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Thread: The Nitty Gritty on Nickels

  1. #1

    The Nitty Gritty on Nickels

    http://www.survivalblog.com/2011/02/...n_nickels.html

    The Nitty Gritty on Nickels

    By James Wesley, Rawles on February 9, 2011 9:47 PM

    As I've mentioned before in SurvivalBlog, U.S. Five cent pieces ("Nickels") should be considered a long-term hedge on inflation. I recently had a gent e-mail me, asking how he could eventually “cash in” on his cache of Nickels. He asked: "Are we to melt them down, or sell them to a collector? How does one obtain their true 7.4 cents [base metal content] value?" My response: Don't expect to cash in for several years. I anticipate that there won't be a large scale speculative market in Nickels until their base metal value ("melt value") exceeds twice their face value ("2X Face"), or perhaps 3X face.

    Once the price of Nickels hits 4X face value, speculators will probably be willing to pay for shipping. By the way, I also predict that it will be then that the ubiquitous Priority Mail Flat Rate Box will come into play, with dealers mailing Nickels in $300 face value increments. The U.S. Postal Service may someday regret their decision to transition to "Flat Rate" boxes for Priority Mail with a 70 pound limit.

    Once the price of Nickels hits 5X face there will surely be published "bid/ask" quotations for $100, $300, and $500 face value quantities, just as has been the norm for pre-1965 U.S. 90% silver coinage since the early 1970s. (Those coins are typically sold in a $1,000 face value Bag (weighing about $55 pounds), or a "Half bag" (containing $500 face value.) Soon after the current Nickels are dropped from circulation, we will see $300 face value boxes of Nickels put up for competitive bidding, on eBay.

    An Aside: Nickel Logistics

    Nickels are heavy! Storing and transporting them can be a challenge.

    I've done some tests:

    $300 face value (150 rolls @$2 face value per roll) fit easily fit in a standard U.S. Postal Service Medium Flat Rate Box, and that weighs about 68 pounds.) They can be mailed from coast to coast for less than $25. Doing so will take a bit of reinforcement. Given enough wraps of strapping tape, a corrugated box will securely transport $300 worth of Nickels.

    The standard USGI .30 caliber ammo can works perfectly for storing rolls of Nickels at home. Each can will hold $180 face value (90 rolls of $2 each) of Nickels. The larger .50 caliber cans also work, but when full of coins they are too heavy to carry easily.

    Legalities

    Since late 2006 it has been illegal in the U.S. to melt or to export Pennies or Nickels. But it is reasonable to assume that this restriction will be dropped after these coins have been purged from circulation. They will soon be replaced with either silver-flashed zinc slugs, or tokens stamped out of stainless steel. (The planned composition has not yet been announced.)

    By 2015, when the new pseudo-Nickels are in full circulation, we will look back fondly on the days when we could walk up to our local bank teller and ask for "$20 in Nickels in Rolls", and have genuine Nickels cheerfully handed to us, at their face value.

    Death, Taxes, and Inflation

    It has been said that "the only two things that are certain in life are death and taxes." I'd like to nominate "inflation" as an addition to that phrase. For the past 100 years, we've been gradually robbed of our purchasing power through the hidden form of taxation called inflation. Currency inflation explains why gold coins and silver coins had to be dropped by the U.S. Mint in the 1930s and 1960s, respectively. Ditto for 100% copper Pennies, back in 1981. (The ones that have been produced since then are copper-flashed zinc slugs, but even the base metal value of those is now slightly greater than their face value.)

    Inflation marches on and on. Inflation will inevitably be the impetus for a change in the composition of the lowly Nickel. Each Nickel presently has about 7.3 cents in base metal ("melt") value, and they cost the Mint more than 9 cents each to make. You don't need a doctorate in Economics to conclude that the U.S. Mint cannot continue minting Nickels that are 75% copper and 25% nickel--at least not much longer.

