#1 (of 5) Core Problem: INCREASED GOVERNMENT-DOMINANCE OF OUR ECONOMY
from Grandfather Economic Report series
http://mwhodges.home.att.net/summary.htm
Posted on 02/27/2004 11:48:14 AM PST by hripka
#315 - Move Over, Gold... The Investment U E-Letter Friday, February 27, 2004
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Move Over, Gold... Here's why it might be time to start burying pennies and nickels in your back yard, too... By Dr. Steve Sjuggerud President, Investment U
You need to make some room next to the gold buried in your backyard... Room for pennies and nickels...
I'm only half joking. Starting this year, pennies and nickels may be worth more for their metal content than for their purchasing power. It's true...
The U.S. dollar has been crashing in value in the last two years... so much so that in 2004, the U.S. Mint will likely lose money minting pennies and nickels... This is no joke...
In 2003, it cost the U.S. Mint 0.98 cents to make a penny. This used to be an easy profit game for the government... In 2002, it cost 0.88 cents to make a penny. And in 2001, it cost 0.80 cents. But now, in 2004, it is almost assured that the government will lose money minting pennies.
The good news: These unfortunate times for the dollar will equate to great times for another investment, an investment that almost no one out there is buying right now.
Before I tell you what that investment is, let's look a little deeper into what's going on with the dollar...
A Loss on Every Penny and Nickel in 2004
The U.S. Mint counts September 30, 2003 as the end of its fiscal year. Since then, the price of copper has risen by 62%. Copper, you may be surprised to learn, is the main ingredient in a nickel.
In 2003, it cost the government 3.78 cents to make a nickel. Easy profits right? But the government didn't count on the dollar crashing. If the price of copper, the main ingredient in a nickel, stays the same, it's possible that the cost of could rise by 62% in 2004. Then it'll cost the government over six cents to produce a nickel.
The situation is similar with the penny. The main ingredient in pennies is not copper, but zinc. Actually, zinc makes up 97.5% of a penny. Zinc is up nearly 40% since the end of the 2003 fiscal year. So if the cost of producing a penny rises by 40%, it'll cost the government 1.38 cents to make a penny.
How can the government get out of this mess? Oh that's an easy one... change the metal content of the coins. I'm sure it's only a matter of time. Maybe next year we'll be spending poker chips instead of pennies. And just think, someday down the road, even those poker chips will have more intrinsic value than a paper dollar.
So How Can You Play this Downturn in the Dollar?
What can you do? One option is to dig a hole in your backyard next to your gold. And fill it with pennies and nickels - coins that have more metal value than spending value...
Another option is to start considering commodities and commodity-related investments. I have been writing about commodity-type investments in these letters for a while now. It's worked out fabulously. As I said in this letter, since September 30, 2003 alone, copper is up 62%, and nickel is up 49%.
There are many ways to get in on commodities like precious metals, as we've covered in past IU E-Letters. One that represents a decent value today is 100-year-old U.S. gold coins.
Commodities in some form deserve a place in your portfolio, in my opinion, for the rest of this decade, at least. What more evidence do you need that the dollar ain't worth what it used to be?
(Excerpt) Read more at investmentuonline.com ...
But when a government engages in such utterly reckless currency debasement that it is incapable of maintaining a debased *copper* standard, you KNOW you are trouble.
LOL - funny though...
Originally currency debasement was a crime, punishable by death.
Today its called "Rescuing America from Deflation".
Our money will be on the Charmin standard soon enough, with Mr. Whipple as chairman of the Fed.
At law, melting constitutes alteration. However, if you refine the melt, which you presumably would do if you were interested in selling copper for value, there is functionally no way to be prosecuted for violating US 18 333.
One other thought. Suggest you melt **particularly** the pre-1982 Lincoln pennies, for their higher copper content. The Treasury began using zinc cores after that. You can easily tell the difference, btw, even without looking at the dates -- just drop a pre-1982 and a post-1982 on a countertop, and you'll hear it immediately.
Melt the coins and sell the metal back to them.
Hum, that sounds like a perpetual money machine. Anybody want to bet that the penny is about to go aluminum or disappear altogether?
#1 (of 5) Core Problem: INCREASED GOVERNMENT-DOMINANCE OF OUR ECONOMY
from Grandfather Economic Report series
http://mwhodges.home.att.net/summary.htm
Guess what was happening...
The price of copper also accelerated the switch to aluminum radiators, since there was also a corresponding rise in the theft of radiators too.
I know it **used** to be solid copper, but I had thought they went to clads late 80s-early 90s. Not so?
But nickels will be worth less than their metal content too!
A similar drama played out in SI in 1980. People were selling grandma's sterling silver serving and dinnerware like there was no tomorrow -- which of course, from the first day observed, meant that the ballgame was over for the silver bulls. That was tougher to trade -- the margins were out of sight on the COMEX contract -- but (heh heh heh), we managed. Once again, bear spreads to the rescue...and that was back before the Regress knocked out tax straddling. We didn't pay taxes (quite legally) on those profits for YEARS.
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