Saturday, February 7, 2015

A Nickel for your Thoughts

Congressman Steve Stivers of Ohio has re-introduced a bill into the US Congress that would allow the US Mint to use steel to make pennies, nickels, dimes, and quarters. It costs the US Mint more to make a penny and a nickel than the face value of the coins. The goal of the bill is to save money, but also to promote the US steel industry (the bill is endorsed by the American Iron and Steel Institute). You can read about the bill here.  It will have some bipartisan support.

An interesting side story is how some people have been stockpiling nickels in anticipation that this bill will eventually become law. They figure that if that happens, the existing nickels (that really have some nickel in them) will quickly disappear in much the same way that silver coins did back in the mid 1960's in the US when silver coins were replaced with the clad coins used today.

It's an interesting theory. For anyone who wants to have an emergency cash fund  on hand it probably makes sense to have some nickels as part of that fund. Of course, to store up very many dollars worth of nickels would be impractical for most people. But a hundred dollars worth of nickels don't take up much space. They are probably about as risk free kind of cash as you can find since the metal in them will probably always meet or exceed the face value.

Some people actually are hoarding them in the belief they will quadruple or more in value if the legislation above becomes law since the "real" nickels will probably disappear pretty quickly if the law is passed. Here is a guy trying to decide if he thinks nickels are worth the trouble or not. Most people would not want to fool with them.

For those who like the idea of having some silver as part of an emergency cash fund, you can use nickels to do that if you like. During WWII nickels were made with a 35% silver content for a few years. Interestingly, nickel was harder to source than silver during the war because nickel was used in armor plating which is why they made the change. 

Right now a silver war nickel (with no numismatic value) goes for about a dollar.

An emergency cash fund is a common sense idea for anyone. Whether or not fooling with nickels as part of it is worth the trouble is another question. But if you are interested, you will want to keep an eye on this bill. If it passes, existing nickels will start to disappear.

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