    Without Later Regrets

    Don't miss out on the opportunity to hedge on inflation with Nickels. Just like the folks who failed to acquire silver dimes and quarters in the early 1960s, you will kick yourself if you fail to stock up on Nickels. Do so before they are debased and the older issue is quickly snatched out of circulation. The handwriting is on the wall, folks. Stop dawdling, and go to the bank and trade some of your paper FRNs for something tangible.
    "Paper is poverty,... it is only the ghost of money, and not money itself." --Thomas Jefferson to Edward Carrington, 1788.
    WWW.APPLESEEDINFO.ORG

    Appleseed Project - "Common folks teaching common folks to shoot uncommonly well"



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  3. #2
    I've mentioned this a couple of times. My local bank ordered me a $100 box of nickels recently with no questions asked. Other than the weight of these things I see very little downside.

    EDIT: Here's another thread on this:

    http://www.ronpaulforums.com/showthr...ickel+thoughts
    Last edited by japes; 02-09-2011 at 04:07 PM.

  4. #3
    Yeah Japes I have read your posts and your spot on. The Govt WILL change the metals in the nickel...they have too. Its at that point when the price will go higher as well.

    Just bought 10 rolls today for $20 (melt value is $29.20)...at this point its a no brainer.

    I will be buying a full box in the morning....

    Cpst the Govt an extra 2 cents to produce them.....
    "Paper is poverty,... it is only the ghost of money, and not money itself." --Thomas Jefferson to Edward Carrington, 1788.
    WWW.APPLESEEDINFO.ORG

    Appleseed Project - "Common folks teaching common folks to shoot uncommonly well"

  5. #4
    Couple things to consider. One, it is illegal to melt down US coins. Two, what will be the cost of melting down your nickles? A smelter probably has a fairly large "minimum quantity" they will require (assuming they are willing to melt coins). Surely there are better ways to make money- but to each his own!

    http://www.usatoday.com/money/2006-1...ban-usat_x.htm
    From 2006:
    New rules outlaw melting pennies, nickels for profit Posted 12/14/2006 12:01 AM ET


    By Barbara Hagenbaugh, USA TODAY
    WASHINGTON — People who melt pennies or nickels to profit from the jump in metals prices could face jail time and pay thousands of dollars in fines, according to new rules out Thursday.
    Soaring metals prices mean that the value of the metal in pennies and nickels exceeds the face value of the coins. Based on current metals prices, the value of the metal in a nickel is now 6.99 cents, while the penny's metal is worth 1.12 cents, according to the U.S. Mint.

    That has piqued concern among government officials that people will melt the coins to sell the metal, leading to potential shortages of pennies and nickels.

    Under the new rules, it is illegal to melt pennies and nickels. It is also illegal to export the coins for melting. Travelers may legally carry up to $5 in 1- and 5-cent coins out of the USA or ship $100 of the coins abroad "for legitimate coinage and numismatic purposes."

    Violators could spend up to five years in prison and pay as much as $10,000 in fines. Plus, the government will confiscate any coins or metal used in melting schemes.

  6. #5
    Quote Originally Posted by xd9fan View Post
    Since late 2006 it has been illegal in the U.S. to melt or to export Pennies or Nickels. But it is reasonable to assume that this restriction will be dropped after these coins have been purged from circulation. They will soon be replaced with either silver-flashed zinc slugs, or tokens stamped out of stainless steel. (The planned composition has not yet been announced.)

    By 2015, when the new pseudo-Nickels are in full circulation, we will look back fondly on the days when we could walk up to our local bank teller and ask for "$20 in Nickels in Rolls", and have genuine Nickels cheerfully handed to us, at their face value.
    Sup with the nickles? They're changing the metal content? I knew they were losing money on minting them, but I didn't know they had already made a decision to replace them with junk.
    "They [the Soviets] intend...to induce the Americans to adopt their own 'restructuring' and convergence of the Soviet and American systems ... Convergence will be accompanied by blood baths and political re-education camps in Western Europe and the United States. The Soviet strategists are counting on an economic depression in the United States and intend to introduce their reformed model of socialism with a human face as an alternative to the American system during the depression."
    Anatoliy Golitsyn The Perestroika Deception 1990


