Investment or Hobby?

[Copper Catcher]

If you are a member of Realcent.org then more than likely at some point you have either hand sorted or used a machine to sort copper pennies. The motives behind this behavior vary greatly and I am not going to go into all the reasons why.

However I will state that much like when silver coins circulated freely in the past the 95% copper pennies stands out because the metal content is worth more than the face value. However with some good things there always seems to be a catch; it is illegal to melt the coin! Regardless, people still see value in saving the 95% copper pennies!

Eventually everyone gets to a point depending on their finances and space issues, to answer the age old question concerning how many copper pennies they want to keep and how long they plan on holding on to them?

It does not appear that the United States government is in any hurry to eliminate the penny from circulation despite the fact that even trying to make the copper coated zinc version cost more than a penny to make. Likewise, there has NOT been any hint of a government program to reclaim the remaining copper pennies in circulation. Doing so, without discontinuing the cent could cause a shortage in pennies that might trigger the need for additional production of the newer version hence costing more money.

So now here is one of the big questions: Is saving copper penny really and investment or a hobby? Investment are generally something whose value either increases or decreases and can be easily bought, sold or traded. I'm not convinced that copper pennies fall into the category of a true investment.

Here is why: Let’s say as an example someone sorted $50,000 in pennies and was able to amassed $10,000 in copper pennies. Quite a feat and I'd guess less than 10% of the folks on the site have done so. Now a question everyone wants to know is: What are they really worth? Most of use love at this point to run to www.coinflation.com for the answer:

Values Used:
Total Face Value: $10000.00
Coin Type: 1909-1982 Lincoln Copper Cent
Copper Price: $2.8843 / pound
Zinc Price: $.9772 / pound

Answer:
Total melt value is $19,122.06.

Now, let’s talk about the reality of the numbers! There is a real cost involved in the time, energy and effort it take to sort coins. We have heard it said over and over that "time is money" but for most of us we discount this and don't generally place a value on our time. Second and one of the most important things to remember that I already mentioned before, the United States penny is illegal to melt so you will not likely find anyone on the planet willing that will be freely willing to give you melt value for the coins. Another issue that cannot be overlooked is that copper pennies are still in circulation and for the most part can be picked up at any local bank. So, people will hesitate to pay much of a premium to obtain the coin. Lastly, weight and ease of transport has to be taken into consideration.

So what are they worth: The obvious starting point is $10,000 but not $19,122.06.

What say you?

[68Camaro]

There are other than your two choices that I think are as or more important.

For some it is also a business.

And for some (perhaps only a few consciously think it of it this way, but perhaps others consider this subconsciously) it is wealth preservation. Wealth preservation is not investment. (Or not necessarily investment, though some improvement in position is possible.) It is what one does when fiat is converted into hard commodities, whether real estate, ammo, 20-year food supply, artwork, classic cars, precious metals or other trade-able assets with the intention of being able to transfer capital assets from one side of a potential crisis to the other side. Copper is one option in that asset universe, and of copper options copper cents are not only easily available but remain the most fungible form of a base metal. There only negatives are the space and weight it takes to store in quantity, but otherwise it is not only still traded as if money and will never be worth less than a cent, but it also has intrinsic value which for many years has been and is expected to continue to greater than face (which US nickels have failed to do).

It can be a stand-alone hobby independent of any of the above, but it can also be a hobby in addition to any of the above.

For me it is - in order - 1) wealth preservation that also provides 2) a low-level hobby, and 3) some measured potential of mild investment.

[henrysmedford]

Hobie sold off--3500#


Untitled by henrysmedford, on Flickr

Untitled by henrysmedford, on Flickr

[Morsecode]

I agree with 68camaro, especially "some measured potential investment".

The thing about Time Value is not valid unless you sort as a business, or you are a lawyer. If it's not interfering with your regular job then there is no value to the time. One could say someone is throwing away their Time on golfing, or volunteering, or playing with their kids. And yet we don't say that. Isn't it true that we most often equate Time Value with activities we DON'T enjoy, or are required of us? (Job)

The other thing I get a chuckle from is this nonsense storage problem, mostly heard from outsiders or newbies. Ok, if you live in a condo or mobile, but 3 feet squared is all it takes to contain a ton. Two tons occupies the space of a riding lawnmower. You guys don't have garages or basements? Or are the pennies taking up the space you would normally stash your Picassos and Renoirs? Besides, how many copper sorters can afford to tie up 3 tons ($9219.83 face) of Lincolns in limbo indefinitely? Not many.

