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The 'Kyle Bass' Trade And How The Penny Cost Taxpayers $436mm
It has been a few years since Kyle Bass suggested the 'nickel trade' and the idea remains as profitable for those with large wheel-barrows now as it ever was. As Bloomberg notes, the penny currently costs almost 2 cents to make and the nickel more than 10 cents - more than double the cost from 2006. In those seven years, the US taxpayer has lost a stunning $436 million thanks to the inflationary devaluation of the USD relative to the metals involved, and while a former Arizona congressman (Jim Kolbe) tried to sponsor a bill to abolish the penny (to save the cost of minting), President Obama noted that "given all the big issues, we're not able to get to it," even as the Canadian Mint just stopped distributing pennies - saving $11mm annually. It seems, while the production process may have costs, the 100% markup for pennies and nickels remains an intriguing disconnect.
Charts: Bloomberg
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I have huge jars full of old nickels, dimes, & quaters.
Not nearly as much as Mr. Bass, but good for me.
So you can buy 2 cents worth of copper (pre- 1996 in Canada) for a penny?
Good deal.
Coin melt values, see: http://www.coinflation.com/
A little copper can be useful in a crunch.
http://en.wikipedia.org/wiki/Explosively_formed_penetrator
Nice. If I may add, I just read that Thermite is a 50/50 mix of iron (III) oxide (aka rust) and powdered aluminum. You can light it with a July 4th sparkler. Add a little magnesium and ratchet up the fun.
Here is another reason for owning physical copper...
http://www.coppermoonshinestills.com/
Federal Reserve: Mr. Bass. Why do you want $1 million in nickels ?
Mr. Bass: I just like nickels
I like to stockpile copper that is wrapped around lead stuck in a brass case filled with black powder.
Does Mrs. H know you look at this stuff on the internet?
hold on now, i'm in baltimore and for a mere 587 mill. we can find out for sure about this data if it is accurate.....
Hedgeless have your potatoes in yet ?
Mrs. Horseman has been digging around out there quite a bit, but I am not sure what she has planted for this go 'round. Here is last night's carrot soup and garden salad with real ginger dressing. I do know that to say we are long lettuce at this time is an understatement.
Here is one of the little horsemen transfering some black gold from the Chateau du Poulet to Compost Pile 3-A, Block 12, Sublevel 2.
cool, hard to get my little 1100-tactical-,410's going but they get better as they get older. I have a feeling bugs will be bad this year , no winter to speak of in the hill country this year. I like NEEM OIL do you have a secret recipe that might be a little easier on the fiatscos?
How droll.
So can a copper jacket....
FORWARD SOVIET!
The penny was discontinued in Canada because it cost ~ $1 Trillion Zimbabwean Dollars to produce.
Since you posted that, the cost has risen to $2 Trillion Zimbabwean Dollars.
Since you posted that the cost has risen to 200 Quadrillion Zimbabwe dollars, and the Zimbabwean stock market indices increased 1000 X.
Since you posted that, a 1000-ton meteor has crashed into Zimbabwe and turned it into one giant copper-filled crater.
Since you posted that Obama has invaded Zimbabwe, droned 1000 kids, opened a US SEAL base and is looking for "terrorists".
Very good example of the effects of the loss of value of the Dollar. Very good deal for someone.
Retailers up here are actually ceasing operations using pennies. Rounding off to the nearest nickel. I'm dead serious.
Let me guess. They are rounding up, not down.
Nope. They're being fair about it and rounding to the nearest. If it's lower, the retailer takes the big hit.
it took 3 weeks to get 100$ in pennies delivered...
The bank was very confused when I wanted several hundred dollars in Nickels, dimes, and quarters... almost like I wanted to rob them of their metal!
Muahahhaha they only have zinc and copper in their vaults...
100$ per person in the USA is how much incirculation small change is out there... get it while you still can.
With regards to pennies only the pre 1982's are worth it.
And even then, probably less the 5% of pennies in circulation are pre 1982.
zzaktly.
should have ordered nothing but nickels.
It must have been luck then when I separated $10 dollars worth of pennies (20 rolls) and found on average that 24.9% were pre 1982... I like to think of them as 1/2 nickles as they're worth 2.45 cents each or so I thought at the time I did this which was a while ago.