  7. #6
    You do not need to melt them Zippy. One it is a store of wealth, and secondly when the dollar implodes it keeps its value and is still worth whatever the metal value is (and nickel and copper will be much higher by the time the dollar collapses). In other words, it makes great small denominations to go along with silver and gold. There is no reason not to get rolls of these to hold on to.
    School of Salamanca - School of Austrian Economics - Liberty, Private Property, Free-Markets, Voluntaryist, Agorist. le monde va de lui même

    "No man hath power over my rights and liberties, and I over no mans [sic]."

    What, sir, is the use of a militia? It is to prevent the establishment of a standing army, the bane of liberty.

    www.mises.org
    www.antiwar.com
    An Arrow Against all Tyrants - Richard Overton vis. 1646 (Required reading!)

  8. #7
    It'll be worth at least five cents in the future. A roll of nickles in your hand can be useful if you want to knock somebody out!

    Not convinced (maybe it is just me) on the "store of value" thing. If a dollar collapses and is worth nothing something which is one 20th of that dollar isn't going to be worth that much either. They are a mixture of copper (75%) and nickel (25%). Straight copper might be worth more.

    Bills to allow for changing the metal content of US coins was introduced in 2008 but did not pass so there are currently no plans to change the metal content. Scarcity won't give them much collectors value either- as of August, there were some 250 million of just year 2010 nickles produced. http://en.wikipedia.org/wiki/Nickel_(United_States_coin)

    If the metal in one nickle is worth 7.3 cents, and you have 1000 of them, you will be worth $73.
    Last edited by Zippyjuan; 02-09-2011 at 10:55 PM.

  9. #8
    all ready on this..
    "The rifle itself has no moral stature, since it has no will of its own. Naturally, it may be used by evil men for evil purposes, but there are more good men than evil, and while the latter cannot be persuaded to the path of righteousness by propaganda, they can certainly be corrected by good men with rifles." —Jeff Cooper

    Out of suffering have emerged the strongest souls; the most massive characters are seared with scars.



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  11. #9
    Quote Originally Posted by Zippyjuan View Post
    It'll be worth at least five cents in the future. A roll of nickles in your hand can be useful if you want to knock somebody out!

    Not convinced (maybe it is just me) on the "store of value" thing. If a dollar collapses and is worth nothing something which is one 20th of that dollar isn't going to be worth that much either. They are a mixture of copper (75%) and nickel (25%). Straight copper might be worth more.

    Bills to allow for changing the metal content of US coins was introduced in 2008 but did not pass so there are currently no plans to change the metal content. Scarcity won't give them much collectors value either- as of August, there were some 250 million of just year 2010 nickles produced. http://en.wikipedia.org/wiki/Nickel_(United_States_coin)
    You seem to be fixated on the Government edict of what they say the nickel is worth. That designation is worthless and meaningless when the monetary system collapses. You don't think copper and nickel will be valued? Commodities are a store of wealth because they have intrinsic value. A piece of paper is not a commodity, or at least one of any value.
    School of Salamanca - School of Austrian Economics - Liberty, Private Property, Free-Markets, Voluntaryist, Agorist. le monde va de lui même

    "No man hath power over my rights and liberties, and I over no mans [sic]."

    What, sir, is the use of a militia? It is to prevent the establishment of a standing army, the bane of liberty.

    www.mises.org
    www.antiwar.com
    An Arrow Against all Tyrants - Richard Overton vis. 1646 (Required reading!)

  12. #10
    I think the problem with trying to save nickles for their metal content is that they are not any pure metal. It is a mixture of 75% copper and 25% nickel. Somebody purchasing them for their metal content would either need to be able to use it in that ratio or go to the added cost of further processing the metal. That means lower demand for it. Pure copper or silver have many more uses.

