Coin Hoarding Idea: Nickels

Is now the time to start hoarding nickels? You never know when the metal content will exceed the face value.

Not too long ago, Canada decided to discontinue the penny. The news has resurrected the debate over the penny in the United States. Should we keep the penny? It costs more than a penny to make a penny. And, at some point, due to rising commodity prices, it is possible that it could cost more than a nickel to make a nickel.

These realities of growing metal prices has many wondering if it’s a good time to be hoarding common coins — before the composition of them changes. One trend has been to hoard older pennies that are still mostly made from copper, rather than the newer pennies that are mostly made from zinc. With copper prices on the rise, many intrepid investors are wondering if the value of older pennies could could skyrocket.

“The value is so apparent the government had to institute a melt ban,” Dan Snyderman, from CC Enterprises LLC, points out in an email. “People, recognizing this, are buying copper pennies by the truck load — literally.”

However, these coins won’t be truly valuable until the melt ban is done away with; right now it’s illegal to melt pennies down, and it’s illegal to take large amounts of them out of the country. Additionally, the fact that these pennies need to be sorted from newer pennies with little copper content, means that the ROI is a little lower, since you have figure in the cost of sorting.

But, what if there were coins that didn’t require as much sorting — at least for now? For some, there are opportunities in hoarding nickels.

Why Hoard Nickels?

“Nickels — made of 75% copper and 25% nickel — are also an intriguing subject,” Snyderman says. “The metal value is slightly higher than the face value, yet no sorting is actually required at the moment.”

While people are looking for older pennies, the relatively high copper content of current nickels might make them well worth hoarding right now, as long as you think that there is a chance that the nickel could be abolished at some point in the future as well. However, the real opportunity, according to Snyderman, is in the fact that you don’t have to deal with the cost of sorting: “A potential upcoming metal composition change would make the ease of unsorted investing go away.”

For now, buying nickels in bulk doesn’t come with a sorting cost, like pennies have if you want to make sure that you are only getting the older pennies with the high copper content. “To sort nickels would require time, making the price higher to buy in bulk. For a client that wants to purchase $1 million in nickels, it requires quite a bit of sourcing, operational logistics, transportation, storage, and a variety of other aspects making it a niche market,” Snyderman continues. “Pricing does not currently include sorting, so buying in large amounts means a better/faster return on investment. If sorting becomes a necessity, pricing will have to incorporate a significant increase in time, making the return on investment much more complicated.”

Of course, you could do your own hoarding, by going down to the bank and getting nickel rolls in exchange for your paper cash. You would have to find a way to store it, just as you would with any tangible investment, like physical gold, pennies, or other coins and metals.

And you have to be aware of some of the risks involved. When it comes to hoarding metal coins in the hopes that the metal content will provide you with returns beyond the face value, you also need to realize that you might never realize returns as long as the coins can’t be melted down.

What do you think? Is it worth it to hoard these metal coins?

Written by Miranda Marquit

Miranda Marquit is a freelance writer and professional blogger, specializing in personal finance, small business, and investing topics. She writes for a number of financial web sites and blogs, and has been featured in numerous media. Read about life as a freelancer at MirandaMarquit.com and in her book Confessions of a Professional Blogger.

34 Responses to Coin Hoarding Idea: Nickels

  1. This is a novel idea & alternative investment for sure. Not sure if the time spent would = $.

    • Miranda Marquit says:

      I’m not sure, either. But, it’s an interesting thought — especially for those who are uncertain about what the future holds, and worry about the economic situation.

      • Jordan says:

        Miranda,
        Looking back it would have been a no brainer for a small time investor (the little guy or gale)in the 1960-70′s to have traded in there paper money for silver dimes, quarters, fifty cent piece, and dollars. I don’t know the math, but when a silver dime is worth $2.30-$2.60 at any coin shop today, it makes you wonder what a nickle will be worth in 20-30 years.

    • BMWSID says:

      If anything, I would hoard ‘junk silver’. Why buy nickels, take up too much space,
      and the silver is a bargain right now. I bought some in ’08, and it has doubled now.
      Nickels will likely never do that!!

      • William says:

        Silver isnt actually a ‘bargain’ right now. Last time I bought silver it was less than $6 an ounce. Silver is way too volatile as far as price to think that it will never bottom out again, as far as Im concerned.

