Interesting read on Coinflation this afternoon

[twentybux]

http://www.survivalblog.com/2011/02/the ... ckels.html

Shipping of nickels sounds awfully similar to what several of us are already doing with the pennies. Is the time drawing near...hmmmmmmmm.

[AdamsSamoa]

I am sure that he is at least a lurker on this site / kitco silver forum.

[Pennybug]

Samoa... I agree. There is a WEALTH of information on this site that others are drawing on... even for the purpose of writing articles!

I disagree on a few points on this article. #1... Current composition Nickels will be LOOOOOOONG gone before they hit 3x. I'd say they will disapear before they hit 2x. I think they will dissapear QUICKLY after they change the composition to steel. #2.... People will pay shipping on them a 3x. Look at pennies on ebay.

Anyone know where to find the latest info on weather or not they are going to change the composition and when? I think it's important to know ASAP when it happens! You can bet I'll take every cent out of my savings and buy nickels THE DAY they decide to!

[Corsair]

Samoa... I agree. There is a WEALTH of information on this site that others are drawing on... even for the purpose of writing articles!

I disagree on a few points on this article. #1... Current composition Nickels will be LOOOOOOONG gone before they hit 3x. I'd say they will disapear before they hit 2x. I think they will dissapear QUICKLY after they change the composition to steel. #2.... People will pay shipping on them a 3x. Look at pennies on ebay.

Anyone know where to find the latest info on weather or not they are going to change the composition and when? I think it's important to know ASAP when it happens! You can bet I'll take every cent out of my savings and buy nickels THE DAY they decide to!

I could not disagree more with you. Once you invest every cent you have into nickels ... then what? No one is going to want to buy them for some time to come. Even though they are "worth" more than a nickel, who's going to pay that? Just like copper pennies, you can't melt them. But at least with copper pennies, there is a resemblance of rarity. The case will not be the same with the nickel. Think of it this way. On the day that the Mint announces a composition change, literally 100% of the nickels you'll pick up will be 75Cu/25Ni. Each one. Then, after the first year of the crap coins, the percentage will be...what, 98%? 95%? 90%?

In 1982, when the composition of a cent changed, some members of this forum rushed to the bank and bought boxes of cents. It has been nearly thirty years, and what profits have they realized? If they sold back in the summer of 2008 (26 years after their investment), they made about 2.25 cents per penny. Of course, they lost a lot of money in reality, because of inflation.

Tying up your fiat in nickels immediately after a composition change (or now, to be honest) is completely ridiculous. If you feel they are going to be a good bet in the future, buy a few rolls here and a few rolls there. But to "back up the truck" when the day of the composition change comes around is equivalent to taking all of your cash and locking it in a safe that no one else wants to open back up for you.

[scotto]

What was the melt value of a penny in 1982? Was it already worth more than face value? If not, that might explain the reluctance of the public to remove them from circulation at that time. Also I think the commodities price explosion was begining to abate at that time, furthering the public's reluctance to hoard. In todays economic environment along with the internets ability to reach almost anyone instantly, it might be different. I think we might be surprised at how fast they disappear from circulation. That doesn't neccesarily mean people who haven't hoarded will be buying. Just that the coinage will be stashed away. Look at Argentina as an example, when they expierenced massive inflation ( some would argue hyperinflation) they had a coinage problem. People were hoarding.
I don't believe "backing up the truck" and spending all your fiat on nickles would be prudent since there might be other commodities that could yield as much if not more in a shorter time frame. I do believe we need to be ahead of the curve though. Who knows what restrictions the banks might impose when requesting nickles.

[didou]

I fully agree with Corsair and Pennybug.

But something that wasn't mentioned : a very acute decline of the U.S. dollar. If the dollar is going to crash over a few hours, it would probably be better to be stuck with a box of nickels than with paper. But it would be very laborious to change every paycheck into nickels and pay with boxes of nickels every time you have to buy something.

The decline can also be slow over fews years and it could prove a lot more effective and safe way to use nickels over paper when you need fiat.

[68Camaro]

Suggest that readers recall that the focus of survival blog and many others who store nickels is very specific and differs from some of the other viewpoints which focused on nickels as an "investment". Survival blog (despite that he tries to talk in this particular column about nickel investing, shipping of them, etc) is really more about the "SHTF" scenario, including "TEOTWAWKI". In the most extreme of those scenarios there would be no time to go to the bank to cash in FRNs for nickels, or anything else for that matter. There is a valid argument for keeping a stash of nickels on hand for such an event, if it's something you are concerned about. (That's the whole reason I got into copper penny sorting, as one of the commodity and precious metals worthy of having on hand.)

I agree that his arguments about nickel investing in general, outside of SHTF, aren't very convincing. At best you could say (as I do myself) that there isn't much to lose in the short-term. As a true investment there are better options. But, for many people having nickels would be better than speculating in the market about things they know nothing about and losing their shirts, as many friends and co-workers of mine have done over the past 10 years.

[whatsnext]

I myself think the survival scene has been overblown and way to many stones have been turned over.

