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17 Posts |
 Posted - 04/04/2007 : 22:13:26
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I recently just purchased a lot of 1982 and earlier 95% copper pennies. I have not personally gone through them, but was told they came from a 25 year collection period which has supposedly not been gone through for numistic value and contain at least some wheaties. I am not terribly concerned about any rare coin finds, or lots of wheaties, and more about a large source of 100% copper pennies (no picking out Zinc pennies). I will pick up the coins sometime this weekend.
The lot contains 2400 rolls of pennies. I paid $1200 for them, so I know I can't lose any money! Worst case scenario I look like a fool dumping coins into a coinstar machine for a couple hours to buy something on Amazon. Total comes out to 120,000 pennies, so not even sure I want to hunt/peck through them for rare/key dates and re-roll the rest. My quick estimates put the lot around 800lbs.
So the obvious question, what to do with them?
coinflation.com currently has pre-82 coins at 2.2 cents a piece. A total value of $2640, or a bit over $1400 profit. But, with melting banned, I can't exactly extract that value very easily can I?
I know a lot of you are taking the hold onto them forever standpoint, using them as a safeguard against a SHTF scenario when/if we see a global economy collapse, but I'm not sure how long I want to hang onto 800lbs of pennies. I'm currently 22 years old entering a somewhat unstable aviation industry with notoriously low early-year wages and although I have my squirrel money to play with I probably won't want a chunk of my money tied up in pennies for more than a few years.
So here are the options I see, I would like to hear other options you guys can think of, or suggestions on what to do.
1. Keep them for a few years. If the feds do rebase the penny to $.05 soon you make a good chunk of change for a fun project. If not, assuming copper prices don't fall significantly, your in the same position you are now minus 5-10% a year you would be get with your money in more conventional investments.
1a. Keep them for a few years. Pennies/Nickels are expensive enough that another debasing will obviously occur within the next couple of years. Once a 'cheaper' penny is introduced the "Good" old pennies (and especially 1982 and before pennies) will be pulled out of circulation leaving the "Bad" new pennies. 1964 all over again.
2. Try to Ebay them in $50 lots and attempt to get 2x face by selling at $100 + shipping. I have seen a few lots go in that neighborhood, but not sure how long of a period I would have to unload to not completely saturate the market willing to pay 2x. I would play up the $.022 metal value fact to try to get bidding.
3. Bring em to the bank, that was a dumb purchase to begin with and you would be better off with your money in stocks/bonds/MoneyMarket funds/etc
4. Melt the suckers! Stick it to the man, if it didn't come from Congress its not a 'real law!' Creating a rig to process 800lbs of molten copper would be a fun weekend anyways! Bring cooled scrap to the salvage yard and get paid what, maybe $2.75 a pound (vs. ~$3.30 published value)?
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17 Posts |
Posted - 04/04/2007 : 22:28:28
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By the way, some food for thought about the thoughts I have on the options I listed:
1: Keep them hoping for a $.05 rebase. Seems like wild speculation at best, outlandish at worst. The whole $.05 rebase, in my very uneducated limited research, seems to stem from the comments of *one* economist as a possible solution to the problem. This solution is not one the US govt (to my knowledge) has ever used before, and seems unlikely to me.
1a: Pennies were *already* rebased in 1982 and 25 years later are still readily available (25-35%ish of what you see) in circulating change. The public does not seem to be reacting to copper like they did to silver. Not overly surprising since historically gold/silver are "precious" metals, and most people wouldn't think twice about finding a hunk of copper on the side of the road.
With the ban on melting pennies/nickels any gains from metal values/dollar inflation are theoretical *unrealized* gains. Unless the public (ie coin collectors) become willing to pay the bullion copper value of coins like they have for gold coins ($50 eagle, etc) then they will continue to be worth face value of 1 cent.
If the money invested in these coins (and possibly new ones I buy/hunt for) was instead in a market account generating 10% annually the money would double every 7 years. Take out inflation and that would still handily beat out the increases I would hope to see in copper prices. Obviously not a big deal with $1200...but if you start to "fill the garage with pennies/nickels" well, if you are putting a sizable chunk of your investments in coinage you want to be sure its a solid investment.