  13. #11
    Quote Originally Posted by Zippyjuan View Post
    I think the problem with trying to save nickles for their metal content is that they are not any pure metal. It is a mixture of 75% copper and 25% nickel. Somebody purchasing them for their metal content would either need to be able to use it in that ratio or go to the added cost of further processing the metal. That means lower demand for it. Pure copper or silver have many more uses.
    I think you are missing the point. You are losing nothing, and gaining if you trade in your FRN's for nickels. Wouldn't you love to buy 1963 quarters or 1960 dimes today for their 'face value' aka Government edict value. The same principles apply. It is Gresham's Law, and if you don't want these, I'll snatch them all up. Thank you.
    School of Salamanca - School of Austrian Economics - Liberty, Private Property, Free-Markets, Voluntaryist, Agorist. le monde va de lui même

    "No man hath power over my rights and liberties, and I over no mans [sic]."

    What, sir, is the use of a militia? It is to prevent the establishment of a standing army, the bane of liberty.

    www.mises.org
    www.antiwar.com
    An Arrow Against all Tyrants - Richard Overton vis. 1646 (Required reading!)

  14. #12
    Well, I don't know what will happen in the future any better than anybody else. Maybe it will work out for you. Good luck! (no- not being sarcastic either).

  15. #13
    Quote Originally Posted by Zippyjuan View Post
    Well, I don't know what will happen in the future any better than anybody else. Maybe it will work out for you. Good luck! (no- not being sarcastic either).
    There's one, and just about only one thing I actually agree with Keynes....

    Quote Originally Posted by John Maynard Keynes
    In the long run, we're all dead.

  16. #14
    Ya never know- there are three billion people here right now who have never died. But yeah, the odds are against us.

  17. #15
    One it is a store of wealth, and secondly when the dollar implodes it keeps its value and is still worth whatever the metal value is (and nickel and copper will be much higher by the time the dollar collapses). In other words, it makes great small denominations to go along with silver and gold.
    yep

    If the metal in one nickle is worth 7.3 cents, and you have 1000 of them, you will be worth $73.
    Right and the face value is $50........a 46% gain in stored value. Not bad.

    If thing "work out" and the dollar is super strong again and in the end you just have 5cent nickels again....you can throw back at the bank and get you FRN's back with no loss
    Last edited by xd9fan; 02-10-2011 at 06:54 AM.
    "Paper is poverty,... it is only the ghost of money, and not money itself." --Thomas Jefferson to Edward Carrington, 1788.
    WWW.APPLESEEDINFO.ORG

    Appleseed Project - "Common folks teaching common folks to shoot uncommonly well"

  18. #16
    Quote Originally Posted by Zippyjuan View Post
    I think the problem with trying to save nickles for their metal content is that they are not any pure metal. It is a mixture of 75% copper and 25% nickel. Somebody purchasing them for their metal content would either need to be able to use it in that ratio or go to the added cost of further processing the metal. That means lower demand for it. Pure copper or silver have many more uses.
    If it came to a point where someone was purchasing nickels to salvage the metal, they would have to process them anyways even if they were made out of 100% copper or nickel. Besides, both of those metals have lots of industrial purposes. I don't foresee any problems selling nickels because they're "diluted" with that pesky nickel or copper.
    Liberty is for all; privileges are for none.



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  20. #17

  21. #18
    I am going to start saving nickels after reading this. I already save pennies made before 1982.

    My concern is the utility of it. What can you buy for 5¢ or 7.4¢? A swedish fish? We do need an easy to use way to break down silver coinage. The silver dime is worth $2.18 atm, and spending one will require change sometimes. There are about 30 nickels to a silver dime, so it might function that way well, but would you want to get 23 nickels in change. We might start cutting silver coins apart again. That way, you would only need to give a max of 7 nickels in change (plus whatever fraction of the dime).

    Any comments on the utility of nickels in barter?
    Quote Originally Posted by DamianTV View Post
    When Freedom is Outlawed, only Outlaws will have Freedom.