Just be perpared to be prepared. Dont think to hard b/c you'll never be 100%, if 50%

[68Camaro]

"survival" is overblown for about 1% of the population; there are always people willing to go an extreme (something almost genetic with Americans). Some other small percentage is somewhat and probably more or less properly prepared. However, 90+% of the population are just sitting ducks in the event of any emergency of significance, completely unprepared. I think the people that are banging the gong are doing the rest of us a favor, as they offer resources that otherwise wouldn't be available.

[Know Common Cents]

It's called diversification my friends. I don't intentionally buy bank boxes of nickels but slowly and methodically save them from daily transactions. I save and find room to store anything of intrinsic value. Given the current state of the chaotic economy, I owe it to myself and my family to prepare for the inevitable outcome. I'm old enough to remember 1965 when the clad coinage replaced the circulating silver coinage. The original chatter was that the changeover was meaningless since silver was of little value. The pundits said that no one would even notice. HA! Silver rapidly disappeared from circulation and while still possible, silver certificates were redeemed for the true metal.

Yep. I save Cu, Ni and Ag in any form. Rather have your paper dollars in a bank CD where you're getting 0.75% APY? Keep doing that. More Ni for me.

[exbingoaddict]

It's called diversification my friends. I don't intentionally buy bank boxes of nickels but slowly and methodically save them from daily transactions. I save and find room to store anything of intrinsic value. Given the current state of the chaotic economy, I owe it to myself and my family to prepare for the inevitable outcome. I'm old enough to remember 1965 when the clad coinage replaced the circulating silver coinage. The original chatter was that the changeover was meaningless since silver was of little value. The pundits said that no one would even notice. HA! Silver rapidly disappeared from circulation and while still possible, silver certificates were redeemed for the true metal.

Yep. I save Cu, Ni and Ag in any form. Rather have your paper dollars in a bank CD where you're getting 0.75% APY? Keep doing that. More Ni for me.

Holding onto nickels from daily change is not a bad idea. It gives you nickel expouse without buying boxes. To quote the old saw, diversifcation is the only free lunch.

[Sheikh_yer_Bu'Tay]

I am sure that he is at least a lurker on this site / kitco silver forum.

He sounded like a member to me. He knew too much.

Even though Brass Cents have a greater melt value, I am more attracted to nickels. In the event things rapidly deteriorate and we go to another shooting war... Ni will appreciate in value faster than Cu.

Kitco's five year chart shows Ni spot high around $28.00. I swear I saw it in the low $30's at that time. When it did, I looked around for Ni to scrap. Five cent nickels have the highest percentage of Ni I could find. Ni is just a low percentage alloy ingredient for every other source, like stainless steel and Sterling. Pure Ni is very rare.

And, they must have found some form of substitute. As fast a Ni went up... it came right back down!

So, it is a loooong shot investment. First there has to be a war. Then the melt ban must be lifted. Then you have to find a way to separate it. Then you have to find a buyer.

Silver sounds way better.

[Sheikh_yer_Bu'Tay]

It's called diversification my friends.

Yep. I save Cu, Ni and Ag in any form. Rather have your paper dollars in a bank CD where you're getting 0.75% APY? Keep doing that. More Ni for me.

Other than five cent nickels.... where else do you find Ni?

[68Camaro]

[Edited/corrected: as I was thinking about this on way into work I realized I had fat-fingered it and swapped the Cr and Ni amounts in SST. Fixed it.]

Mostly in stainless steel, in small amounts. Depending on the SST alloy, typically 14-18%. Along with 5-8% of chromium, and sometimes smaller amounts other good alloy elements. But to get those you're also lugging around ~75% of plain iron as the balance of the alloy.

If you are lucky enough to be in an area where you might find them in scrap, there are "exotic" chemical and temperature resistant "superalloys" with large amounts of valuable alloy elements in them. I suppose you would most commonly find them in scrap chemical processing equipment, etc. Things like Monel, Inconel, Incoalloy, Hastelloy, etc. I've still got a quarter inch thick 6x6 weld test plate of Hastelloy from my early years, which was considered scrap then, but is probably worth 20 bucks in melt value now. Have used it for a door stop, etc.

http://en.wikipedia.org/wiki/Hastelloy

http://en.wikipedia.org/wiki/Monel

http://en.wikipedia.org/wiki/Inconel

http://en.wikipedia.org/wiki/Incoloy

[Corsair]

I am all for stocking up in Ni in various forms. For me, that form is .999 Canadian Ni. I just made my first purchase a few days back.

But why do you think that nickels will be more valuable than copper pennies? There are more nickels out there, more people will have them, they're not as pure as copper cents, and there will be people with .999 Ni getting a much higher premium.

[68Camaro]

I don't myself know that US cupro-nickel nickels will ever have a higher rate of return (which is the real question, not the value of them, as they will always be higher in absolute value) than Cu pennies, but 1) except for their weight, they are painless and risk-free to get, and 2) they are a useful corrosion resistant alloy as-is for marine and other use, in a pinch, 3) who knows, if nickel demand goes up for some reason, they could become even more valuable than they are, and 4) in a speculative future, they could play a role as a new low-end form of currency with a new face value actually higher than current face.

So I keep some nickels around. But I spend more time on pennies.