2. Leaning towards ebay now. If I can double my money I would be thrilled.
3. They gotta be worth something to someone!
4. Although I would certainly enjoy the smelting process I'm not too keen on the whole 5 years in prison thing. Obviously a few you could do no problem, but to make any serious money, say $10,000, you are looking at 1Million+ pennies which would take quite a serious operation. I would imagine any scrap yards would not take coinage (since the ban) that wasn't already 'pre' processed by you to no longer resemble coins.
hmmmmmmmmmmmmmmmmmm
A fun little hobby no? |
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aloneibreak
Penny Hoarding Member
USA
672 Posts |
Posted - 04/04/2007 : 22:38:52
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very interesting. i saw this lot on ebay but didnt even look twice as it was WAY to far for me to do a local pickup. heres my opinions.
i do not personally see the cent being rebased to five or even 10 cents as some have suggested. i do however believe within a couple, maybe 3 years we will see a new composition for the cent, probably sooner for the nickel.
selling on ebay is a good idea. doubtful you'll get 2 cents each for them just yet, but you would be making money on anything over 1 cent. and youre right about saturating the market. youd have to list a couple lots at a time then wait a few weeks and try it again.
what ever you do, do not take them to the bank for face value. youve already got what lots of folks are spending time and money to sort, it would be pointless to cash them in for face value. no matter how tight your money situation gets i believe you could find a way to sell them - even if to another hoarder at face value - just to save someone some time.
i wouldnt recommend melting. is it really worth the fine and jail time if they do get suspicious and catch you?? although it would be a fun time, probably not in your best interests right now.
might be possible to offer them in the buy/sell/trade forum. some are always looking for sorted coppers and possibly having wheats and errors included might help them sell better.
thats just my opinions, dont rely on any of my advice because im by no means a pro at this. it will be interesting to see what some of the others that are smarter than me have to say about this though. glad you found the forum.
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HoardCopperByTheTon
Administrator
USA
6807 Posts |
Posted - 04/05/2007 : 02:34:26
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Welcome to the board, and Congrats on your purchase. I think you are in at the right price. If they were closer I would have been a buyer. I think your estimate of 800 pounds is about right. Make sure to distribute the weight evenly in your vehicle. If you decide you don't want to sort all these you could always well them unsorted in the Buy/Sell/Trade forum. I would certainly be interested in buying them. You can ship about 10,000 at a time in the USPS Flat Rate box for $8.10. I run auctions on eBay every now and then for sorted copper cents. Haven't achieved melt value yet. The problem with selling stuff on ebay is all the fees leaves you little net. They charge a listing fee, a backend percentage fee, and then another fee if you take PayPal. All those fees really add up.
"Preserving coinage.. 2 tons at a time"
HoardCode0.1:M48/14USCA:US1Cu639700:US5Ni2400:CA5Ni46 |
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17 Posts |
Posted - 04/05/2007 : 09:30:20
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Yea I am certainly leaning towards eBay right now. I have done a fair amount of selling so know how much Ebay/Paypal fees hurt, ESPECIALLY on low profit margin items.
The fundamental problem I see with the penny/nickel values and hoarding, which I am sure you all fully aware, is that even if copper values doubled again to the $6 range the value can not be "realized" (like a stock can be) because people are not willing to pay 'melt' value on copper coins. It's like having a shoebox full of baseball cards worth $100 but the only dealer interested in buying offers $10, regardless of what your beckett (sp) says. You're stuck with unrealized 'paper' gains.
Silver and Gold Bullion coins, I believe, are different in that Silver/Gold are precious metals and have a perceived value to the general population. Copper/Nickel/Zinc/etc do not. |
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HoardCopperByTheTon
Administrator
USA
6807 Posts |
Posted - 04/05/2007 : 10:58:20
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I believe the market has not really developed for copper cents yet. I am an efficient market theorist. I believe all markets will clear.. at some price. You might not like that price, but there is generally a buyer at some price level. Even on silver and gold bullion coins which are much more popular, folks are hesitant to pay full melt. Usually they will factor the shipping cost into the calculation when making their bid. When you take out all the eBay fees it is usually not very lucrative to sell silver or gold bullion on eBay. With Copper you have a few other problems. It is not perceived as a bullion investment like gold and silver. Face value accounts for roughly half of its melt value, yet you have to pay all those ebay fees on the full load. They are extremely heavy.. so shipping costs will be a factor. Fortunately for you, your base price is really good.. you are in at face. Most of the rest of us sitting on significant hoards of copper are also in at face, but we also have a significant investment of time in sorting the wheat from chaff. Some folks think that labor cost should add to the value of the product.. most of us just realize that the sorting is just a hobby. How many hobbies do you know of where you can indulge yourself at whatever level you want yet still get all your money back and maybe a little extra? If you decide you want to sell off those 2400 rolls for a profit without doing a lot of work or incurring eBay or Paypal fees I would be interested in buying them direct from you.
"Preserving coinage.. 2 tons at a time"
HoardCode0.1:M48/14USCA:US1Cu639700:US5Ni2400:CA5Ni46 |
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17 Posts |
Posted - 04/05/2007 : 11:47:49
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HoardCopper-
You make some good points about ebay and shipping. Unfortunately I think most of us know the the ebay/paypal combo has us by the balls and because that is one of the only realistic marketplaces there isn't too much we can do about it. Sure you can try to sell through forums/craiglists/etc, but your exposure is so much lower that I can almost guarantee lost sales will be greater than just paying fees.
