The True Value Of Money (Literally)
Submitted by Tyler Durden on 11/04/2011 15:52 -0500
As a follow up bonus from the Artemis presentation earlier, we present this chart which answers the age old question: what is the true value of money? It does so in quite a literal fashion, and explains why Kyle Bass is such a fan of nickels...
As a reminder, from Michael Lewis' book on Kyle Bass:
He still owned stacks of gold and platinum bars that had
roughly doubled in value, but he remained on the lookout for hard
stores of wealth as a hedge against what he assumed was the coming
debasement of fiat currency. Nickels, for instance.
“The value of the metal in a nickel is worth six point eight cents,” he said. “Did you know that?”
“I just bought a million dollars’ worth of them,” he said, and then,
perhaps sensing I couldn’t do the math: “twenty million nickels.”
“You bought twenty million nickels?”
“How do you buy twenty million nickels?”
“Actually, it’s very difficult,” he said, and then explained that he
had to call his bank and talk them into ordering him twenty million
nickels. The bank had finally done it, but the Federal Reserve had its
own questions. “The Fed apparently called my guy at the bank,” he says.
“They asked him, ‘Why do you want all these nickels?’ So he called me
and asked, ‘Why do you want all these nickels?’ And I said, ‘I just
He pulled out a photograph of his nickels and handed it to me. There
they were, piled up on giant wooden pallets in a Brink’s vault in
“I’m telling you, in the next two years they’ll change the content
of the nickel,” he said. “You really ought to call your bank and buy
The US Mint specifies that this coin weigh 5.000 g and be composed of 25% nickel (1.250 g) and the balance of copper (3.750 grams). On June 13, 2008, the value of the metal in a United States nickel coin reached $0.06013, a 20.3% premium over its face value.United States dollar. In an attempt to avoid losing large quantities of circulating nickels to melting, the United States Mint had earlier introduced new interim rules on December 14, 2006 criminalizing the melting and export of cents and nickels. Violators of these rules can be punished with a fine of up to $10,000, five years imprisonment, or both. See Title 31, United States Code Section 5111(d). The rules were finalized on April 17, 2007. This was due to the rising price of copper and nickel and the decline in value of the
As of March 14, 2011, the value of the metal in a nickel is $0.0665396, 33.07% more than its face value.
As of April 10, 2011, the value of metal in a nickel is approximately 7.1 cents at current spot prices for constituent metals, a 40%+ premium over face value.
Costs of producing and shipping 5-cent (nickel) coins during fiscal year 2007 was $0.0953 per U.S. nickel. Canada, which produced a "nickel" of nearly pure (99.9%) nickel starting in 1922 (except during the war years of 1942–45 and 1951–54), switched to cupro-nickel in 1982. Since late in 2000, this denomination is usually produced in plated steel. The metal value of some of these older coins is greater than their face value. In a similar move, on February 8, 2008, a bill was introduced in the U.S. House of Representatives that would allow for changing the metal components in U.S. coins due to the rising cost of commodities and the declining U.S. Dollar. No such bill has yet been signed into law.
The silver content of nickels minted during World War II from 1942 to 1945 is 1.75 g (0.062 oz), and is valued at about $2.86 based on the closing price of silver on April 22, 2011.
Max Igan would probably tell you that this is just code and not law, but still, it kind of makes you think twice about investing in them for the metal value. However, now I wonder about the "junk" silver I own. Would it be illegal to melt down pre-1960 dimes for it's value in silver?