The Seven Cent Nickel: Michael Lewis, Stephen Colbert and probably Michael Burry

[claphands22]

Michael Lewis visited Stephen Colbert last Tuesday to promote the paperback version of The Big Short. (http://www.colbertnation.com/the-colbert-report-videos/372964/february-01-2011/michael-lewis) At 4:15, Michael Lewis gave out investment advice: the nickel. Michael Lewis said one of the characters of The Big Short did the math and found out the metal content of a nickel is worth 7 cents. Then this investor called up his local bank to buy twenty million nickels.

 

Michael Lewis didn't name the person but, I'd bet a farm with water rights, it was Michael Burry. The whole thing made me grin. It is an interesting idea. It's the world's cheapest inflation hedge - if not the most immediately profitable.  So far all the gold bugs out there - sell your gold and buy nickels! =P

 

 

-- Three quick things.

1.) Here is a web site about the current melt value of coins. http://www.coinflation.com/

2.) It's illegal melt nickels and sell the metal content.

3.) For all the Michael Lewis lovers out there. He recently wrote a great article on Vanity Fair about economic crisis in Ireland. Which probably has the best quote ever by a Prime Minister “Lehman’s was a world investment bank. They had testicles everywhere.” - Berti Ahern  http://www.vanityfair.com/business/features/2011/03/michael-lewis-ireland-201103?currentPage=all

 

Enjoy!

 

EDIT: I was wrong, I read the introduction to Boomberang and Michael Lewis was referring to Kyle Bass.  I owe someone a watery farm.

[Guest broxburnboy]

"So far all the gold bugs out there - sell your gold and buy nickels! =P"

 

Gold was the first precious metal coin to be withdrawn from circulation as currency in the US, held in a warehouse, closely guarded and paper treasury notes circulated in its stead.

Silver coins were withdrawn next in  the 1970's as the melt value of the silver content exceeded its fiat value.

Recently the copper penny has decreased in weight as the copper value has exceeded one cent.

Nickel is the last to join the club.

 

You should have sold your nickels years ago and bought gold.

 

[rogermunibond]

The melt value of pre 1982 pennies is better.  Problem is finding the old copper pennies.

[Uccmal]

I think there are legal issues around destroying currency if you are not the government.

[SmallCap]

I know that the value is there in pre 1982 pennies and in nickels but the problem is how to get the value out. what is the catalyst that will extract the value out of this opportunity, or is it a very obvious and interesting value trap?

[T-bone1]

inflation will likely make the penny obsolete in the near future (ten years or so . . . ?)

 

at this point it will be legal to melt them down, no downside and a lot of upside if you can get them for face value (the pre '82s)

[zippy1]

I think there are legal issues around destroying currency if you are not the government.

Is it illegal for non-US citizen living outside of US to melt it? Just curious.

[gfp]

It is illegal to melt pre-1965 "junk" silver (dimes, nickels, quarters) also, but that doesn't stop it from being highly liquid and tradable at it's silver melt value.  I don't hold silver that way, but it seems popular.