Lets play some games with projected online sales fees:
Lets assume small to medium size shipments where actual shipping fee is quite reasonable if you take advantage of flat-rate priority boxes. I am guesstimating that a flat rate box can hold about 200 rolls, or $100 worth. That means $8.10 to ship 10,000 pennies to any domestic location. Running the numbers quick yields $.00081 shipping per penny. Coinflation.com shows current copper penny value at $.02199, or subtracting face value (acquisition price), profit of $.01199 per penny. .00081 (shipping) / .01199 (profit) means shipping eats 6.75% of your proceeds. But, you pass that off to your buyer (although it effects the amount they are willing to pay).
I have seen surprisingly few auctions for sorted copper pennies, which indicates either lack of demand, or lack of suppliers. I guess you would have to start selling to see which is the case. Auction 130095881894 (search it, if I put the whole hyperlink it will screw up thread formating) is a sale of 5,000 ($50) pennies for $109.00 + $27 shipping. He has sold 5 lots of them (1 on the 25th, 4 on the 29th) all to the same buyer, which makes demand harder to derive.
For simplicity sake lets assume sale prices of 91% melt value, or $.02 per penny (instead of ~$.022). 10,000 lots sold for $200 + $10shipping. That total price (sale+shipping) is about 25% lower than the auction I listed.
Ebay Listing+Gallery fee: $3.95
Ebay Final Value: $7.00
Paypal Fee: $6.39
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Total Fees: $17.34
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Profit if bought at face: $82.66 + $1.9 made on shipping (box is free!) = $84.56
Profit per penny: $.008456
Percentage of profit vs theoretical pure melt value: 70.5%
Thats still not a terrible conversion. I mean even if you could legally melt the coins a scrap yard would not pay you pure market value, right?
Sorry if all that was terribly boring, running the numbers myself and thought I would share for anyone else curious.
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17 Posts |
Posted - 04/05/2007 : 12:14:48
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Also, a quick bit about your last post and my thoughts on efficient markets...
I don't quite buy into efficient market theories. Efficient market theory would argue that any monitored market has already balanced all available information (illegal insider info notwithstanding) into current prices. No stock or commodity can therefor be under or overvalued, and that picking stocks/investments by throwing darts would be just as successful as careful research since all stocks are fairly valued.
I think people under/over value certain news, and prices reflect that. There are routinely large daily fluctuations which are not explained by released facts, and only by changing public perception. In fact, I think Penny/Nickel prices is an interesting argument against EMT since valuing $.022 (1cent) worth of copper at $.01(face) is a clear undervaluation. Although a solid counter argument would claim that the new laws prohibiting the realization of that additional $.012 offset the undervaluation...and that until a tipping point is reached where people eventually value the bullion value of the copper over the face value, until then $.01 will continue to be considered fair value.
But thats an argument for a different day, and probably different forum.
I'll stop hijacking my own thread now  |
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Canadian_Nickle
Penny Hoarding Member
Canada
938 Posts |
Posted - 04/05/2007 : 14:38:20
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Double yr money, and use eBay the right way.
1: Set up web site that sells boxes of sorted cents for $100, shipping in, no taxes to anywhere in the continental US. People can pay with money order, personal cheque or online Credit Card (if you want to take the time to get a merchant acct.)
2: Promote your web service via a weekly 7-day eBay auction of 1 box with an opening bid of 99cents.
3: Collect Underpants (profit!)
________________________
"A nickel's nothing to scoff at."
C. Montgomery Burns
HoardCode0.1: M28/5CAON:CA5Ni35000:CA1Cu1200:CA100Ag345:
CA10Ag250:CA50Ag100:CA25Ag30:CA500Ag48:US100Ag20:CA1000Ag16
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17 Posts |
Posted - 04/05/2007 : 14:48:32
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| Not sure how effective they are in doing so, but I believe listings containing external links to sales websites are removed. |
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59 Posts |
Posted - 04/05/2007 : 20:41:43
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I made my own "first purchase" recently. I got to wondering about the cost of pre-64 silver coins, assuming they would all have some collector value above the silver price. I noticed several ebay auctions ending in under a few hours that were still below the silver price. So I put in bids for that price minus the shipping cost, not really expecting to win any of them. But I won most of them, and I am now 27.5 ounces of silver richer. I assume it is normal for "junk" silver to sell below the spot value?
At that point I really got interested, and soon found out about the current penny/nickel situation. And so the hoarding began...
I got the first of that silver in the mail today- supposed to be 35 half dollars. I got 36! woohoo!
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One of the chief attractions of the life of the wilderness is its rugged and stalwart democracy;
there every man stands for what he actually is, and can show himself to be.
