Pennies. We see them casually on the ground, discarded, lonely, and we walk right by. We see them in “take a penny, leave a penny” trays at cash registers. Pennies are price advertising gimmicks when we see something priced $9.99 rather than $10.00, because the one single penny makes the price look cheaper. They are quite literally, the forgotten coin of the coin world.
But what if you had a penny, valued at one cent, that was worth well over two cents? How is this possible, one might ask. That is because the United States penny has two metal contents: copper and zinc. In 1982, there was the big switch over from 95% copper and 5% zinc to 97.5% zinc and 2.5% copper. The old pennies, called copper pennies, have a distinct advantage in worth because of their metal content.
Copper is a highly desirable metal as it is incredibly useful (read what makes copper valuable). Over the past two decades, there has been a very strong increase in demand for copper as everything from automobiles to wiring and plumbing to even basic household appliances contain copper. The more world population grows, modern world countries expand technology, and third world countries develop through the industrial stages of socio-development, copper becomes needed in greater quantities than is supplied through world copper mining companies. A simple grasp of economics states that as demand rises, and supply falls, prices rise.
Copper Penny Value
So what does this mean for pennies? Not much when talking about one individual penny. But let’s face it, there is power in numbers. This is true in almost anything whether discussing the number of voters in a city for political elections, the size of a country’s military or GDP, the speed of a baseball thrown at home plate, the weight of a linebacker in American football, or the processing speed of the computer you are on right now. So just like these examples, if you have 1 copper penny that is worth over two cents, that means 100 copper pennies are worth over $2, 10,000 are worth over $200, and 100,000,000 copper pennies is worth over two million dollars. It really is all about numbers and math.
Run on Banks
Run on banks. The Great Depression. Greece and the Euro. These are things to think about. And not just with investing, but money in general. They aren’t being said here to be scary, just facts of life of past and current events. As a prudent investor and one who wants to ensure their wealth is secure, one must prepare for possible outcomes. If the Euro collapses, that doesn’t mean anarchy and the complete collapse of society. It means that a new currency would be needed as a medium of exchange. After all, currency is just simply the ability to sell something of value to buy something of value. Rather than us having a barter economy, currencies make life easier. So if a currency collapses, your best investment is an investment that let’s you hold onto the value of your wealth when transferring from the old currency to the new currency. If everyone else trades at a 1:1 ratio (old to new), then you want a 1:2 ratio (1 old to 2 new). That means you’d double your wealth in comparison to everyone else. Will copper pennies do that? Hindsight is 20, 20. But having something useful to society is a great way to start. The key to wealth preservation is not always about making money. Sometimes it is as simple as not losing as much money as everyone else. After all, if you hold still, and everyone else loses money, you’ve gained wealth.
The dollar Bill: Is it Real
What is the value of a dollar bill if no one uses it as a medium for trade anymore? The value of the dollar has already historically plummeted in value. It’s simple paper, with green ink and a few security methods in place to prevent counterfeiting. Is there other value? Perhaps one day it will be a collector’s item. But if no one uses it as trade anymore due to a currency failure, what happens next?
There is a lot of talk about whether the Euro can survive. So why should the Dollar survive? If the Dollar is printed in vast supplies to function as the world currency, then what happens if the Dollar is no longer used as the World Currency? Demand for the dollar drops throughout the entire world, and as a result, the value of the dollar would drop, causing a huge loss
in global purchasing power for those possessing U.S. dollars. So which is more valuable, a one dollar bill with a dramatic drop in demand for that dollar bill, your online virtual bank account number (which you may or may not get if a run on banks happened or more scenarios like the events at MF Global occur), or 100 copper pennies which is a useful metal in society? Is 100 copper pennies a lot? Of course not. But there is power in numbers. Take your investment dollar amount, multiply it out by the number of copper pennies you can purchase.
That is the key point here: Copper pennies are real. Dollars are fake in terms that they are only a medium of exchange with no intrinsic value (Read about pennies are real assets). A virtual bank account account with a number plugged into it is only as real as when you withdraw the money as cash. the physical cash in dollar bills are paper money, which is only as valuable as the paper and ink printed on it until you physically purchase something with it. Investing in something real is important to any financial investment portfolio. That is why many people buy gold and silver which are high demand precious metals. But what about copper? Copper is also highly desired yet prices are significantly lower so you can buy much vaster quantities. And you can buy copper pennies below spot price.