Is it more hobby than investment? You could argue both sides of the coin. I do believe there is some small thrill in purchasing from a bank for $25.00 something that has a value greater than $25 the moment you buy it, and that's what ultimately drives the obsession.

[theshoenlebens]

Hobby for me.
I had acquired over #1000 and sold it all to one individual. I took off over a year during my knee replacement and just started back maybe 6 months ago.
I only sort $75 a week so it takes me awhile to get a ctu. When I do, I sell and make approx. $19 for my time. Not anything for my time but I do sort out the wheats which I keep and roll by year. I probably have close to 20,000 wheats that I will keep till worthwhile to sell or let the kids have if they want them.
I look at it as a fun hobby with the possibilty to have a payoff if I find a rare wheat.

[Rodebaugh]

Copper collected via sorting is not the only profit point of the activity.

Varieties, wheats, Indians, Canadian, and keys all value higher than bulk copper.

[Computer Jones]

I find it's interesting to be alive and participating in the enforcement of Gresham's Law.

It's a fun hobby that has the potential to pay off (real big if any of my VDB's grow an "S") for me, but I expect to bequeath my hoard to my descendants and hope they never need to dispose of it and my future generations have a bit of wealth if/when it's needed.

[fasteddy]

short version...

it is a savings vehicle...investment vehicle and a hobby also.

savings...if in a critical situation return to bank for cash infusion.

investment...currently earning .1 to .5 x fv maybe more on sales

hobby collecting...what ever I see that is unique or different or collectible to me in the pile of coin

recently I have sold some copper pennies and turned that money into several tubes of ASE's...savings and investment

[Thogey]

It's a pain in the ass and you have to accept it with a sense of humor.

You are not going to get ahead sorting cents. We are all brain damaged. Accept this fact before it destroys you!
Heavy hitters in this business may be making money because of this fact.
Selling and moving cents is a pain in the ass. This is why we [U.S.] won't deal with eliminating them.

I would sell my stack today......but it's not worth the hassle! I can scoop dog$hit in some stranger's yard and make better money, plow it into silver gold, or cents someone else sorted.

That said, I really like busting into a box of cents and sorting.

I guess it's one of the few hobbies that pays for itself.

[TwoAndAHalfCents]

It's a hobby for me. I sort by hand and find it to be relaxing. It has been a great way to find coins to add to my collection too. I now have seven Indian head cents aquired at face value. The coppers I keep are in $25 boxes stacked up taking up a relatively small amount of closet space. Each box represents $25 of long term savings for me. It's money I can use in an emergency but more likely will just be passed along to the next generation.

[Recyclersteve]

A few thoughts on this subject-

1) STORAGE CONCERNS- I'm in the group of people who feel that storage space is a potential problem, and more so if you sort by date. Example: See EthanA's posting titled "Mega Pennies NE Indiana Hoard..~ 2 Million (Updated Info)" first posted on 12/13/14. Look at the photos- we're talking about perhaps 3 1/2 tons, but those shelves take up a LOT of space.

When someone becomes concerned about pennies taking up too much space, they can branch out into nickels. The problem for those of us in the U.S. not named Kyle Bass (Texas hedge fund guy who bought a million dollars worth of nickels a few years ago) is the nickels in the U.S. are only 25% nickel. Canadian nickels before 1982 were 99.9% nickel and would take less than half the storage space of pennies (at current market prices). The problem is in finding the Canadian nickels. Also nickel is a known carcinogen. So there are tradeoffs as always. Still, I wish I'd known about the Canadian nickels about 5-10 years ago- I'd probably have a nice hoard now. This is kind of like finding out about silver coins in the early 1970's (when most had already been picked from circulation).

2) TRANSPORTABILITY- Space and weight pose another potential issue as well. Let's say you had only a few hours to move your penny hoard because of a flood coming your way. Would you be able to? I'd say many wouldn't, and those pennies sitting under water would get real ugly and corroded pretty quickly. Think about the coins which come out of fountains. The pennies get to looking pretty bad in a hurry. If someone had something perhaps on wheels with access to a forklift, then perhaps they would be ok even with floodwaters coming their way. Basement storage- I just don't know.