  22. #19
    Quote Originally Posted by juvanya View Post
    I am going to start saving nickels after reading this. I already save pennies made before 1982.

    My concern is the utility of it. What can you buy for 5¢ or 7.4¢? A swedish fish? We do need an easy to use way to break down silver coinage. The silver dime is worth $2.18 atm, and spending one will require change sometimes. There are about 30 nickels to a silver dime, so it might function that way well, but would you want to get 23 nickels in change. We might start cutting silver coins apart again. That way, you would only need to give a max of 7 nickels in change (plus whatever fraction of the dime).

    Any comments on the utility of nickels in barter?
    That's a good question and the only answer I have is we will see. I agree that to act as change, the nickel will be a little bulky and it will be hard for the McDonald's employee who has to count 25 nickels to give change for a hamburger. Personally, I always imagined selling off all of my nickels in one fell swoop and not saving them for minor transactions. I'm sure that the market will come up with a solution to the change problem.
    Liberty is for all; privileges are for none.

  23. #20
    Silver dimes and quarters are not pure silver either. Nickels are 25% nickel and 75% copper. That is not a problem. Both copper and nickel are valuable. Even and old silver dollar is not all silver.

  24. #21
    what about other coins like quarters, half dollars, and the dollar coins? what's their metal value relative to their face value? seems that it would be easier to store these coins than a couple hundred/thousand nickels....

  25. #22
    Current Costs of Minting US Coins (figures for 2008)
    http://coins.about.com/b/2008/05/10/...t-us-coins.htm

    •Penny - 1.26 cents
    •Nickel - 7.7 cents
    •Dime - 4 cents
    •Quarter - 10 cents
    •Dollar (Coins) - 16 cents
    Let us say that you want to save up enough nickles so that the metal in them could pay your rent for one month should the dollar collapse. Let's say your rent is $500 a month (about half of what a one bedroom rents for in my part of the country- San Diego). At about 7.5 cents (assuming the basic value of the metals did not change relative to rents), you would need almost seven thousand of them (6,667) every month. How about an ounce of gold at about $1400? That comes out to nearly 19 thousand nickles. Which would you rather store or carry around? Go to a really nice restaraunt and have a meal worth $75. Don't forget to bring 1000 nickels to pay for it!
    Plus tip of course.

    Just not really practical.
    Last edited by Zippyjuan; 02-17-2011 at 10:21 PM.

  26. #23
    Although carrying 100 lbs of metal around to buy lunch would obviously not be the most convenient option.

    If you don't want yours I will be happy to take them.
    "The rifle itself has no moral stature, since it has no will of its own. Naturally, it may be used by evil men for evil purposes, but there are more good men than evil, and while the latter cannot be persuaded to the path of righteousness by propaganda, they can certainly be corrected by good men with rifles." —Jeff Cooper

    Out of suffering have emerged the strongest souls; the most massive characters are seared with scars.

  27. #24
    Quote Originally Posted by Zippyjuan View Post
    Current Costs of Minting US Coins (figures for 2008)
    http://coins.about.com/b/2008/05/10/...t-us-coins.htm



    Let us say that you want to save up enough nickles so that the metal in them could pay your rent for one month should the dollar collapse. Let's say your rent is $500 a month (about half of what a one bedroom rents for in my part of the country- San Diego). At about 7.5 cents (assuming the basic value of the metals did not change relative to rents), you would need almost seven thousand of them (6,667) every month. How about an ounce of gold at about $1400? That comes out to nearly 19 thousand nickles. Which would you rather store or carry around? Go to a really nice restaraunt and have a meal worth $75. Don't forget to bring 1000 nickels to pay for it!
    Plus tip of course.

    Just not really practical.
    Once again you are missing the point entirely, but continue to harp on non-sequitors.
    School of Salamanca - School of Austrian Economics - Liberty, Private Property, Free-Markets, Voluntaryist, Agorist. le monde va de lui même

    "No man hath power over my rights and liberties, and I over no mans [sic]."

