a no risk investment?

[jonathankaplan]

If I did the math right, the Jefferson Nickel is composed of 3.75 grams of Copper and 1.25 grams of Nickel, such ingredients worth a bit more than 7 cents in metal value? (Please, check my math...) Given the nature of movement of commodities during inflation/deflation, and, although I can see 3 small types of risk (opportunity loss/cost, storage/

Comments

[adb_jaeger]

It's making the rounds on some of the more tin-foil laden sites, Survival Blog for example.

[jonathankaplan]

I have plenty of tin foil at hand...oh wait, i get it...smile....strange or not, i am looking at the history of the mint, seeing how long they tend to allow a "problem" like that to persist before changing the coinage. If only few see the value of an idea, that can make the idea even more valuable, in the investing world, in my experience.
Thanks!

illegal though

[eddiehawkins]

It's illegal, for what that's worth. It's another type of risk, at least.

http://www.usatoday.com/money/2006-12-14-melting-ban-usat_x.htm

Re: illegal though

[jonathankaplan]

Yes, smelting the coins into metal is illegal, and only recently. But I have no intention of smelting them.
If one had "bought" a bunch of silver coinage in 1962 then just held them through the re-jiggering by the mint, that doesnt mean they werent valuable investments, sellable to coin collectors and dealers at a later date. No smelting here, nothing to see...smile...
Thanks!

[herooftheage]

It may or may not be legal to do so. It's illegal to burn paper money. It'd be illegal to destroy coins for their metal if it turns out they are "evidences of debt by any national banking association".

Some folks seem to think that the U.S. makes occasional temporary laws to specifically prohibit metals arbitrage, but I didn't chase any of that far enough down to decide if it were true or not.

[jonathankaplan]

I am not going to smelt or arb them in any way, merely put them away for a rainy day, and then, sell them at a higher price than paid. I have trouble seeing a scenario where they are worth LESS than 5 cents a piece, and can see plenty of futures where they might be worth more than that.
In 1963-64, the mint changed coinage to almost eliminate silver in the lesser coins, the only one to still contain silver then was the Kennedy half, I believe. They still left too much silver in there, and for a few years, they barely circulated, they kept disappearing...then in 1971(?), they rejiggered again to no silver at all, and the coin circulated again.
...And, I wouldnt mind having a few bags of those half dollars right now. Coin dealers will pay me a premium for them, I am sure, no smelting needed.
Thanks!

[herooftheage]

II have trouble seeing a scenario where they are worth LESS than 5 cents a piece, and can see plenty of futures where they might be worth more than that.

Well, they could get stolen, which will knock down their value to you considerably. More on point perhaps, storage costs and possible inflation will eat away at your profits.

You might not be planning on smelting the coins, but the anti-smelting statutes could impact what their eventual price is, as it means those speculators will tend to not get into the market. The dynamic from the silver switchover is also different, I think - in the 60s, everyone knew that silver was intrinsically valuable, and so Gresham's law had a chance to operate. I suspect fewer people are that passionate about copper/nickel compositions, and that might also affect your bottom line.

Re: No, your math is good from what I see

[strategery]

I figured the volume of a nickel (688.97875mm^3), scaled it to $100k (1377957500mm^3), then added 10% to that number to account for stacking inefficiency (total guess): $100k in nickels would occupy a cube with sides measuring 170ft.

I imagine hedge funds do these kinds of calculations when they're buying up huge amounts of some asset for longer-term storage.

Re: No, your math is good from what I see

[ext_623051]

I think you're off by a factor of 100K. And intuitively your answer doesn't make sense. It doesn't take "a cube with sides measuring 170 feet" to store a hundred thousand rolls of nickels.I imagine hedge funds do these kinds of calculations when they're buying up huge amounts of some asset for longer-term storage.
No, because they're not having the physical delivered to their office, they're getting some kind of receipt. The only thing they're calculating is the cost of storage.