3) ABILITY TO MELT PENNIES- Sure, we can't melt down the pennies now, but for those who can wait 5-10 years, there is probably a decent chance they will be able to melt them down. After all, you can legally melt down silver coins and war nickels in the U.S. For those who can't wait that long, perhaps they shouldn't own pennies. Back to the example above (the man from Indiana with a few million pennies)- it sounds like he may have health problems and doesn't want to wait that long. So he is probably doing the best thing by trying to sell his well organized hoard.

4) HOBBY SATISFACTION- When I think of hobbies, I am often reminded of the old phrase "An idle mind is a devil's workshop." Even if a hobby doesn't pay for itself, it keeps you from wasting money on other things (i.e., shopping at the malls, gambling, etc.), keeps you from getting depressed, etc. As such, there is value in spending time on a hobby, especially for those with limited means who can't afford to buy boats, RV's and travel the world.

One other aspect of this, and I don't mean to be too much of a Debbie Downer. Let's say there was an emergency where we were without power for a week or two. No TV, internet or radio. Pennies (and coins in general) would be a nice diversion from the chaos going on outside.

5) DECOY STATUS- If someone were trying to rob you at gunpoint (let's say a group of thugs performs a sneak attack and catches you sleeping in the middle of the night), copper pennies would be a nice decoy. In other words you could say "My coins are over here" and proceed to show them something that would be very difficult to move and not worth all that much. How many penny hoarders would have large stashes of gold and silver- probably not that many. If you have your copper or silver well hidden or stored elsewhere, then the pennies have served a purpose that you may not have considered.

Also, think about how the average person might think. Let's say you didn't know anything about coins and saw someone with a huge quantity of pennies. You first inclination might be to ask what they are worth. About 2-3 cents each. Then you might ask how the person got so many. If you say that you sort by hand (even if you own a sorting machine), then the other person will likely think you are both poor and/or eccentric. Tell them that you think that gold is too expensive and a "barbarous relic" with no real utility and you are even better off.

Sorry to ramble on so long. Excuse me while I tell my wife that the two $25 boxes of pennies under the Christmas tree will be moved by the end of the day...

[Sheikh_yer_Bu'Tay]

What are they really worth? Most of use love at this point to run to http://www.coinflation.com for the answer:

Values Used:
Total Face Value: $10000.00
Coin Type: 1909-1982 Lincoln Copper Cent
Copper Price: $2.8843 / pound
Zinc Price: $.9772 / pound

Answer:
Total melt value is $19,122.06.

What say you?

I have to disagree with the parameters set for the discussion. Coinflation.com quotes spot prices of pure metals. At the time of this writing, spot on pure copper was $2.8843 / pound. Spot on pure Zinc was $0.9772 / pound.

"Copper Pennies" are made of a brass alloy, not pure metals. If I remember correctly it is called "Fielding Brass". We all know the composition: 95% copper & 5% zinc.

To get $19,122.06 from a professional metals buyer, I think you would first have to refine the alloy into it's pure parts.

It's like trying to get spot for total weight of sterling silverware from a refiner. They will not pay that. There is a refiner's fee to be paid.

For some it's is a very profitable business. They sell lots and lots of coins. HCBTT & Highroller come to mind.

Others, like me, it's a hobby. I do it mostly for the joy of collecting.

[Recyclersteve]

By the way, I just realized I didn't answer the "Investment or Hobby" question. I guess I think of it as more of a hobby. If I think of it as an investment, it won't truly pay for itself anytime soon and that might be depressing. So I'd rather think of it as a hobby (short and long-term) and as an investment (long to very long-term only).

[silverflake]

I consider it a "HOBVESTMENT". I started hand sorting about 10 years ago and never knew there was anyone other than me who had figured out the math as the price of copper started rising. I felt smug as I pulled 1 cent pieces out of circulation that had more than 2 cents of metal value in them. But as I hand sorted more and more I started pulling wheats, Canadian, U.S. dimes and other foreign coins (found one I.H.) it was fun along with being perceived as valuable. So I kept doing it. However, it was a lot more rewarding when over 30% of the rolls were copper and I was finding 5 wheats in every $10 of pennies. Now, my percentage is below 20% and wheats are getting hard to come by.