I have my kids sort through them for me. The post 82 and 64 (not much there of course) stuff goes in their piggy banks, the good stuff and nickles go in mine.
ive been getting 12- 15 82s and prior per roll...also pulled a 1912 s wheaty....25.00 minimum..
Nickels actually have a nickel's worth of metal. A copper penny has over two cents of copper. A zinc penny has about a half cent of metal.
This web site has the melt value for US coins.
http://www.coinflation.com/
I'd keep the nickels but cash in the dimes and quarters to buy silver eagles.
O/T but this will open your eyes to the truth!
The UCC Connection, by Howard Freeman
If that intrigued you read this too.
BEAT THE LAW HOW TO GET DIPLOMATIC IMMUNITY
No wonder they want the guns.
Only in this damn country can people think that using Dollar denominations (a false weight and measure) that creates an illision of "to expensive to continue" is not worth the resources it extracts. Whereas in reality worthless paper extracts real resources because ingnorat sluts have confidence in the false weight and measure. THANKS PUBLIC SCHOOLS!
The rumors, and just rumors, I have heard is that early in 2013 the Mint will stop making the pennies and nickels here. While it *my* not be worthwhile to sort pennies for the copper ones (1981 and before), it is easy to just throw nicklels into the jug... Or just go to the banks and get $100 worth whenever you have the inclination.
it will be a 3 week wait for 100$ in pennies.
even the new pennies are worth more then their melt value...
100$ per person buying small change (1c, 5c, 10c, 25c) and all the change will disapear....
They plan to ditch the penny, debase the nickel and eliminate the dollar bill for the dollar coin. Long term, they want to eliminate cash altogether.
My dad has a metric_F_ton of copper pennies. May be the original "copper bug".
What the fuck is a metric ton. ?
I was brought up on metric and imperial, side by side.
Never once heard that abortion of a phrase.
metric buttload > metric ton > standard buttload
MANY a beer has been sacrificed among our humble brain trust proving beyond a shadow of doubt that a shit-load is the largest quantity known to man. In case you're wondering....
Yep, but I can absolutely assure you that a shit-load is less than half of what you can shake a big stick at.
http://lmgtfy.com/?q=metric+ton
A metric tonne (or just "tonne") is 1000 kg (approx 2200 lbs).
2205lbs .actually.
Its like saying one Guinnea equal one rouble.
No wonder were all fucked.Fiat for weghts and measures.
silver is getting cheaper by the day, while WTI and gas is going up. makes sense. come to $26 Ag and i will buy lots of you
coin dealers by me are asking $6 above spot and he said he'll keep charging $36 for the rest of the year. I said "what if it gets in the $20s"-he mumbled something and hung up
$4.99 9/10 per gallon
???
fucking Kernan was talking about record gas prices. Instead of recognizing it for what it is--inflation--he saw the deflationary effects of the high price, declaring that the Fed would need to keep the rates low because of it. MIT degree or not, that is just dumb god damned logic.
You mean all those wars over the price of gas was for nothin? Looks like we lost another undeclared war.
Maybe Kyle Bass is a fan of Hank & John Green of vice versa https://www.youtube.com/watch?v=77C47XYm_3c
Fuck this 90 pt drop, You wanna see a market hissy fit, or should I say algo fit, raise interest rates a quarter point
Fewer coins, more food scrip.
Save the Penny! Dump BernanQE!
This just in from Bud Fox..."Blue Horseshoe loves Coinstar"
Edit made it funnier. +1
Nickels are a great arbitrage play. It's not like you're making any money in your savings account, so you may as well hold some of that in nickels. They have the added bonus of being extremely hard to steal, as they weigh a ton.
Fill a sock with them and you have security too.
lol i actually thought about penny hoarding. the only prob is that it costs more in gas to transport them then the profit margin togain. jusr imagine 10k in profit would require almost 700,000 pennies at a 1.5cent conversion
the value will be realized when they pull the pennies and nickles out of circulation, than they will sell like the 64's, for their metal..
