Circulating Nickel Depletion

[cunick]

There has been much speculation about how quickly nickels would be extracted from circulation if the Jefferson nickel is replaced with a less expensive material and/or the melt ban is lifted. Some have pointed out there was no sense of urgency in pulling copper pennies when they were replaced in 1982, and a similar situation would play out for the nickel. This school of thought advocates waiting until after Jeffersons are replaced or the melt ban is lifted to hoard nickels

One significant issue which I have not seen discussed is the fact that in 1982, the melt value of the penny was only around a half a cent. (Based on copper prices of about 80 cents per pound). I am not an expert on the historical prices of copper, but from charts it appears that melt value did not supersede face value of a penny until about 2005. I believe this pretty well coincides with a surge in interest in hoarding copper pennies, and the institution of the melt ban.

With the melt value of a nickel currently over seven cents, it seems there will be much more urgency to hoard nickels than there was for copper when the composition of the penny was changed.

My conclusion is that if the composition of the nickel changes, there will be an immediate interest in hoarding Jefferson nickels and they will not remain in circulation as long as some people have predicted. My guess is that within two years of a change in composition of the nickel, the Jefferson nickel will be more scarce than copper pennies are today.

[frugalcanuck]

I dont know if they will be more scarce than coppers are today but I do agree they will disapear much faster than coppers did. I think a factor that might slow it down though is how few people are making ends meet and cannot spare to hold a few hundred dollars in cash

[VWBEAMER]

The fact that the mint has a melt ban tells us they agree with us. I suspect there will be a melt ban on nickels even after a composition change for a while until the new nickels get out in great numbers.

[Coppercrazy]

I buy bags and boxes of nickels looking for war nickels and pre 1960s,and I find myself always letting the "rejects"hang around longer than zincs....but eventually i dump them to get some new coin to search...but once it gets to near 2x face,I think ill hoard as much as I can afford...I agree that the nickel will deplete faster than the copper penny,but theres no shortage now and even with the recent media attention,most folks dont care..were at least ahead of the curve on this so theres plenty of time to hoard!

[shinnosuke]

There are some other things to factor into the formula of what nickels and pre-1982 pennies might be worth if things get really bad. The price for precious and base metals is partially determined by the value of the US $ and partially by demand. Kitco has a cool webpage to show the effect. http://www.kitco.com/kitco-gold-index.html

If the economy is similar or worse to what the world experienced in the 1930s, unemployed people will not buy durable goods. Demand for the metals that are used in the manufacture of those items will drop precipitously and with that drop in demand we will see a corresponding reduction in price. However, on the other hand, the US dollar will be seen for the worthless fiat currency that it is and prices will go up.

Which factor will be the more influential of the two? Which will have the heavier weighting in our formula?

[Pachucko]

I don't see it happening soon. Vending machines take nickels.... The power of lobbyists....

[VWBEAMER]

If we have hyper inflation, than the Nickel may not be need as day to day currency. Everything can be rounded to the nearest dime, we are almost there anyway.

[StoreOfValue]

We are in a fortunate position now with coin worth more than face because there is no sorting necessary. We also know without a doubt that nickels have to be replaced soon and the melt ban will be lifted soon after. Michael Lewis' friend on The Colbert Report who bought $1 Million in nickels is not an idiot. I am collecting/hoarding a fair amount just for diversification as well because a labor free 40% bump is unprecedented in American history. Picking up a $2 roll here and there from the bank or grocery store that is worth $2.80 is a no-brainer even if just as simple savings. No matter how quickly depletion happens, sorting will be necessary and annoying considering you could have acquired unlimited quantities just a year earlier. If we could have bought $.14 dimes in 1964, you better believe they would have disappeared fast. They weren't so valuable until 1967 where depletion was near total as I recall.

[hejira11]

I think a factor that might slow it down though is how few people are making ends meet and cannot spare to hold a few hundred dollars in cash

Agreed. It takes money to make money!