So to close, when I look at the coppers I have, at the very least I have some tangible cash stored away (I also have a couple boxes of nickels too). Is it 'hard money'? Debatable but certainly they are not cotton fiber paper I.O.U.s so I am preserving some wealth in a way. I have slowed over the last year as it is becoming frustrating and less rewarding with the percentages decreasing. Also, the low price of silver has called my funds away. Until silver moves up again, I am putting as much of my spare cash into silver as I can. I feel close to giving up on the penny sorting but every time I go a few months not doing it, I will break down and get ten bucks worth and hit a wheat vein or find a British penny or something and get back into it. It's a sickness, maybe. An obsession, possibly. But I do feel just a little smarter than the average Joe who has no idea about the destruction of our monetary system.

Enough rambling. That's my 2 cents worth (copper).

[slickeast]

For me it is a hobby. I was at my peak when I was taking care of my mother. She needed 24/7 assistance. I was able to take her on trips to the banks to buy bags and dump zincs. I probably spent more than I made but I enjoyed it.

Some can and do make a business out of it. One member has it mastered. Another member does it as a byproduct of his main business.

I sorted anywhere from $500-$1000 in loose cents every week. 22.5% copper was average. So that meant I was getting between $112- $225 in copper cents a week. If I was able to sell at 1.6x I made $65-$135 a week. If you added up the fuel cost and time it was under minimum wage.

So it was/ is a hobby to me. The investment would have to be long term with hopes for a big payoff one day.

[johnbrickner]

I'm looking long-term. How long? Perhaps several generations. So it really isn't being done to compare time and money to. Puts it into a kind of hobby form. I'm not using this as a way to get ahead in this world. If I were, I'd fell real shitty about the time I spend doing it. Not trying to "get ahead" anymore has given me a much better outlook on life. Perhaps not much of an improved outlook towards humanity as a whole but, much better personally.

Second, since I do look at it to compared against my past "investments" I can tell you I greatly enjoy taking $400 of my hard earned FRNs (Federal Reserve Notes,) passing them thru a Ryedale (was an Ace, now is Blue) and ending up with about $300 in FRNs and over $200 in sound money (see my recent post on sound money) value. The sound money part I stack and the FRNs get put back into the cycle. Like as said above, it's like insurance a way of protecting value.

Third, the sound money part isn't taxed and doesn't get devalued or debased or subject to mismanagement or manipulation, etc. and I can't say that about any of my past investments or FRNs. Fact is, I consider it a bit detached (when compared to typical investments available to the common man) from harm caused by Park Ave, Pennsylvania Ave, or Wall street. Being able to put my hard earned time, and life energy into something like that, well it doesn't get a whole lot better.

[Morsecode]

I'm looking long-term. How long? Perhaps several generations. So it really isn't being done to compare time and money to. Puts it into a kind of hobby form. I'm not using this as a way to get ahead in this world. If I were, I'd fell real shitty about the time I spend doing it. Not trying to "get ahead" anymore has given me a much better outlook on life. Perhaps not much of an improved outlook towards humanity as a whole but, much better personally.

Second, since I do look at it to compared against my past "investments" I can tell you I greatly enjoy taking $400 of my hard earned FRNs (Federal Reserve Notes,) passing them thru a Ryedale (was an Ace, now is Blue) and ending up with about $300 in FRNs and over $200 in sound money (see my recent post on sound money) value. The sound money part I stack and the FRNs get put back into the cycle. Like as said above, it's like insurance a way of protecting value.

Third, the sound money part isn't taxed and doesn't get devalued or debased or subject to mismanagement or manipulation, etc. and I can't say that about any of my past investments or FRNs. Fact is, I consider it a bit detached (when compared to typical investments available to the common man) from harm caused by Park Ave, Pennsylvania Ave, or Wall street. Being able to put my hard earned time, and life energy into something like that, well it doesn't get a whole lot better.

