4 ms·

There might be. One financial sage gave the following example: buy nickles. Currently, the value of the material is ~30%(?) higher than the nominal value of the

by jkbyc 12y ago

There might be. One financial sage gave the following example: buy nickles. Currently, the value of the material is ~30%(?) higher than the nominal value of the coin. Therefore at some point in future the government will have to switch to a different material. At that point you'll be able to sell at 30% gain. If this for some reason is not possible then you'll still have whatever you started with. This way you are sure not to lose any money (except due to inflation) and possibly make 30% profit. You have to consider the likelihoods of both outcomes, etc. Anyway, he bought nickels worth of a couple of million dollars.

dangrossman 12y ago
This seems like a bad idea. Firstly, the melt value of a nickel is less than $0.05 [1]. Maybe he was confused by the fact that it costs more than $0.05 to mint each coin; that's because there are costs other than the materials. That also means it'd be cheaper to just buy the metals that are in the nickels than to buy the nickels if you wanted to bet on their price. If the government switches to a different composition, there will be less demand for nickel and copper, which doesn't bode well for the melt value increasing significantly beyond $0.05 because of a switch. Secondly, just holding the nickels doesn't mean you're sure to not lose any money. As you said, simply stuffing cash (or nickels) under your mattress means you're losing some every day to inflation. You're also losing all the potential gains of the other things you could be doing with that money other than piling up nickels. At the very least, you take no risk of losing the principal by sticking it in a savings account (~1% APY) or buying a 1-5 year CD (2-3%). Then again, I don't have a couple million dollars to blow on stockpiling nickels. The sage investor must know something I don't. 1: http://www.coinflation.com/coins/1946-2007-Jefferson-Nickel-Value.html http://www.coinflation.com/coins/1946-2007-Jefferson-Nickel-...
acelik 12y ago
There is also probably laws that keeps you from doing that. At least in many countries, It's illegal to damage money even after they changed the material or the currency itself. It's a very long shot and probably not very profittable.

by jkbyc 12y ago

dangrossman 12y ago

This seems like a bad idea. Firstly, the melt value of a nickel is less than $0.05 [1]. Maybe he was confused by the fact that it costs more than $0.05 to mint each coin; that's because there are costs other than the materials. That also means it'd be cheaper to just buy the metals that are in the nickels than to buy the nickels if you wanted to bet on their price. If the government switches to a different composition, there will be less demand for nickel and copper, which doesn't bode well for the melt value increasing significantly beyond $0.05 because of a switch. Secondly, just holding the nickels doesn't mean you're sure to not lose any money. As you said, simply stuffing cash (or nickels) under your mattress means you're losing some every day to inflation. You're also losing all the potential gains of the other things you could be doing with that money other than piling up nickels. At the very least, you take no risk of losing the principal by sticking it in a savings account (~1% APY) or buying a 1-5 year CD (2-3%). Then again, I don't have a couple million dollars to blow on stockpiling nickels. The sage investor must know something I don't. 1: http://www.coinflation.com/coins/1946-2007-Jefferson-Nickel-Value.html http://www.coinflation.com/coins/1946-2007-Jefferson-Nickel-...

acelik 12y ago

There is also probably laws that keeps you from doing that. At least in many countries, It's illegal to damage money even after they changed the material or the currency itself. It's a very long shot and probably not very profittable.