Posted on 02/06/2011 4:25:44 PM PST by blam
Why You Need to Own Nickels, Right Now
Robert Wenzel
Saturday, February 5, 2011
On November 11, 2010, I wrote in the EPJ Daily Alert:
Back at the commodity level, copper is the latest to hit a record at $8,966 a ton. Copper is certainly not a "goldbug" play and is simply an indicator of economic (inflationary) demand. At some point, nickels, which are mostly made of copper, will start to disappear from circulation.
There's right now 6.2 cents worth of metal in a nickel [Note the value is now up to 7.2 cents.-RW]. When I run into someone that does not have a strong background in investing, I now tell them to buy nickels. You need storage space and a strong back to move them around, but a $100 box of nickels (roughly the size of a very large brick) can be lifted without a problem. You can stack plenty of "bricks" on a hand truck.
What's great about this investment is that there is no downside. In the unlikely event that there is no inflation, you can just spend your nickels... again, this is a great conservative investment...I fully expect the coins will eventually climb in value to at least double their 5 cent price.
The government has made it illegal to melt them down, but you will never have to do anything close to that. When you need to liquidate, just sell them to a numismatic dealer.
Gresham's law (bad money drives good money out of circulation) will take over at some price point and the coins will simply disappear from circulation, just like the pre-1965 silver content dimes and quarters have, and trade at much higher prices.
Those silver dimes now have over $2.00 worth of silver in them, the quarters have roughly $5.27 worth of silver, and you will never find one in circulation. The current nickel has 7.28 cents worth of metal content (mostly copper) in it. At some point they will disappear from circulation.
Indeed, that may not be far off into the future, if the story starts to get around about nickels the way it seems to be.
Financial author Michael Lewis told a story about a huge nickel investor, this week on the television show, The Colbert Report. The must see video is here.
Note: You can track the metal value of nickels and other coins at Coinflation.com.
Figures, I’ve been out of there for a while. The mines are huge and some knew the industry was set to explode. Unfortunately I was poor and worried more about a roof. :^)
I LOVE this site!
Interesting, guess I’d better hunt for it.
Yup. Silver = $500/oz before I die of natural causes.
And probably before the 2012 elections.
;-)
For $500, you can buy a machine that sorts through mountains of pennies, separating those pre-’82 ones worth 3 cents from the the rest of the crap:
For the time it would take me to examine every nickle and penny in my giant jar to find any real copper or nickel ones, I could go out and shovel two driveways and come out ahead...........
Pennies, if you have a good supply (and way to sell back the new ones) can be sorted as I note in post 127.
Not true, nickels from sometime in 1942-1945 had 35% silver. The so-called "war nickels" are worth about $1.70 right now. Good luck finding one in change - probably 99.9999% of them have been removed from circulation.
However, despite the fact that there were SOME part-silver nickels produced, that's not what the article is about. It is about the common, ordinary nickel, the melt value of which is now about 7.3 cents. Unlike every other coin out there, ALL nickels in circulation are currently worth more as metal than as currency. This is equivalent to getting rolls of dimes, quarters or halves in late 1964, when ALL of them previously made were 90% silver. The article is saying to start collecting them NOW, since the composition is likely to change in the not-so-distant future to something worth considerably less, in the same way that all other coins have in the past.
“There are 146 copper pennies to a pound. Copper is about $4.50 a pound. Therefore each copper penny is worth about 3 cents.”
As others have pointed out, the pennies that are worth this much as metal are those made before the changed composition that started in mid-1982. I don’t even bother with the 1982 pennies, as it isn’t worth it to sort them.
My experience is that somewhere around 14%-15% of all pennies are pre-1982. I have probably $100 worth, and counting. I’ll get $20 of pennies every couple of weeks to sort through. No, I won’t retire on that (nor on hoarding nickels), but every little bit helps. Someday we will go back to a system or real money, where the metal content of a “copper” is actually worth something, the way it used to be (of course, the “coppers” from before 1856 were considerably larger than since then - 5.44 grams of pure copper, vs. 3.11 grams of 95% copper in the pre-’82 Lincoln cents).
FYI, the best way to find the current melt value of current-circulation base-metal coins is to use the following site: http://www.coinflation.com/coins/basemetal_coin_calculator.html
For silver coins, go to http://www.coinflation.com/coins/silver_coin_calculator.html
Same for me, at least recently - I found a couple of Indians back in the early '70s when I first started collecting, but that's it. I hope to someday find another Indian Head, or some valuable Lincoln, but the vast, vast majority of those are gone. I do get a Wheatie about every 10 rolls or so, meaning that the $20 worth that I get every couple of weeks nets me 4 or so. Those get saved separately, same as the pre-1960 nickels - because they generally have a greater collector's value...which I hope to realize, someday.
“Ok, Ive worked the math out based on the latest spot prices for copper and nickel and the US Mints formulation for nickels at 25% nickel and 75% copper. I cleaned out my change drawer and weighed 35 nickels on a kitchen scale. The results:
35 nickels weighed 6.1 oz or 0.0109 lb
Scrap Copper at $4.5666 per lb
Scrap nickel at $12.7896 per lb
$4.5666 * 0.0109 * 75% = 3.73 cents copper
$12.7896 * 0.0109 * 25% = 3.49 cents nickel
= about 7.2 cents total per coin”
Its easier to use a website dedicated to just this purpose: http://www.coinflation.com/coins/basemetal_coin_calculator.html
Why would you have to examine a Nickel? All Nickels are 75% copper, 25% Nickel (with the exception of the war nickel which are worth more).
Nickels are nickels (for the time being) go buy a few rolls. It’s 43% profit on metal weight on every thing you buy.
I would give you cash for all your nickels so I could roll them up.
Happy shoveling.
It’s a great way to have instant “down side protection”.
Heck it’s infinite down side protection; you can’t lose anything, but a little bit of your time, and some used up space in your closet or basement. You still have the face value to fall back on if everything stabilizes.
Well, at least collecting nickels is cheaper than collecting pre-1965 silver coins.
Well, at least collecting nickels is cheaper than collecting pre-1965 silver coins.
gee, I feel so smart now for buying $50 worth of pennies back in 1981....haven’t got a clue why I did it...
gee, I feel so smart now for buying $50 worth of pennies back in 1981....havent got a clue why I did it...
Now 1981 pennies are triple face value, and all nickles 40% above face value, which makes either a winning (not waiting) purchase NOW.
BFLR
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