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