I am not a commodities expert, but I do recognize and hold all of these physical metals. In fact, I have a proposition for you.Consider taking this $200 challenge. If this dollar amount is too expensive, any dollar amount will do. Take $100 out of your saving account and buy (and sort them) to get $100.00 worth of pre 1982 pennies. Then, with the other $100, buy a box of Nickels.
In Five years, if the current monetary system is still intact you will still have your $200, minus the "taxable interest," you would have accrued in a savings account. So basically, you lost nothing.
However, this is where it gets interesting. OUR PAPER MONEY IS BEING DEVALUED EVERY TIME WE CREATE MORE OF IT. And as our paper money loses its value, the intrinsic value of the metals in these coins will go up. Silver, Copper and Nickel have already become WORTH MORE THAN the denomination our government has stamped into them.
"Gresham's Law"- 'Bad money drives out good money.'
This is a law that we need to seize upon.
Lets talk about the coins in our pockets!
Last week I was handed a 1962 dime in change at a store. Later that night I traded that dime for $2.81 cents!
I legally made a $2.71 profit for selling one ordinary dime.
A few months ago I had saved up $2.80 in our Fiat currency and traded it for a one Troy Ounce bar of Silver. At the time the value of Silver was $35.23 the ounce.
I bought $35 worth of Silver for less than $3 in our currency and it was an even trade!
How am I doing this?
Gresham's Law.
The coins I used were made of 10% Copper, 90% Silver.
The last silver dollars were dated 1935.
Silver was removed from half dollars in stages:
- Up to 1964 they were made of 90% silver
- From 1965 to 1970 they were 40% silver
- After that, they've been made of copper-nickel.
The last silver dollars were dated 1935.
Silver was removed from half dollars in stages:
- Up to 1964 they were made of 90% silver
- From 1965 to 1970 they were 40% silver
- After that, they've been made of copper-nickel.
 |
| Complete Set of Jefferson Silver Nickels |
In addition, nickels minted from mid-1942 to 1945 contained a small amount of silver due to wartime shortages of nickel. Those are the only nickels that ever contained any silver
Back in 1964 it was known that the intrinsic value of coins containing Silver made them worth more than the denomination our government stamped into them. It was what Gresham called, "good money." The government weaned Silver out of non-numismatic grade coins and substituted a less valuable metal. This is what Gresham called, "bad money." People began to take the silver coins out of circulation and only the "bad money" was left to use. The "bad" cheaper metal money drove the "good" silver money out of circulation because people held onto it and didn't use it in regular commerce.
Back in 1964 it was known that the intrinsic value of coins containing Silver made them worth more than the denomination our government stamped into them. It was what Gresham called, "good money." The government weaned Silver out of non-numismatic grade coins and substituted a less valuable metal. This is what Gresham called, "bad money." People began to take the silver coins out of circulation and only the "bad money" was left to use. The "bad" cheaper metal money drove the "good" silver money out of circulation because people held onto it and didn't use it in regular commerce.
So, in the case of my $2.80 transaction the numbers stamped into the coins added up to under $3.00, but the intrinsic value of the metals made my transaction with the bar of silver an even trade. Think about that for a moment.
This is a prime example of how de-valued our U.S. money is getting. AND PRINTING MONEY FROM THIN AIR IS ONLY GOING TO MAKE IT WORSE.
Nickels, in their currently minted composition (see the exception above) are made up of roughly 75% Copper and 25% Nickel. They are worth holding because the metal in each of them is worth around 7 cents today. You don't have to sort them either. they are ALL the same and maybe some silver are in there!
Nickels, in their currently minted composition (see the exception above) are made up of roughly 75% Copper and 25% Nickel. They are worth holding because the metal in each of them is worth around 7 cents today. You don't have to sort them either. they are ALL the same and maybe some silver are in there!
The government knows the value of the metals in our nickel, so look for the Mint to announce a composition change in the next year or so. Once this change happens the current Nickels will become "good Money" and Gresham's Law dictates that they will be driven out of commercial use. I suggest you and I beat the masses to the punch and get some to hold onto.