        • mike hartz says:

          Research the declining availability of vs. the industrial demand for silver. Also, research the massive increase in investment demand for silver. Silver is a steal at these prices…. back up the truck! Take physical delivery and sleep easy at night.

          • William says:

            …and then the economy recovers, the dollar buys more of any commodity and so silver drops back down to somewhat normal levels.

            When I started buying nickels they were worth more than a nickel. When I checked 2 days ago they were worth a little less than a nickle. As long as silver, copper and nickel are consider commodities they will fluctuate in price. The better the economy, the more valuable the dollar, the less dollars it takes to buy an ounce of silver, nickle or copper assuming they dont stop mining it.

  2. Bryan says:

    If you’re one of those Doomsday Preppers (one my new guilty tv pleasures) who believe the US government is due to fall apart any time now, there might be value in hoarding nickels for their copper. If you don’t think the government will fall apart soon, I have a hard time believing the US will rescind its law to not melt coins.

    • William says:

      The fact is, however, that paper money has zero intrinsic value. A nickel, however small it may be, will always be worth something due to it metal content.
      I’ll take $100 box of nickels over $100 paper fiat any day.

  3. Brad Cole says:

    Hoarding coins is effectively buying options on metal than you possibly can’t exercise. The upside is that the option cost is simply opportunity cost of putting those nickels in a minimal risk investment such as a CD since you will always have the currency value of the coins. It wouldn’t take a ton of work to Black-Scholes compute if this is a good idea. Something else to keep in mind is that a change in laws would suddenly increase the available supply in the underlying asset as people melt down the coins. That surge in supply should depress the price of metals so your returns may not be as good as you expect.

  4. I think I’d pass on the nickel hoarding. You could end up storing those coins away for decades before you saw any return. Meanwhile they’re taking up valuable space, plus you have to factor in the opportunity cost. What else could you have done with that money other than hoard nickels?

    • 101 Centavos says:

      Never mind about the cost, what about the *time* spent sorting little bitty coins?

      • Miranda Marquit says:

        That’s so true, since time really is money!

      • Aj says:

        What sorting? Go to the bank and buy a roll for $2 – no sorting.

        • William says:

          Exactly.
          I only went thru our nickles just to find out if there were any old ones.
          Found a number of 1942P and 1943P WWII that are 35% silver.
          Also found a few older Canadians that have the much higher nickle content.

          Paper money has no real value. Its worth the same as tissue paper or a plastic bag…absolutely nothing.
          At the very least the metal content of a nickel or pre 82 penny makes them worth saving.

      • Joe says:

        You might reread the article, you missed the point about sorting.

  5. Miranda Marquit says:

    I agree that hoarding metals (especially metals in legal tender form) is risky. It’s definitely an alternative investment! And thanks for the good points Brad and Mike! Any change in the laws could change the whole game!

    • Aj says:

      Risky in what way? In a period of deflation they are worth no less than what you paid, during inflation they go up. It seems you would have said silver dimes (pre 1965) were risky. Seems to me they are now worth over $2(coinflation.com) They are worth this much without the need to melt them down and going against any law, which is the normal argument.

      As an example: A gallon of gas in 1964(when coins were still silver was around 30 cents (3 dimes; an approximation as websites differ) Those same 3 dimes can be purchased from a dealer today for almost $8. That is 2 gallons. They hold their value.

  6. LibertyMan says:

    Why does everyone think you need to melt them? No one is melting silver dimes and quarters.

  7. mike says:

    they will always be worth a nickel!!!!!!!!!!!!!!1600 dollar gold could go to 400 dollar gold…not so with you’re nickels…you could never lose you’re inital investment

    • wmtipton says:

      Not to mention the fact that the Chinese are putting out hundreds of thousands of fake silver coins, bars and rounds right now, making it nearly entirely unsafe to buy silver.

  8. trj says:

    That is true, always worth the face value. They also are made of something of value and no need to melt to have value in the content. May eventually beoome like pre 1965 silver coins. I see no harm in keeping them.

  9. William says:

    I just starting ‘hoarding’ nickles and pre 82 pennies.
    It actually is sound regardless…even if the nickle is taken entirely out of circulation and and the melt ban is never lifted the collector aspect will be there for as long as civilized society exists.