Believe me, I would far rather pickup .999 Canadians for 5 cents, if I had that as an easy choice. But I don't, and I'm personally not sufficiently motivated to actually buy .999 Canadians at a premium plus shipping when I can get the 25/75s at face at my local bank.

[68Camaro]

I am all for stocking up in Ni in various forms. For me, that form is .999 Canadian Ni. I just made my first purchase a few days back.

But, since you mention it, what's the going rate for .999 shipped to US? In case I want to throw some of that onto my pile?

[Pennybug]

Samoa... I agree. There is a WEALTH of information on this site that others are drawing on... even for the purpose of writing articles!

I disagree on a few points on this article. #1... Current composition Nickels will be LOOOOOOONG gone before they hit 3x. I'd say they will disapear before they hit 2x. I think they will dissapear QUICKLY after they change the composition to steel. #2.... People will pay shipping on them a 3x. Look at pennies on ebay.

Anyone know where to find the latest info on weather or not they are going to change the composition and when? I think it's important to know ASAP when it happens! You can bet I'll take every cent out of my savings and buy nickels THE DAY they decide to!

I could not disagree more with you. Once you invest every cent you have into nickels ... then what? No one is going to want to buy them for some time to come. Even though they are "worth" more than a nickel, who's going to pay that? Just like copper pennies, you can't melt them. But at least with copper pennies, there is a resemblance of rarity. The case will not be the same with the nickel. Think of it this way. On the day that the Mint announces a composition change, literally 100% of the nickels you'll pick up will be 75Cu/25Ni. Each one. Then, after the first year of the crap coins, the percentage will be...what, 98%? 95%? 90%?

In 1982, when the composition of a cent changed, some members of this forum rushed to the bank and bought boxes of cents. It has been nearly thirty years, and what profits have they realized? If they sold back in the summer of 2008 (26 years after their investment), they made about 2.25 cents per penny. Of course, they lost a lot of money in reality, because of inflation.

Tying up your fiat in nickels immediately after a composition change (or now, to be honest) is completely ridiculous. If you feel they are going to be a good bet in the future, buy a few rolls here and a few rolls there. But to "back up the truck" when the day of the composition change comes around is equivalent to taking all of your cash and locking it in a safe that no one else wants to open back up for you.

Some valid points here (and I would agree with you on this)... but here's the problems I see. Copper pennies were worth less than 1 cent when the composition changed and there wasn't near as much volatility or demand in the market for copper and nickel at that time (much less as didou pointed out with major inflation concerns or other major economic crisis events in place). Therefore people didn't see the value in it at that time. Also, when pennies changed composition (as well as silver)... there was no internet. During those two periods, it was a word of mouth and personal speculation as to the true value of exchanging fiat for metal then. Now, with sites like coinflation, guys on Colbert talking about buying hundreds of thousands of dollars in nickel, and this site and others like it... the word will spread MUCH faster and further than during those two previous time periods. Also, the fact that you can't melt them did not effect the silver hoarding nor has it affected the copper hoarding going on now.

I will bet silver on it that if nickels get to be over 2x face in melt before they change the composition... that when they do change it... the cupro/nicks will disappear faster than either one of those two events. When silver was taken out... it was worth slightly over face and it disappeared within a few short years. You are right though... it won't go overnight most likely, but it won't take years either. I close with this... you stated yourself that you just bought some Canadian .999 nickels (by the way... I'm working on doing the same thing!) OBVIOUSLY you and I both see the value in those and are willing to pay over face for them. OK... lets assume those nickels were still in production up there right now at .999 (that would still make their melt at just over 12 cent per coin face). Let's say starting in 2011 that they had decided to change to a cupro/nickel. How fast do you think those nickels would disappear given the worlds situation right now knowing that you could go buy a box of solid nickel for face value up there and more than double your profit in melt value? Would you buy as many boxes as you could if you had them available nearby in exchange for paper? I would and will when it happens here. The only thing I see that would keep this from happening this way is if copper and nickel both take a nose dive before or right after it happens.

Also, as far as a back the truck up situation... well... the end results would be the same for me weather I exchange small amounts now or a large amount later. So long as I get them at face, I'd come out better (or at least easier) in the long run if I go bulk at the last minute... which is why I'm not saving them now. My only risk by doing it this way is predicting when the last minute is... which for me is when a composition bill is signed into law (as I am sure will be MANY OTHERS trigger).

[slvrbck]

Barring a major nosedive in copper/nickel before the change, My personal opinion is if you wait until the bill is signed it will be too late. At that time bulk nickels will not be available to the general public at FV. More and more banks either simply dont have them, or are charging a fee to non business customers. It is getting far more difficult to obtain them now. Other than main branches of major banks, try going in and buying two boxes. . . probably not going to happen. The supply of nickels in circulation is starting to get slim, the change is imminent!

[slvrbck]

Oh yeah, BTW I dont mean to be a theorist or anything, but I do not consider this nosedive scenario to be too farfetched considering one of the largest market manipulators (JPM) was approved to initiate a copper ETF in the first month of the year that a composition change is expected by those in "the know". God that pisses me off!!!