All pre-'82 (and roughly 2/3of 1982) Cents are made of 95% Copper and 5% Zinc. Each of these cents are worth nearly 3 cents today. The government got wise to this and changed the composition of the cent midway through 1982. ANY cent minted after 82 is roughly 97% Zinc and 3% Copper. You will need to separate the "good" cents from the "bad" if you plan to hold cents.
Save your pre-1982 Cents and ANY Nickels (as of this writing). They may prove to be the easiest AND safest way to hedge against inflation.
All pre-'82 (and roughly 2/3of 1982) Cents are made of 95% Copper and 5% Zinc. Each of these cents are worth nearly 3 cents today. The government got wise to this and changed the composition of the cent midway through 1982. ANY cent minted after 82 is roughly 97% Zinc and 3% Copper. You will need to separate the "good" cents from the "bad" if you plan to hold cents.
Save your pre-1982 Cents and ANY Nickels (as of this writing). They may prove to be the easiest AND safest way to hedge against inflation.
If you do not have the means to buy Silver, or Gold or you are not entirely convinced we are in financial trouble, they are "good money" and a cheap, painless way to acquire and save a money source with increasing intrinsic value.
Remember, Metals have been used as money for more than 5000 years. The rise in Gold and Silver prices are due to the rest of the world exiting the Dollar. You will not see this on T.V. but the fact remains, the old "Safe Haven Currency"- Our Dollar- is failing and soon it will no longer be worth the paper it is printed on.
Don't believe the media when they tell you these metals are in a bubble. The rise in value is uncharacteristic, but easily explained when you can see the real story.
Roughly 3% of our population holds metals. That number needs to dramatically increase!!! China and India are fast becoming the top two economies in the world. Each encourages their citizens to hold metals.
The U.S. does not promote holding physical metals, in fact, President Roosevelt actually signed Executive Order 6102 which allowed our government to confiscated Gold and made it illegal for U.S. citizens to own.
The order stood from 1933 to 1974. Why?
"The Bernanke" (Ben Bernanke, Chairman of The Federal Reserve) said Banks hold Gold because it is a tradition. Do not believe this for a second.
These metals are simply reclaiming their time tested status as THE ULTIMATE safe haven asset for preserving wealth in troubled economic times.
Protect what you worked a lifetime to acquire and spread the word.
D. James LaSalle
"You don't seem to understand. You are in prison.
If you are to get out of prison the first thing you must realize is
If you are to get out of prison the first thing you must realize is
You are in prison.
If you think you are free, you can't escape."
Georges I. Gurdjieff
25 comments:
in 5 yearts time the current monetary system will not be intact.. will it survive past 2011? if it does civilisation wont
if a penny is worth 3 cents...seems like instantly tripleing your money is better than silver or gold!
Mr. LaSalle, this is a great little tome! However humble one's circumstances may be, they need to be made aware that they're capable of using the qualities of metallic money to protect themselves, as you point out, regardless of what numbers or denominations governments foolishly stamp on the coins! One little addition you had only broached, is that the mere conversion of banknotes to copper cents automatically near triples the real value of their savings. While that same immediate gain is 'only' about 33% in nickels, that plus the reasonable expectation of further enhancement is certainly a 'jump ahead'.
Something similar is happening in Spain. The 12 EUR commemorative silver coin is made of Sterling Silver (92,5%) and weights 18 grams. This means it has 16,5 grams of pure silver. At the actual silver price, this coin is worth 14,5 €.
If you buy one TODAY at the Spanish Bank (12 EUR) and you sell it as silver, you make 2,5 €.
If things go better, you still have 12 €. If they go bad, you have the silver.
Obviously people know this, and the coins are running out.
Agent Blonde
agent blonde- are these only available at the spanish back? where can I get my hands on that deal??
Great article.
www.coinflation.com shows the current melt values for most US coins.
There's a tab at the top that shows the melt values for most Canadian coins too.
