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Lemon Thrower
1000+ Penny Miser Member
USA
1588 Posts |
 Posted - 08/18/2010 : 11:25:13
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quote:
Originally posted by biglouddrunk
Inflation, deflation, WTSHTF those are all side reasons. Sorting copper pennies is a lot like buying long term copper futures for 50 cents on the dollar. Let say we knew for a fact that the melt ban would be lifted in 5 years. If we planned on selling every penny to a scrap dealer than the decision would be should I pay $1.47 of 2010 dollars to buy a pound of 2015 copper. This is the type of analysis we should make when deciding if it worth it. Lets look at buying a 6% CD vs. saving copper pennies. In 5 year $1.47 would be worth $1.97. Now what would copper be worth in 2015. Lets assume copper increases in price at the same rate as inflation. If inflation were 1% per year copper would cost 3.19. It is still an advantage for copper. A CD is likely to increase at a faster rate than inflation so at some point in the future it would pass copper. In my analysis after year 15 the CD passes the copper price. Of course the math is all dependent upon the inflation rate. For example if you were to assume a -1% it would mean a CD is better in year 11. If inflation is 2% a CD is better after 19 years.
good points. but 5 year CD's are paying 2.63%. Ask yourself whether FRN's are being diluted at a rate higher or lower than 2.63%. If higher, than buying anything tangible with FRN's is a better investmentment than a CD. when you consider that copper has been used as money for eons and that pennies have a known purity and weight they make a lot of sense for some of your money. |
Buying:
Peace/Morgan G+ at $15.00
copper cents at 1.3X
wheat pennies at 3X
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Lemon Thrower
1000+ Penny Miser Member
USA
1588 Posts |
Posted - 08/18/2010 : 11:30:30
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I don’t think FRNs have any value so its an easy decision to trade paper for copper.
I think ultimately we get inflation, and in inflation or hyperinflation copper, silver and gold will all do well. I think gold will do the best long term but that is for another thread.
The real risk to me is deflation. Your risk is what you have invested above face value, which for most of us is quite limited. The risk of deflation is mitigated by the fact that the government shares the risk and is printing money like crazy to avoid deflation. Worst case scenario is your pennies are still worth a penny each.
Finally, I no longer contribute to my 401k, so any penny I keep is more than I put in my 401k.
Now, keep in mind pennies are not the most liquid investment and not really an investment at all so this is not for everyone.
As for the melt ban, refiners buy sterling silver at about 85% of melt. Copper is a bit bulkier but you get the idea. On the other end of the spectrum is coin silver, which trades near spot and 40% silver which trades at about 95% of spot.
Re is it worth it, it depends on how valuable your time is. Personally I have gotten too busy to make it worthwhile. For example, where I live it costs $40 to have someone else mow your lawn. I mow my own in less than an hour. Do you make $40/hour sorting coins? Also, where I live I never get over 13% copper. But for me I do think its worthwhile to buy from others at 1.3x shipped and have done so.
Re: being confident about the future, you have to assess the different possibilities. If you buy at 1.3x, the most you can lose is the .3 premium if we have some sort of severe deflationary event.
As far as high quality stocks, they are all subject to exchange rate risk. The only stocks I own besides my employer are mining companies, and those are really just a way to leverage pm investments.
I’m not in the stock market because we are in a depression and growth is not on the horizon. Worse, we are going to have some severe shocks as various sovereigns default, although they will call it a restructuring rather than a default.
Keep in mind that copper is a real asset and can be used as money. Silver and gold are money. They are not investments. An investment is something that has a reasonable expectation of growing. Pm’s only grow when measured in a declining currency. But they preserve purchasing power.
We don’t know what the future holds. Will their be riots, etc. its possible. Its wise to own a gun, bullets and some food as well. Man cannot live on copper alone.
Sorting copper is a way to capture a large portion of the spread between FV and melt. It is also an option on the future value of copper, which is an inflation hedge, and a way to get diversify out of paper FRNs. If you have a lot of money you can do this by buying silver and gold, but you have less downside protection unless you find a way to buy silver and gold below spot (it can be done but it’s a lot of work). Sorting copper is not perfect but depending on competing opportunities for your time is generally a good investment.
as for the question which is best, copper, silver or gold, there are a million facets to that question. but in summary gold, and to a somewhat lesser extent silver, are money and less used in industry. if paper money fails, then gold will do the best. until then, copper is going to underperform gold and silver is the economy is stagnant or declining. silver may outperform gold because it has lagged gold since the 2008 crash and has some catching up to do. but if you read FOFOA I think ultimately gold will outshine silver.
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Buying:
Peace/Morgan G+ at $15.00
copper cents at 1.3X
wheat pennies at 3X
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Sheikh_yer_BuTay
Penny Pincher Member
USA
232 Posts |
Posted - 08/19/2010 : 07:35:35
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I have no money invested in stocks because I subscribe to the Mogambo Guru's Theory of Economic Speculative Glut (MGTESG).
MGTESG Theorem #5 plainly states thus: "A large number of suckers (ahem, that is investors) must lose money for a small number of sharpies (eh... other investors) to make money on Wall Street."
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"The most fiscally irresponsible government in American history."
Mort Zuckerman, liberal columnist and former Obama speech writer |
Edited by - Sheikh_yer_BuTay on 08/19/2010 09:21:56 |
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tmat
New Member
USA
24 Posts |
Posted - 08/20/2010 : 14:18:32
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JUST A THOUGHT
IN 50 YEARS WOULD YOU RATHER HAVE 1 MILLION CU CENTS OR 1 MILLION FRN
THINK CU ARE GREAT JUST TO HAVE IN AN AMOUNT WHERE YOU HAVE NO PRESSURE TO SELL
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I'm Going to Open a Can of Worms Here...
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