Saturday, February 5, 2011

Why You Need to Own Nickels, Right Now

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, nickles, 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 nickles... 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 gvt 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.

(htHansPalmstierna)

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Robert Wenzel is Editor & Publisher of EconomicPolicyJournal.com and author of The Fed Flunks: My Speech at the New York Federal Reserve Bank.

Buy "The Fed Flunks" Now:


17 comments:

  1. OK, dumb question but where do I get these bricks of nickels? Can I just withdraw $100 in nickels from my bank? Thank you!

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  2. never find them in circulation ?my 1958 quarter I received as change from the gas station in po dunk Florida begs to differ!

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    1. Your one, single, solitary quarter? OHMYGAWD. They must be everywhere.

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  3. Very, very rare to find a 90% silver in circulation.
    I go through rolls sometimes and still nothing.
    Everyone should be on the nickel & penny bandwagon. No premiums to pay, unlike silver & gold. Soon the US Mint will switch to plastic or steel for pennies & nickels.
    Pennies are a little more complex because the switch to zinc was made mid 1982. prior to that pennies were 95% copper.

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  4. No bricks - just rolls as far as I know. $2 a pop.

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  5. They are packaged as a box of 50, $2.00 rolls.
    Dubbed a "brick".
    I unroll mine. I figure it makes tougher work for any potential burglar to take them all.

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  6. Can't we just buy nickel and copper futures from the commodities market folks? Wouldn't that be more efficient and easier?

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    Replies
    1. If you can't physically touch it, you don't own it.

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    2. If you can't physically touch it, you don't own it.

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  7. @Misha

    The idea behind the nickels is that currently there is ZERO downside. Not quite the same in the commodities market.

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  8. Nice tip. I work at a bank and routinely comb through quarters and dimes and kennedy dollars looking for treasure. Like you said, no dice. Plenty of nickels though...

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  9. Your bank can order you $100 boxes of nickles

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  10. About 1-2 times a month I walk into my bank and simply ask to buy a box ($100) of nickels. They just bring them to me, debit my acct, badabingbadaboom.

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  11. Just go to a nickel arcade..............

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  12. since when have you seen a nickel arcade lol

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