Coins vs paper money.

Discussion in 'General Precious Metals Discussion' started by intelligencer, Jan 9, 2011.

  1. intelligencer

    intelligencer Active Member

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    Hi guys,

    I've recently been reading up on some other forums and have decided upon a new savings program for emergency funds. I have been keeping a small stash of $5,$10 and $20 bills for emergencies like bank holidays / glitches etc. Problem is that it can be easy to justify spending it. I hate fiat and essentially want to store that money I dont need as something tangible.

    I have enough silver now. Well maybe thats an exaggeration. I have enough that I don't think I need more. If it turned out that I had already purchased the last ounce of silver I'd ever get then I'd be OK with that.

    Not only that, but I think that silver is not what will get one through a shtf scenario. The last thing you want is to spend your silver in unstable circumstances with uncertainty present.

    So what to do?

    Cupronickel!

    Save in coins. The 5-20c range are equivalent and currently have 75% of their face value in metal. Other nations like NZ and Canada have already replaced their cupronickel with debased or smaller coins. Its DEFINITELY going to happen here too.

    My advice? Go and exchange your emergency funds for coins. Stack as much as you think necessary. I already have bags and bags full.

    Pros:

    A. Inflation and deflation proof. In inflation the metal value of the coin rises. In deflation your face value is intact.
    B. Hard to spend meaning an enforced saving. Carrying 5.3 kg as $100 means you wont spend this store of value.
    C. A play on the copper and nickel prices.
    D. Little to no downside.
    E. Numismatic value. If you'd hoarded 1971 20c coins they'd be worth about $70 unc today! Thats a 350x increase!


    Cons:

    A. Opportunity cost. Other investments may outperform had you invested the money there.
    B. While the coins are being produced at the mint there is no upside as they can be bought for face value.
    C. Storage.

    Once the mint stops minting these coins; and its inevitable; these coins will start trading at their metal values like the 1966 50c silver coins. Dont underestimate how high the metal value may go. It may take some time but your $1k of coins may be worth $5k to $20k down the track. Something for your heirs perhaps.

    In a shtf hyperinflation, the coins remain worth something and remain acceptable. In fact this is what I'd be using, not my silver. Another benefit is that sometimes the coins will be maintained despite the paper currency being adjusted. So if the AUD was inflated to $100,000 bills being equivalent to $10 newAUD then the coins are often spared meaning your coins get an automatic 10,000x increase in purchasing power.

    If you're happy with your gold and silver stacks then consider stacking cupronickel. I think this is how you stay a few steps ahead of everyone else. Anyone who has read this and is dismissive may live to regret it :)
     
  2. rbaggio

    rbaggio Active Member Silver Stacker

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    Interesting. Is this a free service that banks provide, i.e. Swapping your $100 note for their $100 worth of 20c pieces?
     
  3. Dabloodymess

    Dabloodymess Active Member

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    Yeah when I was a lowly pleb working in retail/hospitality one of my jobs was to go and deposit the takings and at the same time exchange some notes for whatever coins we were in short supply of for change. Its a common thing to go and get change.... very often you will get them in rolls as well which would be good if your going to hoard them.
     
  4. intelligencer

    intelligencer Active Member

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    I just get bags from the bank. I do a very rough sort through these looking for the shiney new coins. I pull these out and keep them. If you're going to stack you may as well do it with a bit of class :)

    I was lucky to have gotten a few $100 bags with only 2010 coins in them. All fresh from the mint.

    My play is really to get the last minting of these, whenever that might be, 2010 or 2011 etc. The mint publishes mintages later in their annual report so you may strike upon a good year and having essentially uncirculated coins is going to be the best way to get that numismatic premium down the track.

    Here's a small sample of my stash....

    [​IMG]
     
  5. Clawhammer

    Clawhammer Well-Known Member Silver Stacker

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    That's sounds cool. I saw the Silverfuturist with a box of US Nickles in rolls.

    Sticking to 1 type of coin may be beneficial from a habit forming/ self control point of view. For instance the thought of me spending a $5 note is unthinkable now, even if I'm hungry. Any other denomination I'm fine with. If I need spare cash, I have a change bowl I'm happy to dig into... but $5's are taboo!

    Apparently it takes about 3 weeks to form a habit like this.

    P.S.
    What have NZ and Canda replaced their old coins with? If they change the coin density, won't that screw up coin operated machines?
     
  6. Dynoman

    Dynoman Active Member

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    A mate of mine shoots down to the bank on a Monday, trades $200 Fiat for 50 cent coins, takes them home, sorts thru & finds the pick of the bunch then takes them back the following week. Does the same again. They must hate him down there.

    Has amazed some Gems doing this, heaps of UNC 1986's worth $30 or so these days.
     
  7. spannermonkey

    spannermonkey Well-Known Member Silver Stacker

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    I go down to the local train station & get new bagged 20c & 10c 2010.
    Mainly 2010 Tax dep 20c
     
  8. shortstack

    shortstack New Member

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    I have read this elsewhere before and have started tossing all my "shrapnel" (5c and 10c) into a drawer, with plans to get change at the bank too.
     