Buy Copper Below Spot Price
Why do copper pennies sell for less than copper spot price? Because you can’t melt them. It is currently illegal under U.S. law to melt down pennies or export pennies out of the country (Read about United States penny laws). This is for nickels as well (since nickels are mostly made of copper).
|That means that buying copper pennies is for long term wealth preservation and asset growth, as well as inflation resistant. Why is copper inflation resistant? This is due to copper being a high demand metal useful in society. As inflation rises, copper is still used and needed, so copper price rises with inflation and also should outpace inflation due to demand increases, technological break-throughs, and population growth.
A big question is whether a copper penny investor should not buy until after it is legal to melt copper pennies. The answer: No. If the copper penny could be melted, then you wouldn’t be able to buy copper pennies at a discount price below copper spot price. So if you want to pay a higher premium for copper pennies, wait until the melt laws change. But if you want to buy into the copper market at great pricing, then buy your copper pennies before the laws change and you’re too late to the game.
So you can’t melt pennies, but you can make money from them. Here’s how:
The most common question: “If I can’t get the copper out of the penny, why buy them?” When you buy a stock in the stock market, why do you buy it? You expect the stock to rise in price, then sell. This could be in seconds, minutes, days, months, or even years. The same goes for an investors retirement 401k account. The idea is copper pennies rise in copper value due to expected continued copper demands and expected rises in copper price. In addition, most countries have gotten rid of their pennies because inflation and currency devaluation (fancy words for this is known as quantitative easing) has made the penny quite literally not worth the time to pick up off the ground when you see one. The United States will eventually stop making and using the penny. In fact, the United States has already gotten rid of the penny on U.S. military bases which use rounding systems to round to the nearest five cent nickel. so consider buying copper pennies as like buying a copper penny stock with a future value for yourself, for retirement accounts, or for your children.
Even if you want to make money in a shorter term, consider this: If copper price is X and you buy copper pennies at Y below copper price, then as X rises, Y should rise in relative equal proportion. That means that even if you can’t melt your copper pennies, you would have the potential to sell them out at a higher price than you bought them for. Though this is possible, it would be more prudent to hold onto copper pennies as wealth preservation.
Copper Pennies and College Funds
Will the penny be around in 18 years when your newborn child or grandchild goes off to college? If the U.S. follows nearly every other country that once had a penny denominated currency, the answer is almost certainly a big No. Therefore, buying copper pennies for children would potentially mean a great investment for your child or grandchild’s college education 18 years from now. Imagine cashing in on copper price buying below today’s price, and cashing in 18 years later. If copper price predictions hold even remotely true, you’ve made a considerable large amount of money and helped them exit college closer to being debt free if not entirely debt free for a fraction of the cost. After all, student loans are the talk of most college graduates today in having loans with little to no work, or not enough income to pay off their loans with ease. Sometimes financial planning can be as simple as saving your copper pennies.
Pennies in Bulk
Copper Pennies in bulk numbers add up. The more you have, the greater your potential return on your money for the future. No one can predict future. But we can prepare for possible outcomes. It is fact that no one can say whether the U.S. dollar or Euro will survive. It is fact that the copper penny is made of copper and holds a greater intrinsic value than paper money or virtual bank accounts.
Pennies As an Investment
You can have a checking account, savings account, CDs, 401k, stock portfolios, and cash under the pillow. But if your entire financial portfolio is based in U.S. dollars, then the old adage stands true that you really do have all your eggs in one basket betting on the stability and survival of the Dollar. Not only that, but you are betting that the Dollar will also hold its value against all other currencies in the world when discussing economic dependencies on globalization and world trade. Putting all your eggs in one basket is widely accepted as a financial blunder. So take a step back and look at the facts of how you can protect and preserve your wealth.
The fact remains, pennies are more real than dollars. And copper pennies are worth more than their face value. Take advantage while you can. Because copper pennies stopped being made in 1982, three decades ago. They don’t make them anymore so that means copper pennies are in limited, dwindling supply. And as we already agree, basic economics state that as supply goes down and demands goes up, the prices rise. Since copper pennies hold a currency value and metal value, that means two facts:
1) The supply of the currency is going down because copper pennies are not made anymore and people are pulling them out of circulation. In addition, more zinc-based newer pennies are being made, so it is also harder to get copper pennies because there are less available in circulation.
2) World copper demand is on the rise, so copper prices are rising.
So copper pennies have penny supply going down, and penny demand going up while also copper supply not keeping up with the demand for copper. The results? The price and value of copper pennies is highly expected to rise.
Diversify with real assets today. Buy copper pennies. Browse this site to learn more about copper penny investing. It is advised to start off by reading over the FAQ and also How to Make Money off of Copper Pennies.