July 1, 2025

The Nickel Coin

Nickel Hoarding

It's not uncommon that during times of financial or economic distress or crisis, one in which the local currency is rapidly declining, i.e., is losing its purchasing power, that people will actively seek to protect themselves by moving their money into something that is holding its value against the declining currency.

Depending on one's level of wealth, some people will purchase such things as precious metals, gem stones, land, collectibles, etc., things that can increase in value as the currency fails. In this article we'll examine the option of those who choose to hoard nickel coins, and as odd and strange as it may appear to be to do such a thing, hoarding/stockpiling nickels for many has become (for them) the vehicle of choice in protecting themselves against the dollar's declining value. However, unless one carefully thinks through such an unconventional strategy it can prove to be a mistake and disappointment, resulting in lost time, opportunity, and wasted effort. And with that in mind, this article will examine if hoarding nickels is a viable alternative and practical long-term investment strategy that will protect and preserve one's wealth.

Gresham's Law: Consider the Penny

Today's nickel coin is composed of 75 percent copper and 25 percent nickel and both metals are two of the more expensive base metals in use today, and as of this writing the price of nickel has been in a tight trading range of between six and seven dollars per pound. Other base metals such as brass, stainless steel, and bronze each contain alloys of either nickel, copper, or both.

Some nickel hoarders believe that one day Gresham's Law will apply to the nickel, the reasoning is that if the nickel we use today ever has its metal composition changed to a less expensive, cheaper metal, such as steel or aluminum, it will drive out of circulation the older nickel coins as the U.S. Mint removes them from circulation and people hoard and save them for the value of their metal content. For nickel hoarders, the fact that the older nickels will be removed from circulation and thus making them more difficult to find reinforces for them Gresham's Law of bad money driving out good money.

Although it hasn't happened to the nickel, the effects of Gresham’s Law is real and can be easily seen at work in regards to the U.S. penny. For example, in 1982 the penny’s metal composition was changed from 95 percent to 2.5 percent copper, with the remaining 97.5 percent being zinc, the resulting effect of this change is that the quantity of copper pennies in circulation today is far less plentiful. As a matter of fact, it will be discovered that in any roll or box of pennies obtained from a bank that, the chances are high that the majority of the pennies will be zinc, proving that Gresham’s Law is not simply a theory, but an observable fact.

The reason for the change in the penny’s composition is easy to understand, the cost to produce it exceeded its face value, this change resulted in the devaluation of the penny because to switch the metal composition of it from one that is expensive (copper) to one that is cheap (zinc) is to debase its value i.e., it's purchasing power, making it less desirable to hold as money. But despite this undesirability most people didn’t blink an eye when this debasement occurred, instead they simply used whichever penny they had in hand, whether copper and/or zinc. Although a devaluation can apply to one currency in relation to another, in this instance it is the currency i.e. the dollar being devalued against a commodity, copper.

Steel Penny

                  Steel Penny

A single penny today is worthless due to its devaluation, it has zero purchasing power, you can’t buy anything with it, not even “penny candy”. In fact, for most people, a penny on the ground wouldn’t be worth the physical effort it would take to bend over and pick it up. Ironically though, steel pennies that were minted in 1943 due to a copper shortage during World War II are more valuable today than copper pennies, and although steel pennies are not considered scarce or rare, it is uncommon to find them in circulation today. These pennies can primarily be purchased through a coin dealer, private party, or some other venue and despite not being rare or scarce, steel pennies do sell for a premium over their face value, ranging from a few cents to hundreds of dollars, depending on the coins condition and/or other special feature(s).

Now the question is, is what happened to the penny going to happen to the nickel, is its metal composition at some point going to be changed to perhaps steel, like the Canadian nickel, or discontinued altogether? The reality is that, a single nickel like the penny has no real purchasing power, you can't buy anything with it. And “Five and Dime” stores no longer exist where at one time you could actually buy candy for one, five, and ten cents, we now have so-called dollar stores.

Junk Silver

                  Junk Silver

Unlike gold and silver coins, the disadvantage of nickel and penny coins is that they are composed of base metals that are widely used in industry, and even though gold and silver are used in industry as well, it is not to the same extent as is nickel, copper, zinc, aluminum and other base metals. To highlight this disadvantage and (again) Gresham's Law, we can use silver as an example, let's therefore consider pre-1964 silver coins, commonly referred to as “junk silver” called such because they have been in circulation. These once commonly circulated dimes, quarters, half-dollar, and dollar coins are each composed of 90 percent silver, nearly all of which have disappeared from circulation, with many people having saved or hoarded them so that now they can only be obtained primarily through brick-and-mortar coin shops, online coin dealers, as well as from individuals and others who are selling them at prices far above their face value.

Anyone prior to 1964, or shortly thereafter, who saved, hoarded, or accumulated the above mentioned silver coins before their removal from circulation would have preserved their personal wealth in an unimaginable way. For example, a roll of forty silver quarters in 1964 would cost you ten dollars, that same roll at roughly a thirty dollar spot price per coin would be worth twelve hundred dollars! The silver dollar and half-dollar coins would be worth much more, and the silver dimes less, because they're smaller and would contain less silver. Our five cent nickel today, suffice it to say, because it is a non-precious metal it is highly unlikely to see the same dynamics play out for it as for silver.

