Twilight's last metal gleaming

Starting in 1965, the US began to actively debase metal coins in circulation by removing silver from the dime, quarter, and half dollar. The half dollar went from 90% silver to 40% silver, then 0% silver by 1971. In 1983, the penny went from 95% copper to 97.5% zinc and 2.5% copper. Both copper and silver became worth much more than the face value of the coins. Monetary debasement has been common throughout history as inflation eats into the value of the "official money". Consequently, governments require greater seigniorage and taxes to keep overextended empires going.

Today, there is one US metal coin remaining with a metal value greater than the face value: the lowly nickel. The nickel composition is 75% copper and 25% nickel. According to Coinflation.com, it has a metal value of roughly 7.1 cents or about 42% above face value.

There was a brief period during World War II when the composition was changed to 56% copper, 35% silver and 9% manganese to preserve the nickel for war needs. It was a rare period when the nickel had no nickel in it. It went back to the copper-nickel alloy after the war.


Don't take any wooden zinc nickels

Straight from Wikipedia...

Gresham's law is an economic principle "which states that when government compulsorily overvalues one money and undervalues another, the undervalued money will leave the country or disappear into hoards, while the overvalued money will flood into circulation."[1] It is commonly stated as: "Bad money drives out good", but is more accurately stated: "Bad money drives out good if their exchange rate is set by law."

With the nickel undervalued and other coins and paper overvalued by fiat, it is only a matter of time before either nickels start disappearing from circulation as they are hoarded, or the US Mint decides that paying more than double the face value for the current nickel alloy doesn't make sense and will change it something like the new penny, 97.5% zinc. That action may also cause the copper-nickel version to be hoarded.

Trying to stay only one step ahead of the crowd, I have started collecting nickels. The risk is that I will miss out on 0.1% interest in my money market fund, but there is no acquisition cost or deflation risk. I started with a humble request for 10 nickel rolls from my credit union. Sadly, they only had 7 rolls in the entire brach. I was able to double that from the loose change jars of two friends. I've added copper and nickel charts to the blog.

I am prepared to wait 10-15 years on my nickel speculation. The 1964 silver coins didn't become a big win until 1979 or 1980. I'd rather be wrong about the active and earnest debasement of the dollar, and will happily return my nickels to the bank when I am convinced it is safe to do so.