American coins are illegal to melt; and we don't have too, they're already cast in perfect little units of measure :)
Here's some more info on the subject:
www.survivalblog.com/nickels.html (not my work, just passing on the link)
Anonymus #4,
In order you answer you, I have to tell you a few things about these coins:
- They are European, not only Spanish. But only available in Spain.
- There were similar coins in Germany (10 €, and 18 grams of silver if I remember correctly) and Dutch. But they've run out.
- Stores are not obligated to accept them, but if things go well, you can exchange them back at the Spanish Bank, and if they go bad, you have the silver. So win-win.
- They've almost run out. This means there will be no more coins for sale this week.
- About trading, they are so valuable that I don't think anybody will exchange them for something reasonable. (not even me. sorry)
Agent Blonde
Mr. LaSalle
Great article. I preach up metals to anyone that will give me a few minutes of their time. I love changing in my paper for real money. Especially at the bank. Grab those nickels while you can. They are the LAST coin to be replaced with some bullshit zinc-aluminum metal. I hear end of this year or early next.
It's almost hard to believe that we've come to a point where it has become difficult to afford to buy ... silver! Are we living at the end times of the Roman Empire, or what. ;-)
I don't get where people say they can't afford gold compared to silver, or in this case gold and silver versus copper and nickel. It simply does not make sense. If I have $200 in fiat currency I can afford both silver and gold, as well as copper and nickel. I simply buy $200 worth of gold or $200 worth of silver or $200 dollars of any other metal or object. If you have any fiat at all that you can spare, you can afford any metal you wish. It's just a matter of how much physical material you get for that $200. But either way, you have $200 worth of metal no matter which you choose. The key is to choose the metal that will have the greatest percentage of return. And silver is most likely to be king compared to gold.
There are other things to consider when purchasing metals. Like the fact that if you purchase copper you will be weighed down with a hell of a lot more material than if you buy silver or gold. Here is a test for you. Take a 10 pound weight and force it into your front pocket. This 10 pound weight represents copper. Now walk with it and see how long it takes before you lose your freaking mind, especially knowing that it's only worth about 40 dollars. Next, take a single 1 oz silver coin and do the same thing. They are both worth $40. Which would you prefer to carry? And if you have a lot of any metal would you rather have something you can keep control of with little effort, or would you rather have pallets and pallets of copper that amounts to no different a value, but will take enormous effort and cost to move, relocate, or hide?
If you want to carry or store the least amount of metal right this minute, buy platinum. If you want to weigh your ass down with an anchor, buy copper or nickel. What you really want to do is buy a metal that is scarce enough that it holds more value than the cheap crap and has hidden potential far beyond those metals with perceived scarcity by comparison. Gold costs more than silver because everyone still thinks that gold is more scarce than silver. And that used to be the case. But not now. Silver is more scarce because it has turned into a consumable.
Do the research and find out what is best for you. But don't ever let anyone tell you that you can't buy whatever metal you want. That is absolutely ludicrous.
Jon, of course you're absolutely correct about the relative effect of quantity. Whether an ounce of silver is 40 banknotes or 400, is immaterial in the long run because the silver will hold value, whareas paper must by design depreciate infinitely. Still, if a fool wanted to trade silver eagles to you at one banknote each because that's what's stamped on their face, you'd be giddy with indescribable delight to accommodate him. Well, the same condition exists with copper cents and nickels on a less dramatic scale. I, for one, am perfectly contented to avail myself of that wonderful little semantic arbitrage and make the necessary storage space available with quiet, regular glee.
Pat - are there any legal issues related to melting Govt issued coinage? How much is a penny actually worth?
Dan, yup ! Nickels and pennies are verboten for melting.A penny 3 cents now right Pat?
Well First your gonna need some form of change for your 1 oz silver if say your buying a loaf of bread. As far as melting down the pennies and nickle your gonna want to keep it in an identifiable form. People will know that a pre 1982 penny is 95% copper when the SHTF. They won't know what you are passing when it is just a chunk of copper. Also when you melt it down your gonna be selling it for the fiat dollars that your trying to get out of. Plus the fact that those who don't know whats going on that are melting down pennies makes a collectors value on what you have saved, if the SHTF doesn't happen. plus the fact that pennies are easy to take to the bank and turned to cash very easily if you need to(Idon't recommend).with the pennies I really don't see a downside.