[TwoPenniesEarned]

If we have hyper inflation, than the Nickel may not be need as day to day currency. Everything can be rounded to the nearest dime, we are almost there anyway.

If we encounter hyper inflation, then the nickel WILL be needed in the day-to-day currency regime that replaces toilet paper FRNs and debased coinage.

Protect your nickels, Americans! It's the only thing of value in your entire financial system.

[OtusLotus]

Although I agree initially with it takes money to make money.. I also believe that it takes a conviction to believe what you are doing is right for the long term, no matter what the pundits or the skeptics say (or your friends/coworkers)...

When I was living in Korea, the electric bill, beeper (dating myself) bill, and if I recall gas bill was all assessed to the penny (single won) but when you paid the bill, they always rounded up to the nearest 10 won..

[west77]

Until the melt ban is lifted I can not see it disappearing very quickly. Even with the Canadian government and mint extracting our nickels for melting along with the other few hoarders, there is still plenty of pure nickel circulating in Canada. If the melt ban were lifted, it would be open season and I suspect that it may disappear quite quickly (especially when you don't even need to sort it .)

The other thing to keep in mind is that even if the ban were no longer in place, the scrap companies are most likely not going to pay you the full value of the metal. It still might only be worth 4.5 or 5 cents at the scrap yard. They want their cut, the transport company wants theirs, the smelter wants theirs and so on down the line...

[Pennybug]

Here's something to consider as well... I've often wondered about this calculation... so I'll just go ahead and do it right quick.

How many copper pennies were produced vs. how many clad nickels were produced? And what is the face value of the two totals? Does this matter? It may... Obviously the penny craze is growing... And when people start in on hording nickels... How many will there be to go around? OK... for these calculations... I took out silver war nickels and only took pennies from 58 to 82.

Total Mintage production
Nickels 51,556,791,616
Pennies 158,142,016,222

Total Face value
Nickels $2,577,839,580.80
Pennies $1,581,420,162.22

There are obviously FAR FEWER nickels out there... BUT... the total value of the nickels will make it more difficult for the average collector to hoard up larger amounts (since they will have to pay at least face amount to get them). I think the deciding factor will be if guys like Colbert's friend decide to go out and buy massive amounts. THEY... along with how many average joe's wake up to the whole thing while it's happening... combined with how banks respond (you may have bank tellers/employees start getting their paychecks in nickels at that point... ya never know)... these I believe will be the big factors in how fast nickels disappear. I don't think that the folks on this website (even the nickel guys... mieser, less, and the other big nickel dudes here) or even other collectors who are aware of the nickels value right now will make much of a dent in them... at first. Two point five billion dollars face value nickels leaves quite a bit to go around!

[Pennybug]

Ops... I meant fewer nickels out there.

Also, I used nickels produced from 1938 to 2009

[Slaphot]

I just did a quick calculation. If every US citizen had an equal amount of nickels based on the amount of 1938-2010 minus the silver. Each person would have about 165 nickels. That's $8.25 or a little over a pound and a half.

Memorial lincolns $14 per person

Copper Memorial $5 per person
Zinc Lincolns $9 per person

[Verbane]

I just did a quick calculation. If every US citizen had an equal amount of nickels based on the amount of 1938-2010 minus the silver. Each person would have about 165 nickels. That's $8.25 or a little over a pound and a half.

Lets say only 1% of the population becomes enlightened, and has the resources to hoard some nickels. That 1% only needs to hold $825.00 each to dry up the supply assuming no loss in circulation since 1938. In walks Michael Lewis' friend on The Colbert Report who bought $1 Million in nickels, and Ponce.

[tn-dave]

I just did a quick calculation. If every US citizen had an equal amount of nickels based on the amount of 1938-2010 minus the silver. Each person would have about 165 nickels. That's $8.25 or a little over a pound and a half.

Memorial lincolns $14 per person

Copper Memorial $5 per person
Zinc Lincolns $9 per person

I've got "a little more" than my share..