People think I oppose everything Obama favors, but they are wrong. I stand with the president on getting rid of the penny and having a college football playoff.
time to make paper pennies.
cash will be obsolete as soon as they figure out how to buy and sell illegal drugs, weapons and other criminal goods and services with plastic. wells fargo is working on that.
isn't that the reason Goldman Sachs created BitCoin?
And all this this time, I thought HSBC had cornered the market on profit from illegal substances.
Oh well, guess it's all fair game now.
I guess the gov is penny foolish, pound foolish.
So what kind of costs could reasonably be expected for an investor one day selling copper pennies for the 2c in metal? Would be interesting to know at what volumes it becomes worth it.
As my father would say, "don't take any wooden nickels".
I love Kyle Bass. I'd suck his dick but I'm afraid I'd be labeled a cocksucker for life.
You're going to regret writing that when you sober up, you know?
Change your oil ONCE, and they don't think you're a mechanic.
Wear a tuxedo ONCE, and they don't think you're a millionaire.
But suck just ONE cock..
There's a lot of minting costs in those figures.
The actual metal value is only 5.1 cents in a nickel, and half a cent in a penny:
http://www.coinflation.com/
Nickels have been worth more than 7 cents in the last few years, but declined with the recent commodity pullback.
Don't be ridiculous.
They should be FORCED to continue minting pennies (and for that matter they should be the 100% copper they once were).
The enemy here is not "the penny", not "the cost" nor the goal "saving taxpayers money". The enemy is CURRENCY DEBASEMENT and the penny should be maintained as a reminder that the real villains are GOVERNMENTS.
Lets get on topic, you don't need a crystal ball to see what's going down.
And theres only one solution.
http://www.marketoracle.co.uk/Article39053.html
"...In those seven years, the US taxpayer has lost a stunning $436 million thanks to the inflationary devaluation of the USD relative to the metals involved..."
talk about majoring in the minors and re-arranging deck chairs on the titanic, this farticle rises to imbecility....removing the penny is pure fraud.....the same with a nickel.....how many items jump by more than 5% in price because of that stupid move? not everything which loses money should be ended, including the post office.....there truly are some services which should be maintained at a loss....
with 1.5 trillion usd deficits, whining about an average 60 million usd loss per year is the biggest sanctimonious horse shit i have heard in a long time....
if you want to save real money, slash and burn the cia, defense, debt, and bureaucrats.....that would be savings you could crow about....in the mean time, we will have to listen to this chicken shit about the cost of the penny and the post office.
<golf clap>
...that was just a plug for Kyle Bass to keep his name in the limelight.
Nope, that was a "Tyler Troll"... wasting my time.... lol
If you want to read what Bass is saying these days go to his blog
http://kylebassblog.blogspot.ca/
I think that the US should start minting SUB PENNY coins!
It is unfortunate that copper, zinc, and nickel have gone up in price.
What we need is for everybody to wear WIN buttons. (for "Whip Inflation Now")
Those buttons bring prices down, which is what causes inflation. This was one of the good ideas that Gerald Ford (American President and frequent star on Saturday Night Live) came up with. It worked in the 70's, and helped get him re-elected.
I see what you did there.
"In those seven years, the US taxpayer has lost a stunning $436 million ..."
To put that into context, the Fed prints $2.79 billion every DAY.
I guess the expression "worth every penny" is void?
Weyland-Yutani.
"Building Better Worlds"
Many of the world's government mint coins are sold at a loss .... paper markets are a rip off .... crocked government casino with bottomless pockets .... even Monedas could make money with those advantages .... while mint coins are heavily subsidized .... moral .... buy phizz govmint coins .... it's a no brainer ! While they are auditing US gold .... let's see a "real" audit of the US and Canadian mints .... nevah gonna happen ! Monedas 1929 Comedy Jihad World Tour Fatwas issued while you wait !
I'm afraid that the penny and the nickel are doomed. But we don't really need them. In the 1960's, a penny had at least as much purchasing power as the dime does now. For example, four pennies would buy a first class stamp and 25 pennies would buy a gallon of gas. Now, four dimes will get you a first class stamp and 25 dimes will NOT get you a gallon of gas.
