 Worried About The Dollar? Make Some Change!Published Date: 2003-11-05 04:23:17 WorkOnInternet.com
Investments in stocks, bonds, precious metals and real estate all involve commissions and fees. For instance, there are brokerage fees incurred when buying and selling equities as well as potential margin costs. Furthermore when purchasing gold and silver bullion, most dealers justly charge a fee to cover their expenses. Clearly, to begin investing in metals without fees, one must look beyond these markets. Interestingly, an alternative does exist. The list below illustrates the current prices of semi-precious metals. Notice copper is less than one dollar per pound, .89 cents. However, one metal shines within the list: nickel. At a current price of $5.14 per pound, more than five times copper prices, nickel represents a (semi) precious metal investment. London Metal Exchange Official and Un-Official Prices 10/23/2003 USD/LB Cash 3 Month Aluminum .6722 Al Alloy .6373 Copper .8936 Lead .2713 Nickel 5.1483 Tin 2.3587 Zinc .4178 So where can one find a risk-free source of nickel? Interestingly, two coins in circulation today contain nickel: the Jefferson Nickel as well as the Washington quarter. One might be surprised to find that the Jefferson nickel weighs 5 grams and the quarter only 5.67 grams. What is more startling is that the Jefferson nickel contains 25% nickel and 75% copper. Yet the Washington quarter only 8.33% nickel and 91.67% copper. So the current nickel contains approximately three times more nickel than the quarter. Since they have similar weights, the Jefferson nickels metal content is three fold more valuable than that of the pricy, Washington quarter. Therefore, exchanging one quarter for 5 nickels creates 15 times more value, without any expenses! Next, assume that one decides to become a modern alchemist by changing a $100 paper bill into nickel and copper without any costs or fees whatsoever. A $100 bill will purchase exactly $100 worth of nickels: 50 rolls of 40 = 2000 nickels. $100 of nickels weighs exactly, 22 lbs, given 5 grams per Jefferson nickel and a gram conversion factor of .0022 per lb (5 grams X 2000 nickels = 10,000 X .0022 = 22 lbs.) Therefore $100 buys 22 pounds of nickels. Next, if one multiplies 22 lbs by the 25% nickel content the result is 5.5 lbs of nickel. Current nickel prices are $5.15 per lb which yields $28.32 of nickel! Additionally, the copper content is 14.5 lbs. Multiplying this figure by copper prices equals: 14.5 X $.89 = $12.9, a total copper value of $12.9. Clearly, $100 of nickels contains over $40 worth of nickel and copper, yet still retains the $100 face value and involves no-risk or commissions. In fact, if the Jefferson nickel truly contained 100% of the metal nickel, it would have a metallic value of approximately 4.25 cents, the first metals backed currency in decades! Although a subject for another article, that fact alone could lead to a partial currency solution during a dollar crisis. So, the next time a cashier hands you change, will you request nickels in place of quarters? Imagine if each family exchanged $100 in paper bills from their savings for a small cardboard box of nickels. Such an investment would be less likely to be spent frivolously due to the coins weight. If one is concerned about the currency and the threat of inflation, collecting nickels represents a viable alternative to paper money for everyone and a great way to begin investing in precious metals. Chris G. Waltzek, M.B.A.© http://www.geocities.com/afafafa30047/TRENDTRADERS3.html Endnotes: [1] Boucher, Mark. Of TradingMarkets.com. As quoted by: Berentson, Ben. "Head And Shoulders Hedging." July, 10th, 2002. http://www.forbes.com/2002/07/10/0710chartroom.html
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