    What, sir, is the use of a militia? It is to prevent the establishment of a standing army, the bane of liberty.

    www.mises.org
    www.antiwar.com
    An Arrow Against all Tyrants - Richard Overton vis. 1646 (Required reading!)



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  29. #25
    Quote Originally Posted by outspoken View Post
    what about other coins like quarters, half dollars, and the dollar coins? what's their metal value relative to their face value? seems that it would be easier to store these coins than a couple hundred/thousand nickels....
    http://www.coinflation.com/ has all the information you need to know about the value and composition of current and recent U.S. coins.
    Liberty is for all; privileges are for none.

  30. #26

    Other Coins instead of nickels

    Quote Originally Posted by outspoken View Post
    what about other coins like quarters, half dollars, and the dollar coins? what's their metal value relative to their face value? seems that it would be easier to store these coins than a couple hundred/thousand nickels....
    Sure you could buy silver dimes for about $2.50 each. They may go up even more, but think about it what if they go down to $2.40? They are still very valuable, buy you have lost money. Now what if you buy a roll of nickels for $2. It is worth $2.91 just for the metal content. Your have a gain right from the start. A 45% gain. Where else can you find that? Now what if the metal prices crash. You can still spend your nickels for face value, just what you paid for them. You loose nothing. Now what is the down side of nickels. They are heavy. Even $100 in nickels are not that easy to carry around.

  31. #27
    If you have a PGCS rated nickle coin in MS condition, most modern ones are worth five to seven cents. Take off the coin dealer's markup and he might be willing to give you three or four cents a piece for them. Ungraded coins will be worth less. http://www.pcgs.com/PRICES/PriceGuid...fferson+Nickel Compare that to what you can get for a gold or silver coin. This page http://coins.about.com/od/coinvalues...kel-values.htm, quoting the Blue Book of Coin Prices lists the uncirculated quality value of nickels as five cents except for selected years like 1955 and 1971. That is what a coin dealer will offer you (before subtracting off his markup).

    If you can find somebody who will pay you $2.91 for a roll of nickles, do it. Take that money and trade it at the bank for more nickles. Repeat until you have millions of dollars saved up. Then you can retire.

  32. #28
    Quote Originally Posted by Austrian Econ Disciple View Post
    Once again you are missing the point entirely, but continue to harp on non-sequitors.
    I think he has a good point. The mass it would take to save enough copper or nickel to be of substantial value is an additional cost that people need to take into account. And it's a big part of why physically owning those metals is not very popular.

    The discount we can get for nickels right now helps make up for that factor. But the question is how much.

  33. #29

    Nickels

    Quote Originally Posted by Zippyjuan View Post
    If you have a PGCS rated nickle coin in MS condition, most modern ones are worth five to seven cents. Take off the coin dealer's markup and he might be willing to give you three or four cents a piece for them. Ungraded coins will be worth less. http://www.pcgs.com/PRICES/PriceGuid...fferson+Nickel Compare that to what you can get for a gold or silver coin. This page http://coins.about.com/od/coinvalues...kel-values.htm, quoting the Blue Book of Coin Prices lists the uncirculated quality value of nickels as five cents except for selected years like 1955 and 1971. That is what a coin dealer will offer you (before subtracting off his markup).

    If you can find somebody who will pay you $2.91 for a roll of nickles, do it. Take that money and trade it at the bank for more nickles. Repeat until you have millions of dollars saved up. Then you can retire.
    Forget it. You are a little to thick to understand. Other people should save their nickels. Not you. Some people just don't get it. The idea of saving your nickels is to save them. If you were around in 1964 and went to the bank and bought a roll of silver dimes (they would have been silver because they were all silver at that time) for $5, would you have gone around the corner and tried to find somebody to sell them to the same day? No they could have gone to the bank and gotten them for $5 themselves. Now those dimes are selling for $2.50 each. Like I said, some people just don't get it. You wait until they change to metal in the 5 cent coin. Then you can sell them. Is that so hard to understand?

  34. #30
    How much do you pay for lunch?

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