Is now the time to start hoarding nickels? Coin hoarding recognizes that you never know when the metal content will exceed the face value.
Not too long ago, Canada decided to discontinue the penny. The news has resurrected the debate over the penny in the United States. Should we keep the penny? It costs more than a penny to make a penny. And, at some point, due to rising commodity prices, it is possible that it could cost more than a nickel to make a nickel.
Why is Coin Hoarding a Thing?
Rising metals prices have many wondering if it's a good time to be hoarding coins — before their composition changes. One trend has been to hoard older pennies that are still mostly made from copper, rather than the newer pennies that are mostly made from zinc. With copper prices on the rise, many intrepid investors are wondering if the value of older pennies could skyrocket.
“The value is so apparent the government had to institute a melt ban,” Dan Snyderman, from CC Enterprises LLC, points out in an email. “People, recognizing this, are buying copper pennies by the truckload — literally.”
However, these coins won't be truly valuable until the melt ban is done away with; right now it's illegal to melt pennies down, and it's illegal to take large amounts of them out of the country. Additionally, pennies need to be sorted from newer pennies with little copper content. This reduces the ROI because you have figure in the cost of sorting.
But, what if there were coins that didn't require as much sorting — at least for now? For some, there are opportunities in hoarding nickels.
Coin Hoarding: Why Nickels?
“Nickels — made of 75% copper and 25% nickel — are also an intriguing subject,” Snyderman says. “The metal value is slightly higher than the face value, yet no sorting is actually required at the moment.”
While people are looking for older pennies, the relatively high copper content of current nickels might make them well worth hoarding right now, as long as you think that there is a chance that the nickel could be abolished at some point in the future as well.
However, the real opportunity, according to Snyderman, is in the fact that you don't have to deal with the cost of sorting: “A potential upcoming metal composition change would make the ease of unsorted investing go away.”
For now, buying nickels in bulk doesn't come with a sorting cost. Unlike pennies, you can just start hoarding nickels with no problem.
“To sort nickels would require time, making the price higher to buy in bulk. For a client that wants to purchase $1 million in nickels, it requires quite a bit of sourcing, operational logistics, transportation, storage, and a variety of other aspects making it a niche market,” Snyderman continues. “Pricing does not currently include sorting, so buying in large amounts means a better/faster return on investment. If sorting becomes a necessity, pricing will have to incorporate a significant increase in time, making the return on investment much more complicated.”
How to Start with Coin Hoarding
Of course, you could do your own coin hoarding, by going down to the bank and getting nickel rolls in exchange for your paper cash. You would have to find a way to store it, just as you would with any tangible investment, like physical gold, pennies, or other coins and metals.
And you have to be aware of some of the risks involved. When it comes to coin hoarding in the hopes that the metal content will provide you with returns beyond the face value, you also need to realize that you might never realize returns as long as the coins can't be melted down.
What do you think? Is it worth it to hoard these metal coins?