War Nickel

                  War Nickel

One may wonder if there were ever any silver nickels issued by the U.S. Mint, and the answer is, yes, but they were issued for a specific reason and for a short period of time. These particular nickels were issued from 1942 – 1945 and are commonly referred to as “War Nickels” because they were issued during World War II as nickel was greatly needed by the military for the war effort. Each coin contains 35% silver, 56% copper, and 9% manganese and can still be found in circulation today and are easily identified by the large letter of either P, S, or D printed on the reverse side of each coin above the image of Monticello. These coins are considered collectibles due to their historical significance and silver content, and can usually be found in any given roll, or box of nickels obtained from a bank, or they can be purchased from a coin dealer, typically costing several dollars over their face value depending on their condition.

Nickels as Collectibles

Even though nickel coins are not generally considered valuable like silver coins, some can be worth quite a bit of money if they meet one or more of the following criteria: good or above condition, historical significance, errors, scarcity, rarity, age, aesthetics, national origin, and demand. For example, the War Nickel as previously mentioned are considered collectibles and depending on their condition, or some other favorable feature can be worth much more than a few dollars over their face value.

        Buffalo-Indian Head Nickel                          Liberty Head Nickel

But besides the War Nickel, there's also the Liberty Head nickel also referred to as the V nickel and/or Barber nickel, and the Buffalo-Indian Head nickel too, both coins are considered collectibles and sell at a premium over their face value, and again depending on their condition or some other special feature can be worth considerably more. Collecting nickels from a particular time period can add to a nickels desirability, demand, and value. For example, nickels from the 1940s and 1950s are already more difficult to find in circulation than those from later decades, nickels from these two decades aren't rare but it's important to realize that a coin doesn't have to be rare in order to be valuable, in many instances, it just has to be scarce.

        Licoln Bicentennial Penny                               Wheat Penny

Consider the 2009 Lincoln Bicentennial zinc pennies, they are newer than the much older copper Wheat Pennies, but having been issued for just one year the Lincoln Bicentennial penny is far more scarce and difficult to find in circulation today. So when collecting nickels, or copper pennies for that matter, the emphasis is not on its metal content but rather on those features mentioned earlier, because unless or until the spot price of either metal rises significantly the role of the metal itself in determining the price or collectability of the coin will be minimal to none.

Nickel Alternatives

 
   1 oz. Nickel Round           1oz. Silver Round          1 Pound Nickel Bar              1 oz. Nickel Bar

Up to this point the the focus has been on the U.S. nickel coin, however, an alternative to collecting nickels is to collect commercially produced nickel rounds and bars that are composed of .995 percent pure nickel. When held in the form of rounds and/or bars you're getting more of the metal than you'd get with U.S. minted nickels, 25 percent vs. .995 percent! These rounds and bars also exist in silver, which is far more common, and both are commercially produced, but the silver versions often depicts an array of images such as famous people, events, logos, even images depicted on official U.S. minted coins, whereas the nickel bars and rounds seldom do, or not to the same extent as do the silver ones. Also, the weight and purity are usually always indicated on both varieties to distinguish them from genuine U.S. coins, which typically don’t always include such information. And just as an aside, neither are legal tender and cannot be used as money.

One important consideration when buying either bars or rounds is that they are liquid, meaning they can be sold and traded online or some other venue for cash, even taken to a scrapyard and sold for the metal's melt value, however, it is illegal to melt down government coins. It may be unwise to have ones nickel rounds and bars melted down, but rather instead sell or trade them online, because nickel is the more expensive metal compared to the others such as copper, aluminum, zinc, and iron. It's also an important, in-demand metal due to its many commercial applications, such as in the manufacturing of stainless steel. Another reason why not to have one's nickel rounds or bars melted down is that in order for it to be profitable to do so, the spot price of nickel will have to rise significantly above its current price range of between six and seven dollar an ounce. Moreover, any profits from selling will depend on the initial price you paid for your rounds, as well as what any given scrapyard is paying for nickel. It may be best, particularly as a long-term investment in the metal, to buy and hold your rounds until the price of nickel rises high enough to make selling them profitable.

One last way to obtain nickel is by buying it as an industrial metal from a metals dealer, these dealers generally sell to other businesses such as industrial users of the metal, but they also sell to the general public, and individuals. This is a more straightforward approach to obtaining and getting exposure to the metal, you can purchase the metal in a variety of sizes, weights, grades, and shapes, all of which will factor into the price you will pay for the metal. But unlike nickel coins or commercially produced bars and rounds there will be no designs, images, wording, or anything else inscribed on the metal.

Things to Consider

Price Appreciation

Stockpiling, hoarding, or whatever the case may be, collecting nickels entails certain considerations that are to be thought through before venturing into such an activity. One of those considerations briefly touched on earlier was the need for the price of nickel to rise significantly, because there are definite pros and cons to think about before collecting nickel coins and price appreciation is one. The United States is currently facing a financial crisis, and a big part of that crisis involves the nation's debt, it is therefore important to understand how that debt problem will affect the price of nickel, because nearly everything bought and sold domestically and internationally is priced in U.S. dollars, and that includes nickel.