[Pennybug]

I just did a quick calculation. If every US citizen had an equal amount of nickels based on the amount of 1938-2010 minus the silver. Each person would have about 165 nickels. That's $8.25 or a little over a pound and a half.

Lets say only 1% of the population becomes enlightened, and has the resources to hoard some nickels. That 1% only needs to hold $825.00 each to dry up the supply assuming no loss in circulation since 1938. In walks Michael Lewis' friend on The Colbert Report who bought $1 Million in nickels, and Ponce.

This is a VERY VALUABLE analysis everyone! Keep it up! Very interesting!

I think this whole thread provides some VERY VALUABLE info on when (not so much if... we all know we will/should) to start collecting nickels!

[68Camaro]

I just did a quick calculation. If every US citizen had an equal amount of nickels based on the amount of 1938-2010 minus the silver. Each person would have about 165 nickels. That's $8.25 or a little over a pound and a half.

Lets say only 1% of the population becomes enlightened, and has the resources to hoard some nickels. That 1% only needs to hold $825.00 each to dry up the supply assuming no loss in circulation since 1938. In walks Michael Lewis' friend on The Colbert Report who bought $1 Million in nickels, and Ponce.

This is a VERY VALUABLE analysis everyone! Keep it up! Very interesting!

I think this whole thread provides some VERY VALUABLE info on when (not so much if... we all know we will/should) to start collecting nickels!

Well, I already have mine, as well as yours!

[Pennybug]

Well, I already have mine, as well as yours!

Cool... thanks for holding on to that for me!

[sparechange]

UPGRADE---Sell your coppers & buy nickles.

[coppernickel]

If the nickel is simply removed from cirulation and anyone in the media reprots the value being enough to keep them, then they will disappear very quickly.

If they are replaced by the half dime, or another coin significantly different then it will again diappear faster.

If it replaced with an iron slug of the same size they would continue to cirulate just like the half dollars are still found today along side a few silver ones.

Perception, it is all based on what people think. As long as Brittnay Spears is a bigger news story than world revolution then nickels will be the last thing Americans worry about.

[999Ni]

I just did a quick calculation. If every US citizen had an equal amount of nickels based on the amount of 1938-2010 minus the silver. Each person would have about 165 nickels. That's $8.25 or a little over a pound and a half.

Lets say only 1% of the population becomes enlightened, and has the resources to hoard some nickels. That 1% only needs to hold $825.00 each to dry up the supply assuming no loss in circulation since 1938. In walks Michael Lewis' friend on The Colbert Report who bought $1 Million in nickels, and Ponce.

VErbane, when you put it like that, i get scared. 825 ain't a whole lot!

[hobo finds]

I just did a quick calculation. If every US citizen had an equal amount of nickels based on the amount of 1938-2010 minus the silver. Each person would have about 165 nickels. That's $8.25 or a little over a pound and a half.

Lets say only 1% of the population becomes enlightened, and has the resources to hoard some nickels. That 1% only needs to hold $825.00 each to dry up the supply assuming no loss in circulation since 1938. In walks Michael Lewis' friend on The Colbert Report who bought $1 Million in nickels, and Ponce.

Bricks of Nics! hahahahahahaha

[Pennybug]

I just did a quick calculation. If every US citizen had an equal amount of nickels based on the amount of 1938-2010 minus the silver. Each person would have about 165 nickels. That's $8.25 or a little over a pound and a half.

Lets say only 1% of the population becomes enlightened, and has the resources to hoard some nickels. That 1% only needs to hold $825.00 each to dry up the supply assuming no loss in circulation since 1938. In walks Michael Lewis' friend on The Colbert Report who bought $1 Million in nickels, and Ponce.

VErbane, when you put it like that, i get scared. 825 ain't a whole lot!

Yeah... it made me re-think my nickel collection attack plan too! That's why numbers are IMPORTANT to look at!