From Our Archives January 2008
The price of gold is going crazy as investors look for a shelter from a dipsy-doodling stock market.
It reminds me of one of my grandfather’s stories. During the bad financial times of the early 1920s in Germany, the peasants (ancestors of ours) traded their potatoes for gems that the rich people were forced to pay to get something to eat.
That story is one reason why in 1974, I took my family out of Philadelphia where I had a good job, bought a little piece of land in my home country, built a house on it, and prepared for a severe economic depression, which fortunately did not come. Yet.
The only requirement I insisted on in looking for land was that it have several acres of woodland on it. I knew I could have a garden producing food in a hurry, but it takes time to grow the wood to keep a house warm and to cook with, if it came to that. I did not want to depend entirely on faraway oil to stay alive, and in a pinch I wanted to get by without electricity if I had to.
Whether I am just paranoid or prophetical I don’t know yet, but as I sit in my woods, resting from the work of splitting firewood, that decision has continued to make sense to me even in times of stable economics. (Is our economic system ever stable?) What I have gained in enjoyment alone makes my investment in two mature woodlots at least as “profitable” as investing an equivalent amount of money in gold.
You can’t eat gold like you can the bounty of trees in fruits, nuts, maple syrup, and various edible mushrooms and herbal treasures of the woodland. You can’t warm yourself with gold. You can’t bask in the shade of gold. You can’t make fence posts out of gold. A gold house would be mighty expensive. You can’t make a windbreak out of gold. You can’t make furniture, violins, guitars, wall paneling, picture frames, gun stocks, tomato stakes, flooring, barns, chicken coops, and hog houses out of gold. You can’t mulch a garden with gold leaf. Gold does not take in carbon dioxide and give off oxygen to preserve an environment we can live in. Gold does not provide habitat for millions of wild animals and zillions of insects necessary for a sustainable environment. And in fact, you can make methane out of wood much more efficiently than ethanol out of corn. All gold can do is go up and down in price and invariably it turns out to be a poor investment, as many panic buyers learn the hard way.
I’ve known my two woodlots intimately for over 70 years. The one of ten acres was my playground as I grew up. The other, of about four acres two miles away, I also tramped as a child and have lived in, literally, for the last 34 years. There are so many ways to figure the value of woodland, so many intangibles that don’t show up on ledgers, that I doubt anyone can make an accurate estimate. But I want to try, using only my own rather uncomplicated experiences, leaving out intangibles like how the tranquility and exercise I’ve gained from caring for my woodland may have affected my health beneficially.
I paid $700 an acre for the four acre woodlot in 1974 and $2000 an acre for a ten acre woodlot in 1979. The four acre plot was really the lot for our house, so to speak, and so it is hard to try to calculate its value as woodland alone. So I will focus on the ten acres although what is true for one is true for the other.
Twenty thousand dollars for ten acres of woods was extravagant by local standards in 1979 but that’s what I had to pay to keep a corn farmer from bulldozing it away. I presume that if I had invested that money in the stock market, it would have doubled or tripled by now, but then again, after the recession in the 1980s when the market took a beating, and again in 2002, and now in 2008, maybe not.
A few years after we bought the ten acres, a timber buyer offered us $20,000 if we would let him clear-cut it, which of course I had no intention of doing. But I did sell five white oaks as veneer for $5000. A few years after that I sold another $2000 worth of logs. About 1995, my son, who was getting in the home construction business, hired a sawyer with a bandsaw mill to saw about 10,000 board feet of lumber which my son and I have used in various ways. The slab wood “waste” made several loads of firewood too. The sawyer charged thirty cents a board foot as I recall. We figured the wood was worth, above that cost, about a dollar a board foot, possibly twice that. If you have purchased wood from a lumberyard lately you know that you can carry $150 worth out to your truck in one trip. My son used some of the red oak as trim throughout his new home. It is breathtakingly beautiful. What is that worth? I sold another $2000 worth of trees in 2007.
Every year I harvest about four cords of fuel wood from the 14 acres of both woodlots. My son and other family members have been harvesting firewood from the ten acres too. Experience teaches us that an acre of mature woodland will produce indefinitely at least a cord of wood annually just in deadfalls, blowdowns, and thinnings, without lessening the over all yearly production of wood, and in fact increasing it. One mature tree containing two sawlogs to sell or make lumber from, also has enough branches to make a cord of wood.
The price of cord wood, needless to say, is going up as fast as the price of oil. I’ve always figured that a cord of oak replaced about $100 worth of other fuel but now the replacement value is higher. In general the wood I’ve used to keep the house warm over the last 25 years saved us an average of $400 a year even after deducting the cost of five chainsaws I have worn out in the process. My son figures that today his wood replaces about $300 of other fuel per winter month. He heats almost entirely with wood. I let our woodstove go out at night in favor of backup electric heat unless the weather is very cold.
Actually I rarely count wood by the cord but by the amount I need to heat the house for a day. Experience has shown me that I can cut from the log and split a day’s supply of heat in about an hour if the wood is straight-grained. Could do better when I was young. So to work up enough wood to last a hundred winter days, which is what I do, takes about a hundred hours. Since I like to work in the woods, and since I am not paying money out of pocket to someone else, I consider that labor as part of the profit.
Obviously the original $20,000 was an excellent investment. The woodlot will go on producing fuel and lumber and satisfaction forever with proper management. Even discounting that, the land is still there, going up in value whether it has trees on it or not. And if I were to sell the land, it is worth far more for homesites if it has mature trees on it than if it were bare land.
When I was a boy, farmers followed a code of ethics that proscribed a ten acre woodlot be kept for every hundred acres of farm land. That of course was forgotten when coal, fuel oil, bulldozers and subsidized corn became easily available. Would we not have much better homeland security today if that practice had remained as part of our cultural heritage?