Silver, Copper, Nickel and the Slow Death of Money

[midwesterner (banned)]

Gold, Silver, Copper, Nickel and the Slow Death of Money Feb 16th, 2011 whiskeyandgunpowder.com/gold-silver-copper-nickel-and-the-slow-death-of-money/

A huge opportunity to hedge against both inflation and deflation is lying out there in the open. There are no transaction costs and right now therefs even a built-in discount. But most people will never realize any of this.

In 1971 Nixon severed the last official ties between gold and the dollar. The dollar quickly sunk to its real value, which had been debased by years of money supply inflation. By 1975 Americans were allowed to own bullion gold again, but during the roughly 40 years bullion gold ownership had been illegal, the dollar had been drastically debased. At its former lowest point in the summer of 1980, the dollar was worth only 1/850 an ounce of gold. It regained some value for a while, but for the past couple of years a dollar would only get you less than 1/1000 an ounce of gold (right now it gets you less than 1/1300 an ounce). That was the story with a piece of paper that was merely standing in for a monetary metal. But what happens in the case of circulating coins actually composed of monetary metals?

Let’s look at quarters, dimes, nickels and pennies

Prior to 1964, U.S. quarters and dimes were 90% silver. From 1965 to 1970 half dollars were 40% silver gcladh over a copper-nickel or gcupronickelh mix. Now quarters and dimes and half dollars have no silver in them at all. They are now entirely copper and nickel, but only enough to get a little more than 1/4 their face value. Prior to 1983, U.S. pennies were 95% copper and 5% zinc. In 1982 we started getting pennies made of 97.5% zinc with only 2.5% copper plating. Since 1983 every new penny has had this composition. The U.S. nickel has been cupronickel since 1946: 75% copper and 25% nickel with trace amounts of manganese. But thatfs probably about to change

Because the amount of silver and copper and nickel in each case came to exceed the face value of the coin. The debasement of the U.S. currency over time has required the metal in the coins to be replaced with a cheaper substitute.

The average American has no idea what inflation really is or why currency debasement is a problem at all. He figures one metal is as good as another in minting of the currencycthat when the face value of a coin falls below the value of the metal in the coin, itfs nothing more than a curiosity. Substitute a cheaper metal, they think. Problem solved. Prior to 1984, the penny was almost all copper. Now those old pennies have been driven out of circulation and hoarded (Greshamfs Law strikes again). And theyfre worth just under three times their face value: Almost three cents for the old one-cent piece. Buy Two, Get One Free Copper is currently about $4.60/lb. Nickel is currently about $13.00/lb 120 five-cent pieces is $6.00. Those 120 coins contain a pound of copper and 1/3 pound of nickel. Thatfs about $8.93. If you deposit $6 in any bank in the nation, then withdraw your money as nickels, you get almost $9 worth of metal. Thatfs an immediate 50% return. Thatfs like paying for two thing and getting three.

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[Deleted]

Gotta love the site

whiskeyand gunpowder.com

lol

[bean29]

In 1990 DH and I bought a small toolbox of old coins from my Grandma's estate. There is an assortment of Pennies, Nickles, Dimes Quarters, Half Dollars and Silver Dollars. The Coin Dealer at the time put a value on them of about $120.00. Many of the coins Date back to prior to the turn of the last century.

DH felt even at that time that the value was seriously understated.

Isn't it illegal to take the metal out of the coins ie. Melt it down for the metal in it? Is it commonly done?

[domeasingold]

Mid
Pre 1964 quarters. How much?

Another thought: Forever stamps.

When you stated the metal content of current coins. What happens with the current Gold plated dollars?

[midwesterner (banned)]

Feb 21, 2011 15:26:42 GMT -5 bean29 said:

In 1990 DH and I bought a small toolbox of old coins from my Grandma's estate. There is an assortment of Pennies, Nickles, Dimes Quarters, Half Dollars and Silver Dollars. The Coin Dealer at the time put a value on them of about $120.00. Many of the coins Date back to prior to the turn of the last century.

DH felt even at that time that the value was seriously understated.

Isn't it illegal to take the metal out of the coins ie. Melt it down for the metal in it? Is it commonly done?

Bean, right now it is still illegal I believe to melt down the coins. If you have pre 1964 coins, save them because they are worth much more than the face value. I'm thinking the nickels and pennies are going to start being hoarded, just probably not as big of a hype as the silver coins. But go back to early days before the federal reserve, a nickle would and penny could buy way more than now, because the metal value was recognized as having value, and not just a zinc slug like now.

I believe if there is any return to metals as a monetary unit of money, copper and nickel should have their place. Not sure if you'd get rich hoarding pennies earlier pennies, but look at it now, a large spoil of copper is still worth something and not cheap.

[Virgil Showlion]

What Mid is discussing is a particular case of Gresham's Law.