  9. intelligencer

    intelligencer Active Member

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    They're not for recycling. Thats one of the traps of thinking about this.

    Why would you destroy the manufacturing and standardisation of these coins? They've got a guarantee to be 75% copper and 25% nickel in this form. If the price of these metals skyrockets and the coin becomes worth 10x its face value in metal then here's what will happen:

    A. Mint stops manufacturing these when the cost exceeds the face value for some amount of time, say 6-12 months.
    B. A new set of debased or smaller coins with the face value are introduced. Its more likely to go to steel.
    C. The original coins will be rounded up by the mint.

    Now as the metal value then steadily climbs, these coins will be bought and sold just like round 50c are. Remember that they were going for as low as 2-3x face at one point too. There will never be a point at which you'll need to melt these.

    Having said that, cupronickel is a useful premium alloy that is used in marine applications etc; so it is useful as the alloy. A refiner can adjust these to more standard 70:30 or 80:20 ratio Cu:Ni which sells for a premium.
     
  10. Dynoman

    Dynoman Active Member

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    I recently purchased three kilo of CuNi world coins for $40 & I've found about forty bucks worth of semi-numis & about 90% is just decirculated (is that a word?) scrap metal. Very time consuming occupation though.
     
  11. intelligencer

    intelligencer Active Member

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    In that thread the mely value started at 11.4 cents for a 20c piece.

    Then in October it was 14 cents.

    Today its 15.39 cents in a 20c piece.

    Can you see the trend ;)
     
  12. millededge

    millededge Active Member

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    there was a website called moneymetal.net - doesn't seem to be active, posted by tozak1 (aussie stacker), which compared face value to metal value of our coinage.

    this stacking idea was also recommended some time ago, by a Chinese metal merchant on a george4title youtube. I'll see if I can find the vid.
     
  13. Slam

    Slam Well-Known Member Silver Stacker

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    Interesting, thinking about stacking a few hundred bucks worth of coins now.

    Anyone know if the 50cent pieces are worth stacking metal wise? or stick to 20cent pieces?

    Slam
     
  14. intelligencer

    intelligencer Active Member

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    But theres the rub.

    An increase, everyone can live with.

    What about a decrease?

    This is a low risk, no brainer way of having emergency funds that serves multiple purposes. Its inflation AND deflation proof. That face value is your insurance.

    Are there higher returns on other investments? Yes!

    Is there anything as idiot proof and free of risk, but provides as much upside? Probably not :)

    11.4 cents to 15.39 cents in about a year.

    A 35% gain. Not even gold went up that much last year :)

    If it does the same this year then it should go above 20c melt. But dont forget, the costs of making the coin etc on top of the metal value will mean the demise of these coins is near. Get them cheap while you can!
     
  15. millededge

    millededge Active Member

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    oops, sorry

    www.metalmoney.net

    is active!

    btw, check out tozak1 on youtube if you haven't
     
  16. Big A.D.

    Big A.D. Well-Known Member Silver Stacker

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    I used to work in cash handling and as someone mentioned above, this stuff gets very heavy very quickly.

    If you're after brand spanking new coins, you can either just ask you local branch if they have any or go to a big branch in the city and ask for a "monster bag" (you'll have to work out how big one is yourself because I can't remember) which is how they get shipped out by Armaguard from the RAM. Its something like $1000 in $1 coins (50 bags of 20 coins) and its easier for the teller to give you a mint-sealed bag than pull together lots of loose bags.

    My bank in the city is currently loaded with 2009 $2 coins and 2010 $1 coins, your mileage may vary.
     
  17. millededge

    millededge Active Member

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  18. SirMoz

    SirMoz New Member

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    Hi folks - coinflation keeps up with US and Canadian metal content pricing...you should hound the owner to add an Oz section.

    Since it's generally illegal to melt legal tender (at least in Canada...most places I assume), some of the higher denominations may take some time before they are retired from circulation. As well, I swear I read somewhere that a few of the metal combinations (can't recall which) were a real pain or cost prohibitive to refine and some combos even exhibited undesireable traits such as poisonous fumes, etc.

    Still, pure nickel 5c pieces all the way up to 1981 here in Canada are already double face in metal value.

    http://www.coinflation.com/canada/
     
  19. mickjohn

    mickjohn New Member

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    ok....
    So taking a quick read. It looks as if the 20c coin will breach the metal value VS face value threshhold before other coins, due to its weight, content and face value.

    With that in mind and the fact that 2 other coins 5c and 10c should be de-circulated before the 20c is taken out of circulation......
    What would happen if the metal value of the 20c was more than 20c?
    would they be taken out of circulation? replaced?
    Sorry, trying to understand it better.
     
  20. adrenalin

    adrenalin New Member

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    They'll hate him if he rocks up at 3.59pm :)
     

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