The economy can "fall apart" in a few different ways - One way would be for the dollar to become debased through further inflation, the economy could contract into a massive depression (in which case all asset classes would fall in price) or there could be a "SHTF" Shit Hits the Fan total collapse scenario with food shortages, martial law, etc.
The reason people like gold is that is has been ackowledged by the world as a store of value for thousands of years. Dig up an old sunken ship from the 1800s and the gold in its treasure has retained the same value as it did when it sunk. The paper money used back then is now worthless. Three thousand year old gold is as good as new, whereas paper money all eventually becomes worthless.
Throughout history, all governments (as in ALL, every single one) have used debasement of their paper currencies as a way to pay for ever expanding debt. Inflation started back in ancient Athens by mixing cheap metals into gold coins) Rome blew up their economy through debasement as well.
So the inevitable course of money (especially paper "fiat" money not tied to a tangible asset) is to lose value over time until it is replaced by something else. The Pound Sterling has lost 98.6 percent of its purchasing power since its inception in the late 1600s. The US dollar has lost 98 percent since the year 1900.
Thus the dollar will continue to decline in value as it has over the past 100 years. In fact the first currency we printed - the Continental - became worthless through debasement. Thats why the US constitution declares that ONLY gold and silver be used a form of money. But of course the government got around that with the Federal Reserve Act. Thanks to Nixon in the 70s, the US dollar is now backed by nothign more than America's "good credit and reputation" LOL.
So why gold and silver? Simple - they do not change in value against other asset classes, rather they remain constant over the long term. What people perceive as an increase in the price of Gold/Silver is, over the long run, simply a function of the debasement of a currency. That sounds hard to weird, but its true - an ounce of gold in 1900 had the same purchasing power as it does today. But through inflation (printing of excess amounts of currency) it takes more "dollars" to buy that same ounce of gold today.
In a true, world ending SHTF scenario, gold might not be immediately useful (Although in other examples of economic collapse around the world through war or famine gold has always been valued. Especially when a currency collapse is the cause of the problem)
But once we move beyond a "hide in your bunker" phase back to a semblance of normal trade and commerce, history shows gold will again become useful as a store of value and a unit of money.
Personally, I think it's wise to have as many bases covered as possible for anything from a terrorist attack to a natural disaster (earthquakes where I live) That means a firearm or two, ammo, cash, food and water and supplies (batteries, toiletries etc). We do have a lot of gold and silver bullion as well because I know that the long term value of fiat "dollars" is to go to essentially zero and my gold/silver bullion carries no counterparty risk.
When a currency gets weaker you do not want to have your wealth locked up in it. Gold/Silver or other strong currencies will be insurance. It's hard to say exactly what currencies will grow stronger since ALL the of the world uses various forms of fiat money.
Due to short term factors such as deleveraging, margin calls, foreign capital flight etc. the dollar could continue to remain strong relative to other currencies in the short - mid term. For the past 4 or 5 years the real estate market in the US was in a bubble that is now popping. Eventually prices will fall back in line with per capita income and other general asset classes. Actually, over the long term, all the asset classes generally track each other within a narrow band, In the short term they will fluctuate and bubbles will form, but eventually that bubble pops and returns to the normal range.
By the way, most people don't realize this, but even before the recent crash the DOW had DECREASED in value over 9 years since the year 2000 when measured in inflation-adjusted dollars. Large stock market numbers do not mean anything unless measured against inflation. The stock markets have been in a bear market for 10 years, but because inflation has jacked up the nominal prices, most people think the opposite.
