Saturday, February 19, 2011
Frankly, this isn't new financial advice. James Wesley, Rawles, author of Patriots who blogs at SurvivalBlog.com, has been urging people to accumulate nickels for years. There are two reasons behind it. First, the raw metals that make up a nickel - copper and nickel - are worth 7.3 cents as of the close of business on February 18th. So for 5 cents you get something worth more if it is melted down. If commodity prices decline to zero, the coin will still return 5 cents. In other words, it is an investment that only has an upside.
Second, Gresham's Law says good money drives out bad. In other words, money who's nominal value and commodity value are close will be worth more than those where the commodity value is virtually nil when compared to the nominal value. To put this in perspective, a dime whose nominal value is 10 cents has a commodity value of 2.6 cents. An even greater disparity is found in the golden Presidential Dollar coins. Their face value is $1 but their melt value is only 7.7 cents.