The Wikipedia article happens to be passably well written.

[kman]

Legal? You already declared the currency dead. What do you care if there is a picture of an eagle or a dead Queen. Melt away. Face value of what...fiat currency?

[Virgil Showlion]

What do you care if there is a picture of an eagle or a dead Queen. Melt away. Face value of what...fiat currency?

It's illegal to deface bills or coins.

A bill/coin remains the property of the issuer (the US Federal Reserve), the same way as subway passes typically remain the property of the subway company and/or ID cards remain the property of the issuing company.

If you destroy or deface money, you can be prosecuted for destruction of property.

[midwesterner (banned)]

Feb 21, 2011 19:05:13 GMT -5 kman said:

Legal? You already declared the currency dead. What do you care if there is a picture of an eagle or a dead Queen. Melt away. Face value of what...fiat currency?

haha, Mr. Sarcastic. You know what, every day you and the rat packers become less and less creditable. You've said a lot of stuff that is now being shown to be false day by day. So if insults and laughing is all you can do, be my guest. People can figure out real fast who gave them bad advice or not.

Paid to Pump, or just throwing silly comments out there to further look silly?

Virgil, you hit nail on the head. People I believe in an all out currency crisis, (all depending how bad it gets) will trade these coins for real goods. Just makes sense. A nickel would be worth more than a nickel, so long as it was really a nickel. Get it?

[Virgil Showlion]

Mid, kman is just trying to engage you in debate. A little civility goes a long way.

[midwesterner (banned)]

Feb 21, 2011 19:20:12 GMT -5 Virgil Showlion said:

Mid, kman is just trying to engage you in debate. A little civility goes a long way.

Seemed to me like the pointing fun a laughing type of debate I'm used to with him.

[kman]

Is that so Virgil?

Perhaps you should reword my question and get something else in response other than spin.

[midwesterner (banned)]

Feb 21, 2011 19:24:46 GMT -5 kman said:

Is that so Virgil?

Perhaps you should reword my question and get something else in response other than spin.

Talk about spin, your running on spin cycle 24/7 without shame in your profits.

[usaone]

Feb 21, 2011 19:37:11 GMT -5 midwesterner (banned) said:

Feb 21, 2011 19:24:46 GMT -5 kman said:

Is that so Virgil?

Perhaps you should reword my question and get something else in response other than spin.

Talk about spin, your running on spin cycle 24/7 without shame in your profits.

Mid

How many poor Third world people died mining your Gold and Silver?

[itstippy]

"120 five-cent pieces is $6.00. Those 120 coins contain a pound of copper and 1/3 pound of nickel. That's about $8.93."

Is this true regardless of mint date? I can just go to the bank and get $100 in nickels every month and it would be a rational and simple metals hedge?

[kman]

There is no shame in profit...

I asked a legit question.....Why is a silver coin from a worthless debt currency worth more than the metal it's made of?

[Virgil Showlion]

Why is a silver coin from a worthless debt currency worth more than the metal it's made of?

If the currency isn't more valuable than the metal, the coins get hoarded or melted down.

How many poor Third world people died mining your Gold and Silver?

You're thinking diamonds, U1. And the deaths are due to wars over territory and profits, not conditions at the mines.

[usaone]

www.monstersandcritics.com/news/africa/features/article_1362577.php/Gold_mining_in_South_Africa_deeper_dearer_riskier

[kman]

Good news Virgil......So it's fair to say that silver U.S. coins will trade many times the face value because the currency is anything but worthless...seems to be a contradiction here.


oh ...I almost forgot ..I'm a paid pumper and shameless profiteer.

[kman]

Mid...really...I'ts ok...everybody makes a mistake. Maybe Virgil can help you with the holes in your logic.

[Virgil Showlion]

So it's fair to say that silver U.S. coins will trade many times the face value because the currency is anything but worthless

Silver dollars, like everything else (except derivatives), are worth what somebody is willing to pay for them.

What Mid is referring to is that while the US was on the gold standard, a dollar was a note that entitled the bearer to a certain amount of gold. Post 1976, a dollar entitled the bearer to nothing; US dollars were just such a widespread currency that the "good faith of the US government" was enough to convince people they were a stable means of exchange.

Hence you and Mid are both correct. You, in the sense that dollars can still be exchanged for goods and services and hence have putative worth. Mid, in the sense that coins and dollars bills have no intrinsic worth other than the materials that make them. If a "critical number" of people lose faith in them, their worth could plummet to zero in a matter of weeks.

[domeasingold]

The question still remains...Forever stamps.
I believe a case can be made for hording forever stamps. The USPS is assured of raising the price of a first class letter.
Is this not a legitimate discussion?

