The E-Sylum:  Volume 10, Number 30, July 29, 2007, Article 39

COPPER CENTS AS AN INVESTMENT

On July 22 MarketWatch.com published an article about the case for
investing in U.S. cents as production costs rise.

"A penny saved may still be a penny earned, but the real question
for investors is whether a penny purchased is actually worth a
nickel when it comes time to figure their return on investment.

"Plenty of small-time investors are betting that the penny will
someday be valued like its larger cousin, and so they are snapping
up pennies. Taking pennies out of circulation and collecting them
is one thing, but paying a premium to buy pre-1982 pennies for
their copper value is another and, for most investors, it would
be a Stupid Investment of the Week.

"The case of the penny is compelling, because everyone has pennies
and can relate to the most common of coins. Moreover, the math
behind the move to buy pennies looks compelling. The real question
is one of practicality.
The case for buying pennies goes like this:

"The rising price of copper has made it so that the metal content
of pre-1982 one-cent pieces is now worth more than the one cent
the coin represents, falling somewhere around 1.2 cents. You need
roughly 155 of the pre-1982 coins to make a pound of copper. And
with copper trading for more than $2 a pound -- and as much as $4
a pound a little over a year ago -- there's definitely some
economic merit in hoarding the coins if every $1.55 is worth $2
or more.

"But there's a difference between taking pre-1982 pennies out of
circulation and putting them in a special place -- the way some
people, myself included, have saved the so-called "wheat ear"
pennies from the early 1900s for decades -- and plunking down
investment dollars to buy pennies at a premium in order to cash
in on their value as a commodity.

"Then there's the problem of storing all of those pennies. A $50
bag of pennies weighs a bit more than 30 pounds. So a $10,000
investment in pennies -- even if it buys just $5,000 worth of
coins -- weighs north of 1.5 tons.

"Having four or five shoeboxes of 'wheaties' is one thing, but
the cumbersome nature of really investing in pennies for their
melt value makes this idea just insane on any larger scale,"
says Bret Leifer of Bret Leifer Numismatics in Wayland, Mass.

To read the complete article, see:
Full Story

  Wayne Homren, Editor

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