We don't need pennies and nickels and whenever the melt value of a coin becomes significantly higher than its face value, people start hanging onto them and they cease to circulate.
When I was a kid, a nickle would buy a pack of gum (five sticks of Juicy Fruit [probably real sugar]. Or was it ten sticks?). Ten cents bought a large(ish) candy bar. Four ounces? Six? Eight even? Can't recall. This was 1960 +- or thereabouts. Twenty-five or fifty cents was some real money for a kid back then.
Some of the critics of Bass' "nickel trade" crack me up.
They often cite how it is illegal to melt down, or otherwise destroy, coins...so he'll never be able to truly benefit from it...
The way I see it, he really can't lose on it...at least if you consider the two extreme outcomes of all of "this."
If (when?) we eventually experience a legit currency crisis, and we pretty much go SHTF, no one is going to give a damn about laws like that...and the nickels will hold their value to at least some degree because of the raw materials...assuming of course he/his clients have physical possession of them...
...and if we ever let true deflation ever take hold (like we should have done in '08), the nickels will go up in value as a currency.
Either way, he has succeeded in at least preserving some of the wealth of his clients - and if you listen to his various speeches, etc., that's what he's really trying to do. He's not necessary trying to make a killing on each and every "bet" he places.
I THINK the only way he could "lose" on this bet is if we see a steady, controlled "inflation" - but IMHO, that's less likely to happen than either of the two "extreme" outcomes. Shit, Japan has been trying to do inflate their way out of their debt problems for 20 years...and all they're done is add more debt....
by the way Mr. Blaine,
Yes...it is currently illegal to "melt" coin. But if you did, there's not a recycler in the US that's going to question where you big block of copper came from. Though, with nickels at 75% copper, they may want to assay it first....and you won't be able to melt this on your kitchen stove.
Yeah...it may not be "easy" to get to make that material "usable"...but at least he/his clients will "have" it.
The only commodities I own are in the form of thousands of small pieces of lead...most of which are covered by a thin copper "jacket."
I figure no matter what happens, they'll always be worth something.
For the fun of it, I've purchased a few hundred pounds of pennies from "sorters" like pennybullion.com. They pull the pre-1982 pennies. There are other sorters on ebay.
Out of rebellion, I throw every other penny I get into the trash, or into the street to show others how worthless it is, and to force the US Treasury to spend a few cents to remake and redistribute replacement pennies.
Please join me.
You should cut off your nose to spite your face? Nah, keep the '82 and older pennies and buy nickels with the newer ones. I thought everyone knew that.
What's with pre-1982 pennies?
Predebasement or before the debasement, 1982 was the last year pennies were 90 percent copper, 10 percent zinc. 1983 was the first year pennies are 90 percent zinc, 10 percent copper.
Oh yeah, PROSECUTE THE WAR CRIMINALS.
Maybe the U.S. Government should get their penny and nickel and the rest of the coinage made in China in order to save money (they let Corporations destroy America this way).Or even better,sell the U.S. Mint to China.I was reading today that the Chinese have already bought enough oil and gas assets worldwide that the production from the assets is more than Saudi's now.Seems like everybody is selling out to them.
China is converting all the $US they've gotten making crap for us into HARD ASSETS, knowing damn well that the value of the dollar is tanking. China is converting dollars into equity stakes in Australian and South American mines, African farmland and energy sources all over the world.
My small grocery store stopped using pennies except in the price of goods. If you buy a $1.99 item and hand them a twoonie, you get no change. It's ridiculus.
Keep harping on it, you dipshit. If you keep calling the USGov stupid long enough, they're finally going to cave and start making our money like those toxic, smelly slugs that come out of Europe. Ever jangle a handful of Euro fractional coins compared with a handful of US coins? Ever get a whif of Euro coins? As a taxpayer, I'm happy to have some of my tax money go to making sure our coinage isn't skanky and slug-like.
Pennies no longer made from coper because the metal value is higher and now even the 'cheaper metal version is worth more for its metal value - so time to make a 'cheaper' coin AGAIN.
Doesn't this count as 'debasing' coinage? - not as bad as removving all the silver from coinage in '64 but still a debasement.
And wasn't debasement a capital offense in th eoriginal Constitution?