I THINK the only ones that legislation prohibits melting is pennies
Dan, Jay ... see: http:///www.coinflation.com for up to date coin-melt values. It's a great site! Huge cuddos to the webmaster and originator for a job fabulously done (and slowly improving!). Dan, who needs to melt them down? Once banknotes go belly-up, the intrinsic value of the coins will become commensurate with purchase power and their form (as guaranteed alloy) will help to smooth out rational transaction. On the other hand, should government get vicious, all commodity trade would go 'underground' and the form, again, would be more advantageous than as bullion bar.
you can't melt nickles either
It's time to get a friend who has a refinery :)
Ron, Kyle ... melting them is a waste anyway, because they'll need to be re-struck for trading, incurring additional seignorage. When we reach the juncture where metals are trading on their intrinsic, rational valuation, the numbers will become as invisible as those stamped on Plantation Scrip.
I completly agree. I just don't have the words to explain it as well as you.
Will, every community accross the country (indeed, across the world) ought to organize local warehousing, smelting, assaying, rolling, stamping and minting operations to produce high quality trade pieces. It's unlikely that corrupt local governments will do it, so this is a task for The People.
Best Vid on the subject:
http://www.youtube.com/watch?v=mugyKhoFNfk&feature=related
@Ron Cool, I hope you're right. Latest I read was the mint took suggestions for a period of time earlier this year, but no plan was announced. If you can point me to where you read about it I'd really appreciate it.
Here's is the actual quote: "In February, 2010 it was announced that the Obama administration had endorsed a change in the metal composition of pennies and nickels. And then, in November 2010, President Obama signed "The Coin Modernization, Oversight, and Continuity Act of 2010". It is very likely that the U.S. mint will begin producing debased nickels in late 2011 or early 2012. Once this change is implemented, you will then have to manually sort the "old" from the "new" debased nickels! But for now, there is still an open window of opportunity, during which time SurvivalBlog readers can salt away countless rolls and bags of nickels."
For long-term investing, people always say "buy what's on sale," meaning invest in the investment category that's currently in the doldrums, and hold.
But what people actually do is buy an investment when it has already dramatically risen from its lows. They buy then, because everyone else is buying. Herd mentality. They never think of buying when the investment is actually "on sale."
I think the idea of "hoarding" nickels is a great one, because right now nickels are better than being "on sale." You have a metal in a recognizable form (U.S. nickel) that is selling for LESS than its actual metal value. That's as "on sale" as you can get.
Sure, it might not be five or ten years until you see the kinds of gains people are currently seeing in gold and silver. But make no mistake about it: the people who are making the most money in physical silver and gold right now are the ones who purchased it ten years ago when silver was $4 an ounce and gold was $255. Yes, back when the headlines were calling both metals barbarous relics of the past, and laughing at you if you were buying.
I know there's no "market" in the nickel coins right now, but in the event of a collapse of the paper dollar (which seems all but inevitable, at this point), what else are people going to use as money?
Let's say gold's trading at $10,000/oz. after the dollar collapses. Are you really going to try to buy a loaf of bread with an ounce of gold? How would you get change for your $10,000/oz of gold?
Nickels would be the perfect medium of exchange, because when gold is at $10,000/oz. nickels will probably be worth at least a buck apiece (20x face value), maybe even more. So you might get a nice dinner for a two dollar roll of nickes. Heck, if the shit has really hit the fan during a dollar collapse, you might even be able to feed your entire family for a day on that two-dollar roll of nickels. And if you had 200 rolls, well, there's 200 dinners.
To me, it's a no-brainer, because if absolutely nothing happens in the economy, you can always trade your rolls of nickels back in for paper dollars. But I don't think you'll ever want to.
Just thinkin' out loud.
Post a Comment