    People dont buy old silver quarters and dimes to melt, they buy them buy the roll simply because they love to say they have them.
    It wont be any different for old copper pennies and nickles.
    My guess is that the nickle is going nowhere anytime in the next 30 years or more seeing that they are talking about changing the composition to stainless steel of some grade or another. If we can do steel cents then steel nickles should do just fine.

    If the steel nickles are in circulation then my nickles will still be worth the nickle I paid for it, inflation and all.
    But the value will be more because of the copper/nickle alloy to collectors and hoarders.

    Even though people can still buy pennies and sort the pre82 they will pay a premium for a roll of presorted pennies right now on ebay.

    If nothing else a $100 worth of metal nickles is ALWAYS better than digital or paper money that has no real value at all.

  10. Jack Flack says:

    The value in nickels is not in melting them. It is having a form of currency that has intrinsic (not fiat) value, if/when hyperinflation hits or economic collapse happens.

  11. Jack Martin says:

    The other thing to consider is a hyperinflation situation. After all, the Fed is printing phony money like water these days ($85 billion/month). In the event that the US government decides to drop a zero off of the dollar (I know, you don’t think this could ever happen), the coinage typically increases in value by the same multiple because it is much cheaper to keep the existing coins in circulation. Replacing paper currency is simple by comparison. This whole process has been historically documented many times.

  12. Joe says:

    Here’s an article covering this from the prepper side: http://www.survivalblog.com/nickels.html

    I save nickels because if the mint decides to change the metal composition current nickels may become as valuable as silver coins have become. Also as someone pointed out they are not subject to currency devaluation.

    As an aside this website article has no reference to the date it was written or posted. At least I could not locate it.

    • William says:

      Right now on ebay there are sellers selling rolls of copper pennies (the mostly pre 82 stuff) for much more than their face value. People want them apparently. Ive sorted a few thousand myself and set them aside.
      Here we are discussing buying nickles too, so in essence it has already begun.

  13. Bart says:

    Don’t forget Gresham’s Law! I now have close to $1,500 in nickles.

    • William says:

      We have about $600 so far. Did the PVC tube thing like I saw on a website somewhere. Put them in and seal them up.

  14. dmike says:

    large banks have issued internal “look out” memorandums to their branches.

    like a suspicious or large cash transactions they can deny you a large order of nickles or put your name into the ubiquitous list.

  15. alfred says:

    Just food for thought: in a doomsday scenario, I wouldn’t trade a can of pork and beans for a gold bar, or any money for that matter. If you have limited resources, and storage space, stock up on nonperishable foods you may actually eat at a later date as a hedge against inflation, and buy as many bullets of various types as you can afford. If you still like gold, copper, silver etc, starving hoarders will give you all you want for a meal. Bullets will be as good as money. But I can’t see what use the precious metal would be if the infrastructure collapses.

    • wmtipton says:

      Very true, Alfred.
      I have been telling gold and silver investors for years to not sit back and hope that their metals investments soar too high because that can actually be a bad sign for the economy when it takes too many dollars to buy gold.
      And here we are. The economy went to pot and gold and silver went thru the roof.
      Absolutely NOT worth it in my opinion.
      If it all comes crashing down that gold wont be worth spit to anyone….food and water will be the new gold and silver instead.
      Investing in gold and silver works IF the economy is sound.

      Myself I like it when the economy is good and silver is based on supply and demand and we get those normal fluctuations in price. Its easy as can be to invest and make money because its predictable.
      At this point who can tell whats going to happen now. It could be decades before the economy finally straightens out with our national debt getting so high.

  16. Talltown says:

    alfred,

    “In a doomsday scenario” you are correct and most smart folks have already made or are in the process of preparing. There are, however, numerous other potential scenarios that one can be prepared for. Gresham’s Law, for one…

  17. Terry says:

    Well hat is off to you Miranda for your article… the premise of collecting pennies & nickels is good… I am a coin collector for 50+ yrs… Pennies is a better investment then nickels BUT Nickels are better as there is NO sorting needed & take up to 5 times less room… Pennies on the other hand pays twice what nickels do at the present… keep this in mind… CANADA has already got rid of the penny… USA will also do the same… once they do which should be in next yr or two… then everyone will start hoarding pennies… hence value will go up – especially for collectors… just some of my thoughts & opinion… :-) Thanks Miranda…

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