For fans of Quirky Investments.
My oddest investment foray was trading cemetary plots.
From www.economicpolicyjournal.com
NICKELS
Eventually, nickles, which are mostly made
of copper, will start to disappear from circulation,
as the copper price climbs. There is now approximately
4.8 cents worth of metal in a nickel. It was higher
before the financial crisis: Close to 7 cents worth of metal.
Buy nickels. There is no downside except storage costs
or hassle.
You need storage space and a dolly to move
them around, but a $100 box of nickels
(roughly the size of a very large brick)
can be lifted without 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 nickles. But you will
have to "order" your nickles from your bank.
I tend to keep any one order (per bank) to around
$1,500 for both handling (lifting) purposes.
You can also buy brand shiny new nickels
from numismatic dealers for a small charge,
and obviously they don't ask any questions.
Nickels are a conservative investment
[If you have the space and the strong back]
with zero downside.
The coins will eventually climb in value as
the government relentlessly debases the
currency to at least double their 5 cent face
value price. The government has made it
illegal to melt coins down, but you will
never have to do anything close to that.
When you need to liquidate, just sell them
to a numismatic dealer. Via the magic of
black markets, the value (with a good spread)
will track the metal value.
You can monitor the value of the metal in
the nickels at the website, Coinflation.com.
United States Circulating Coinage Intrinsic Value Table
This table does not reflect U.S. Mint production costs, but the pure base metal value that composes the coin. Calculations are based on coin weight, metal composition, and base metal prices. The “Metal % of Denomination” column represents the percentage of metal that comprises the denomination’s purchasing power. A coin that is over 100% in this category has more base metal value than purchasing power.
Table based on August 13, 2012 closing base metal prices:
| Copper $3.3390/lb 0.0388 | Zinc $0.8180/lb 0.0090 | Nickel $6.9339/lb 0.0104 |
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Value realization is tough though – isn’t it illegal to melt coins? How else will you extract the materials and separate them into a form that can be sold?
You can take your coins to a numismatic (coin) dealer. You should have to figure in the spread.
I believe if pennies are retired as official currency it becomes legal to melt them. The (legal) rate of return you get then depends on when you think the penny will be removed from circulation. I don’t know how easy it would be to get massive amounts of pre-1982 pennies, but apparently sorters can be had for a few hundred dollars or less.
What is interesting is that no one questions the premise–what RIGHT does the government have in the Constitution to prevent people from melting down coins (their property)? If you exchanged value for the money then that “money,” coin, bill or sea-shell is yours to do as you see fit.
True money is what the market (free exchange) says it is not WHAT the government forces people to use.
I see where you’re coming from, however I think the point of money is to create a tool that allows us to exchange value for value. If I made a coin of my own and sold it to you, then yes, I understand that it’s your’s do with as you please. However to the extent that they are used as a currency, and remember it is our choice to do so because we can take our money to other places if we want to, then we need to abide by the rules they put in place. If we disagree with them, we can voice our concerns, but we shouldn’t expect their method of creating coins to last if the inputs are greater than the benefit.
Dear Ankit:
I concur that money is a medium of exchange. The social value of money is to facilitate exchange and thus specialization of labor that, in turn, improves productivity and thus wealth. What is money was posted here: http://wp.me/p1PgpH-xE. I am unclear what you mean by saying, “It is our choice to do so….” I don’t know how one has a choice if one is forced by fiat to only use the government’s money. Money sprung up as gold and silver through the market then there were private goldsmiths who made coins. Under the US Constitution (see Pieces of Eight in the post listed above) the government has the right to set and enforce weights and measures. So the govt made sure that private creators of coins did not cheat the public.
In fact, today if you make a dolloar bill and I knowingly accept it–that is still illegal. See http://localcurrencycouncil.org/index.php/resources/features–articles-research-a-concepts/boggs-the-art-of-making-your-own-money
Could you conceivably just try to purchase old (pre-1982) pennies from the bank since they are already selling at a large discount to the base metal value? Understandably that increases the storage and nuisance cost.
I can drop by my bank tomorrow since it’s really convenient for me to ask. I believe you also need to re-roll any coins you plan to return. I think if one were to pursue this venture it would require the ability to source and sort tens if not hundreds of thousands of coins per week, and having a place to store all the coins.
P.S. Are you from Atlanta GA? I believe we may have a mutual acquaintance if I remember correctly…
Yes I am from Atlanta, GA. There’s a decent chance we have mutual acquaintances, but I’m not sure who you are.
No worries, there is no reason you would know who I am. I had a friend doing social work in Atlanta and name came up in conversation since you two had apparently talked. She mentioned you did finance, I remembered having read your blog randomly a few years back, and put 2 and 2 together…