[decoy409]

Virgil, you could explain it as 'The Barter System' as well. The old bartering with precious metals has worked well for me throughout the past. It sure does pay rent if you want it to. Why the barter system is a wonderful system.
As long as there is a demand for precious metals and a purpose for that demand, they will always hold true. What do you think we are doing over in Afghanistan. A trillion, 3 trillion right off the bat!

Quote: (7 min.) PBS Valuable Mineral Resources Found in Afghanistan


afghanistan.cr.usgs.gov/minerals.php

And last but not least!

Highlights of Afghanistan's mining sitesThe Associated Press
Posted: 02/12/2011 10:20:06 PM MST


The Afghan Ministry of Mines last month presented information on 27 prospective mining sites that it says contain an estimated $3 trillion in iron, copper, gold and other prized minerals.
Here are highlights it reported on six of the prospective mining sites:

—Nearly $90 billion worth of rare earth minerals as well as niobium in southwest Helmand province.

—An estimated $30 billion in gold and copper deposits in the Zana Khan, an area of Ghazni province that Wahidullah Shahrani, the minister of mines, said could become one of Afghanistan's largest mining operations within five years.

—Up to $60 billion in lithium deposits in Herat, Ghazni, Nimroz and Farah provinces. A U.S. Defense Department task force projects that small-scale lithium production could begin within one year and large-scale production 2-4 years later.

—An undetermined amount of copper just north of the Aynak copper mine in Logar province, which is being run by China Metallurgical Construction Co.

—An estimated $29 billion in copper in Herat province. Previous studies by Soviet and Afghan geologists concluded that this deposit was not worthwhile to mine, but new data suggests it is.

—A massive copper deposit in Balkhab district of Balkh province, value undetermined, but the task force report said it could become a significant mining operating in fewer than five years.
www.scsun-news.com/silver_city-business/ci_17375139

[Virgil Showlion]

I believe a case can be made for hording forever stamps.

Consider the cost of warehousing the number of stamps for the length of time you'd need to beat the "forever" premium.

If you found a dry, abandoned bunker somewhere, you could buy up 500,000 stamps, put them down in the bunker for 50 years, and sell them at a $0.05 profit per. Minus the $5,000 in shipping costs and $10,000 cost of selling them again, you'd wind up with a handsome $10,000 profit. Which by my calculations would amount to a $0.085% annualized ROI.

[dumdeedoe]

Price of a stamp in 1960,,,,, 1.25 cents,,,, price of a stamp 50 years later,,,, 44 cents... Maybe not a bad idea after all...


If i bought 500,000 stamps in 1960 (4000 dollar investment) and sold in 2010 ( 220,000 thousand dollar return)....

I am running out to buy forever stamps.....

www.akdart.com/postrate.html

[kman]

So...The U.S. silver coin is worth more as a collectors item??Rather than the material it is made from.

When the world ends as we know it. I could care less if a coin has an eagle ..or a Panda...Third Reich markings. I could care less about Country of origin.

Stamps...You have got to be kidding.

You guys talk about the end of the world and somehow collector items are still valid

[midwesterner (banned)]

Feb 21, 2011 19:41:07 GMT -5 usaone said:

Feb 21, 2011 19:37:11 GMT -5 midwesterner (banned) said:

Talk about spin, your running on spin cycle 24/7 without shame in your profits.

Mid

How many poor Third world people died mining your Gold and Silver?

Better tear down that home you live in, how many countless brave lumberjacks died or injuried to bring you the wood you need for your home or deck. Best stop using paper, pencils, tolet paper, napkins, and any other products made of wood.

Good think I support American and Canandian based mines where is still dangerous job, but much safer than mining in third world.

Also, yes Virgil is right about those stats being mostly diamonds, which is a scam in itself.

[decoy409]

Good one Mid. Say, nobody cared to address #22 here Mid. What do you think is up with that? Why it is TRILLIONS in $cake$!

[midwesterner (banned)]

2,000 Nickels currently matches the value of five $20 fiat notes! But for how long?



Saving Nickels for Metal Content

[frankq]

Interesting. The market has a 175 point panic drop on global tensions, 1.5-2%, oil up over 5%, yet the metals didn't perform? What's this I see, big money flowing into.....Treasuries? Into USD's? How can it be? I guess everyone else in the world is stupid except these two guys........

Current Market

LME Alum 3 Mo - 2.52%
LME Copper 3 Mo - 2.75%
LME Nickel 3 Mo - 2.90%
LME Zinc 3 Mo - 5.05%
LME Tin 3 Mo - 2.94%
LME Lead 3 Mo - 5.72%
CMX Copper Mar 11 - 0.33%
CMX Copper May 11 - 0.33%
CMX Gold Feb 11 - 0.22%

Those aren't dashes. They're minus signs.
www.metalprices.com/FreeSite/metals/cu/cu.asp