-- Theodore Roosevelt |
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17 Posts |
Posted - 04/06/2007 : 07:28:32
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Wes, I am certainly no expert, but I believe that is common to sell under the market value of silver. There would certainly be a cost associated with removing the silver from those coins should anyone want to do so.
Unless the coins are of particular high quality (coin grade) I suspect they will trade below silver value and hold primarily intrinsic value, and not so much numistic value. |
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59 Posts |
Posted - 04/06/2007 : 08:42:01
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I had intended it to be an "intrinsic value" investment, not numismatic, but a few of the pieces in the first lot are quite nice. I expect they'd sell at the local coin shop for at least 2-3 times what I paid for them. Perhaps I'll take a few down there and test the waters.
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One of the chief attractions of the life of the wilderness is its rugged and stalwart democracy;
there every man stands for what he actually is, and can show himself to be.
-- Theodore Roosevelt |
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HoardCopperByTheTon
Administrator
USA
6807 Posts |
Posted - 04/10/2007 : 03:00:59
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quote:
Originally posted by Magua
HoardCopper-
You make some good points about ebay and shipping. Unfortunately I think most of us know the the ebay/paypal combo has us by the balls and because that is one of the only realistic marketplaces there isn't too much we can do about it. Sure you can try to sell through forums/craiglists/etc, but your exposure is so much lower that I can almost guarantee lost sales will be greater than just paying fees.
Lets play some games with projected online sales fees:
Lets assume small to medium size shipments where actual shipping fee is quite reasonable if you take advantage of flat-rate priority boxes. I am guesstimating that a flat rate box can hold about 200 rolls, or $100 worth. That means $8.10 to ship 10,000 pennies to any domestic location. Running the numbers quick yields $.00081 shipping per penny. Coinflation.com shows current copper penny value at $.02199, or subtracting face value (acquisition price), profit of $.01199 per penny. .00081 (shipping) / .01199 (profit) means shipping eats 6.75% of your proceeds. But, you pass that off to your buyer (although it effects the amount they are willing to pay).
I have seen surprisingly few auctions for sorted copper pennies, which indicates either lack of demand, or lack of suppliers. I guess you would have to start selling to see which is the case. Auction 130095881894 (search it, if I put the whole hyperlink it will screw up thread formating) is a sale of 5,000 ($50) pennies for $109.00 + $27 shipping. He has sold 5 lots of them (1 on the 25th, 4 on the 29th) all to the same buyer, which makes demand harder to derive.
For simplicity sake lets assume sale prices of 91% melt value, or $.02 per penny (instead of ~$.022). 10,000 lots sold for $200 + $10shipping. That total price (sale+shipping) is about 25% lower than the auction I listed.
Ebay Listing+Gallery fee: $3.95
Ebay Final Value: $7.00
Paypal Fee: $6.39
----------------------------
Total Fees: $17.34
----------------------------
Profit if bought at face: $82.66 + $1.9 made on shipping (box is free!) = $84.56
Profit per penny: $.008456
Percentage of profit vs theoretical pure melt value: 70.5%
Thats still not a terrible conversion. I mean even if you could legally melt the coins a scrap yard would not pay you pure market value, right?
Sorry if all that was terribly boring, running the numbers myself and thought I would share for anyone else curious.
I like your thinking but there are a few things to consider. First, as the lot size gets larger the potential number of bidders diminishes.. there are a lot more players at the $10-20 range than than in the $100-200 range. The market gets pretty thin for higher priced lots. I have tried a few auctions just to test the market. I think there is both a lack of demand and a lack of supply of the sorted copper cents on eBay. The supply side could be because of the time or equipment needed to extract the copper from the zinc (Something you need to consider in your profit model) This can either be done by extremely cheap labor (yourself) or more efficiently with a capital investment in a machine specifically designed to do that for you such as the Ryedale Coin Artist. The other reason that supply is limited is because of the prices realized on the few auctions that have been completed. Most knowledgable sellers will check completed auctions before listing something to see if there is much of a market for it before they incur all those fees and end up giving the item away for a song or starting it too high and getting no bids, thus just incurring fees with no return. On the buyer side.. most buyers on eBay want to get a bargain. They are only going to be willing to shell out a percentage of melt after making an adjustment for the $8-10 shipping fees. So your net is not going to be very high when you consider what the buyers will be willing to pay and then subtracting all the eBay/PayPal fees for the privelege of doing the transaction. This lack of net potential profit coupled with the effort of carting those heavy flat rate boxes down to the post office will keep most sellers from entering the market. You have an advantage over other sellers since you have no investment of time or extra capital above face for your hoard.. so theoretically you should be able to undercut any competitor. You won't get anywhere near full melt value, but you could turn a quick tidy profit.
"Preserving coinage.. 2 tons at a time"
HoardCode0.1:M48/14USCA:US1Cu639700:US5Ni2400:CA5Ni46 |
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