There you go

[RichardPenny43]

It's definitely a hobby for me.
I quickly realized that I wasn't going to get rich sorting pennies, but I do make a small profit selling them.
I would value $10,000 face at $12,500 because I sell my coppers at 1.25x FV. Sorting $50,000 is a lot of work to make $2,500, I could make more money with my time and effort flipping burgers at McDonald's.
The small profit I make does allow me to maintain a small hoard that is free and I can hold for long term and possibly sell at a higher price in the future.
Buying, sorting, dumping, moving and selling can be a pain in the ass but I enjoy pulling out the wheats, indians, foreign and other odd stuff too.
I also like that I am among a small number of people who are putting Gresham's law into effect.
I will continue to sort until I can't find a buyer or the whole process becomes too difficult.

[Gobirds66]

I guess the answer to the question is a little different for everyone depending on your status in life, other investments, and hobbies, as well as your projected longevity on the planet.

For me, I see this as a multiple faceted approach:

1. The Oddities - I like to pull the wheats, the Indians, the strange stuff, etc. like the rest of us. I save up and convert the wheats and Indians into silver. I calculate the ounces of Ag bought based on the face spent, so I really dollar cost average my silver in this way. It gives me that investment grade metal for a base metal price, and with the price of Ag (currently sub-$16) I really cannot lose on this one and the Ag is much more portable than the same value in Cu.

2. The Collection Value - in 1959, I have to think that no one was really saving wheats. OK, maybe some errors or rarities like the 1909 SVDB, but not the 40-s and 50's wheats. They were all looking for Indians and earlier. As wheats started getting being pulled and became more of a rarity, people pulled them, and now you can go to just about any LCS in the USA and get .02 a piece for the run of the mill, common, wheat. Well, we have had a new Shield Reverse since 2010, and the Memorial has not been minted since 2008, so that means that the Memorial is becoming rarer by the day and one day, they will be what the wheats are today. Granted this is a longer timeline than some of us on here have, but there will be a day when the 1959-1982 Copper Memorial will carry a premium over the 1982-2008 Zinc. People will always want to search for the errors and such, and let's face it.....our population in this country is growing one way or another. There will be a desire for these coins one day....and even though I may or may not see it, my heirs likely will and will be able to cash them in.....much like I do with wheats, and since I do not search the copper, they will be able to put them on Ebay as "unsearched".....LOL!

3. The "Investment" - Sure, I collect the copper for the sake of collecting copper hoping that one day some bureaucrat will want to lift the ban and I can score an immediate win. Only a few short years ago, I paid for a Ryedale, and made a nice profit sorting for some speculators. There is a sucker born every minute. If copper goes up again, I am sure more will want to buy rather than sort. Now, the reality..... I really think that copper is not going to skyrocket in the foreseeable future. With the slow down of the other industrialized nations' demand for the base metal, we will be able to supply the world with the recycled and current supply. WE are going wireless in the country. So is Europe. Asia is as well. We get more coverage every day. Soon, connectivity will happen via sattellite for the most residential users. Much of the country will only need to have a power connection to the house. We will become considerably more mobile and connected through "air" which means less need for wires and copper. Yes, there will always be some demand, but a fraction of what we needed even 20 years ago. If we spike, it will be due to us shutting down new production too much and having an immediate need. It will not be a long standing spike though. So, when that spike happens, the suckers born every minute will get my cents at double face and I will hopefully still be buying silver on discount.

Of course I could be all BS and none of this happens and I have to use my cents to trade during the zombie apocalypse, so I am still ready....LOL!

[hobo finds]

A hobby that I invest in and an investment that is also a hobby

[coppernickel]

Hobby, definitely.

Tool to teach children, if they want to learn.

Investment, figure they rate of return is better than any bank, or stock will do.

Inflation hedge, and

Decoy, I say boredom factor, people know copper is boring, thus I never mention silver or gold.

I do it because I enjoy it.

Thanks be also to the positive support here on the forum.

[Zincanator]

Was a really fun hobby for me until it became very difficult to source pennies to sort. Seems all my local banks had excuses not to give me many/any rolls. That was before the recent dip in metals prices though. I should go by a few branches and try again I suppose...

[willy13]

Hobby

and a protection from a currency collapse

[coppernickel]

Recently Wells Fargo has been willing to provide coin. Helps if I mention this, "business," instead of calling it a hobby. Also, asking for more, "business," type change. A box of pennies, a roll of dimes, a roll of quarters, and five rolls of nickels, $50 even. Never ask about halfs.

[dakota1955]

I can get halves from Well Fargo. They are happy to give them.