Why You Should Save Your Nickels
The True Value of Coins
Prior to 1933, a one ounce gold coin was worth $20. It fact, a dollar was defined as a twentieth of an ounce of gold. The dollar was considered as good as gold. The world trusted the dollar. A gold based dollar was the foundation of the capitalist system.
1933 was the year that president Franklin Delano Roosevelt passed a law forbidding Americans to own gold. It might have been an attempt to retain the value of the dollar by decreasing the value of gold. It didn't work and the president was forced to quickly revalue gold at $35 an ounce. Americans still weren't allowed to own gold. The power to create money was reserved by the federal reserve. President Roosevelt succeeded in his dream of undermining the foundation of capitalism.
In 1965, the silver in dimes and quarters was eliminated. Dollar coins were now only 40% silver and only till 1970. After that, no silver was used at all in any coinage.
In 1971, another blow to the foundation of capitalism was dealt by president Nixon. Foreign countries could not redeem their dollars for gold anymore. The gold window was shut. The dollar had no foundation whatsoever. The golden ruler became a rubber band.
If you had saved your silver dollars in 1964, they would be worth over $24 today. A $20 gold piece from 1933 is worth over $1300 today. The value of money has decreased over 50 fold since the abandonment of a fixed standard.
The same thing happened to the penny in 1983. Pennies made in 1982 and before were made of copper. The value of copper increased till it became economical to melt pennies down for their copper. In 1983, pennies were made mostly of zinc. Today a copper penny is worth almost 3 pennies. Today, the value of the metal in a zinc penny is worth about half a penny.
Saving Your Nickels
This brings us to the nickel. A nickel is about 75% copper and about 25% nickel with a bit of manganese added for strength. This makes the metal in a nickel worth about 8 cents creating a great opportunity to hedge against inflation.
You can get large quantities of nickels at the bank and store them. A thousand dollars worth of nickels is actually worth about $1460 today. Even if all the inflation hawks are wrong and the economy goes into a depression and cash becomes king, you will still have a $1000 worth of nickels to spend.
However, if inflation gets the upper hand, you will make a quick little profit once nickels start trading for their metallic value. Silver coins and copper pennies now trade at a premium for their metal. Although it is illegal to melt coins down, they still hold their value due to the metal. There is no need to melt them down. Traders just bag them up and sell them.
The U.S. nickel is the last piece of honest money. Be sure to save a lot of it.
Destroying the Foundation of Capitalism
Vladimir Ilyich Lenin is said to have claimed that the best way to destroy capitalism was to debase the currency. Through inflation, governments could secretly confiscate a large portion of the wealth of their citizens. This would bring hidden economic forces that would destroy the economy and not one person in a million would understand the cause.
I actually think that a couple of percent of the current population of the U.S. population actually understand most of the dangers of inflation. At least they understand that the value of money depreciates over time. What many of them don't understand is that false signals are sent throughout the economy. These false signals result in false investments of wealth and time in the wrong portions of the economy. Investors concentrate on taking advantage of inflation instead of investing in new ideas. The biggest symptom of these false signals, was the housing bubble and its collapse.
The enemies of capitalism understand this concept better than the supporters of capitalism. They do not want a gold standard. A gold standard forces honest accounting or bankruptcy. Fiat money allows dishonesty by simply printing up money to cover up impossible promises.
As we head further into the 21st century, we will watch the economy slowly get worse and worse. Eventually we will formally abandon pennies, nickels, dimes, and quarters for trade. There will be no more metal coins for anything less than a dollar. When that day finally arrives, let it be a reminder of that day in 1933 when president Roosevelt abandoned capitalism and began the switch to a fiat currency.