were having this same discussion last night. All of your points were basically made. However it came down to this: In a true "god, we are so f-ed" (SHTF) scenario, gold is basically worthless. If you had a case of mountain house and no water and I had water and no food, are either one of us going to give up our supplies for gold? No. But at some point society will start to restore, people will adapt, and we will not just be looking for the bare minimum to survive -- we will be seeking comfort. If that means I will pay you an ounce of gold for a couple blankets and a box of bullets, so be it. But it WILL have intrinsic value at some point post-shtf. You can't just say that something that has been sought after, killed for, and hoarded by governments and the rich for centuries (even to this day) will suddenly have no worth.

So your scenario C almost makes the most sense, even though you deemed it the last thing you'd want to do. Hold it. At least for a little while, unless you desperately need something to survive and someone is willing to trade for your gold. When society starts to rebuild you may just find that you've catapulted yourself to the top 1% of the survivors. :p However, don't you worry. Someone will come along to steal or swindle it from you soon enough. :-D
 

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Discussion Starter #15
A buddy and I were having this same discussion last night. All of your points were basically made. However it came down to this: In a true "god, we are so f-ed" (SHTF) scenario, gold is basically worthless. If you had a case of mountain house and no water and I had water and no food, are either one of us going to give up our supplies for gold? No. But at some point society will start to restore, people will adapt, and we will not just be looking for the bare minimum to survive -- we will be seeking comfort. If that means I will pay you an ounce of gold for a couple blankets and a box of bullets, so be it. But it WILL have intrinsic value at some point post-shtf. You can't just say that something that has been sought after, killed for, and hoarded by governments and the rich for centuries (even to this day) will suddenly have no worth.

So your scenario C almost makes the most sense, even though you deemed it the last thing you'd want to do. Hold it. At least for a little while, unless you desperately need something to survive and someone is willing to trade for your gold. When society starts to rebuild you may just find that you've catapulted yourself to the top 1% of the survivors. :p However, don't you worry. Someone will come along to steal or swindle it from you soon enough. :-D
Agreed, again - I probably would reword a couple things if I could post it all over again. In a vacuum, gold is worthless - but in society, it's always been worth something.

I guess for the most part I just wanted to say that there are so many other things you can buy that make more sense than gold - and until you have those things...you shouldn't buy gold because you're setting yourself up for a big mistake. You'll feel confident that you're covered/protected - but you're not.

I guess I just wanted other people to hear that...and know that it's OK that they aren't buying gold; those who are focused on other things like food storage and necessary supplies.
 

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I think the OP is assuming that everybody is in the same financial boat as him. He doesn't understand that some people on here are multi-millionaires all the way to living day by day for some of the people. If your living day by day, of course your not going to buy gold. You don't have all that cash to do it. If you have plenty of extra cash and your preps are in order, then why not turn that cash into gold?
 

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I think the OP is assuming that everybody is in the same financial boat as him. He doesn't understand that some people on here are multi-millionaires all the way to living day by day for some of the people. If your living day by day, of course your not going to buy gold. You don't have all that cash to do it. If you have plenty of extra cash and your preps are in order, then why not turn that cash into gold?
Are you a multi-millionaire IceDemon?
 

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That's it exactly. If you can't afford to do both, you invest in preps exclusively. Metals are a financial prep.

I will accept them in barter situations. I do that today in fact. Straight barter is horribly inefficient. This was once common knowledge, but we always forget the lessons from the past it seems. As barter becomes the norm, people are once again going to discover this. Every time commerce becomes established, forms of common "currency" appear to make it go smoother. Metals have always been one of them.

I can give you an example where metals can be a valuable prep. I invested back when they were a lot cheaper. They're worth over four times what I paid for them now. In 2009 the economy put me out of business. Between being able to eat from my food storage, and cashing in some of my metals for far more than I paid for them, I've managed to keep things going just fine. They were an indispensible prep item that has come in just as handy as my food storage. Not all SHTF situations involves the entire country. There are personal SHTF situations too. So far, food and metals have come in handier than the firearms I own. I have yet to have to use one of them in my personal SHTF situation.
Gold is too high for barter for most things. Fractional silver is the way to go for barter preps
 

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Agreed, again - I probably would reword a couple things if I could post it all over again. In a vacuum, gold is worthless - but in society, it's always been worth something.

I guess for the most part I just wanted to say that there are so many other things you can buy that make more sense than gold - and until you have those things...you shouldn't buy gold because you're setting yourself up for a big mistake. You'll feel confident that you're covered/protected - but you're not.

I guess I just wanted other people to hear that...and know that it's OK that they aren't buying gold; those who are focused on other things like food storage and necessary supplies.
True that. By the way very well thought out post, clear points, etc. I expect it in powerpoint form on my desk by tomorrow morning for presentation to upper management. haha :p
 
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