As the nation's debt problem worsens, and as more dollars are printed by the Federal Reserve to finance the government's debt, the purchasing power of the dollar will decline, resulting in inflation, because too many dollars are being printed and in the process diluted. This means that the price of nickel is destined to rise over time as it will take more dollars to buy any given quantity or weight of nickel. And even though there will be attempts to suppress the price of nickel from rising too fast or too high, it will rise anyways. It won't be a straight upward shot without ebbs and flows along the way, but the long-term trajectory is up, this is a positive thing to consider when deciding on whether to collect and/or invest in nickel coins, or the metal itself.

Weight and Storage

Unfortunately, the problem with nickels is that when accumulated in great quantities are very heavy and difficult to move around, also having adequate and suitable storage space can become an issue that needs addressing too. So it's very important to be realistic and practical when deciding whether or not to build a sizable stash of nickels, because weight, storage, and mobility can all be potential problems.

Liquidity

One of the positive aspects about building a stash of nickels is liquidity, that is, the ability to turn your nickels into cash quickly and easily, and since nickels are cash already they are liquid. Now the fact of the matter is that, one nickel by itself can't buy anything, but a large hoard of them can, as well as be exchanged for paper dollars, and your nickels will always be worth a minimum of their face value. Here's something else to consider, and that is that, although it's not the situation now but can be in the future, particularly as the banking system becomes more digitized, banks (or some banks) will stop accepting coins altogether, but this risk as of now is minimal to non-existent, nonetheless, you don't want to be stuck with a hoard of nickels you can't do anything with, especially during an emergency.

Selling Time

Now, to put it plainly, when and if you decide to sell your nickels you won't be selling them unless they're collectibles e.g., War Nickels, Barber (V) Nickels, Buffalo-Indian Head nickels, or nickels with a special feature. When to sell will depend on different things, some personal, some not, but it's usually best to sell when there's demand. Because the fact of the matter is that, as this financial crisis worsens and money becomes tight, demand will fall as people pull back on their spending, especially discretionary spending.

In an economy that is contracting, when unemployment and inflation are both rising cash becomes king, it quickly becomes the go-to asset in greatest demand, not collectibles. The reality is that, as things financially go from bad to worst most people will be going broke as they begin drowning under a rising tidal wave of debt that they can no longer finance or repay, these people will not be looking to buy nickels but rather to lay their hands on some cash.

The scenario foreseen is one in which most people will be trying to offload i.e. sell their valuables en masse, whether it be coins, stamps, sports cards, comic books, vintage clothing, wine, toys, classic cars, movie posters, antique furniture, jewelry, art, and so on. This sell off will be taking place on websites like Ebay, Amazon, Craigslist, as well as at yard sales, flea markets, public and private auctions and other such venues, all in a desperate attempt to raise cash. These sellers will have bills to pay and other financial obligations to meet, so again, and initially, cash will be king. What’s being described here is a buyer’s market, great for those with cash, but horrible for those who are forced to sell, a person will want to avoid being in the latter group because you will be selling at either a much lower price, or at a loss.

Another thing to consider when deciding to, or not to sell, is that during the time described above that, simultaneously many coin dealers, pawn shops, auction houses, and even auto dealerships will be shrinking their businesses as they begin laying off workers and shedding excess inventory as they downsize. Many of these businesses will either be bought out by, or merge with a competitor, or simply go out of business. And to a lesser or greater degree this is already happening around the country due largely to a decline in sales, which in turn is due to a lack of demand, because many people are in sell mode, not buy mode.

Lastly, a person must consider to whom they intend to sell their coins and other collectibles to, because in a cash-strapped environment many coin dealers, pawn shops, auction houses, individuals and others may not be major buyers. It must be understood that dealers make their money by selling to customers not always buying from them, so you can reasonably expect that dealers may have little to no interest at all in your nickels, unless there’s something really special or unique about them that makes them stand out. At the end of the day, it's up to you to decide if and when to sell your nickels or other collectibles, what do your personal circumstances dictate that you do, but as a general rule, it is sometimes best to sell early and realize a small loss or profit rather than selling later with the expectation of receiving a larger profit and instead receive a larger loss.

Political Risk

There is something that should be said about buying and holding nickel for its melt value, or as a long-term investment, and that is, political risks. One of the political risk debated within both the financial and mining industries is that the government is artificially suppressing the price of both base and precious metals.

Without going into all of the details surrounding these claims and accusations, if indeed such turns out to be true, it would mean that the spot price for nickel is inaccurate, it is being quoted at a price that is either too high or too low, which doesn't reflect its fundamental value. Therefore, to your advantage or disadvantage, the price any scrap metal dealer offers you for your nickel rounds and/or bars should be understood with that in mind, because (due to no fault of their own) they are quoting a price that is manipulated.

Again, if true, I would be more inclined to consider this manipulation to have a less dramatic impact on base metal prices when compared to gold and silver prices. The reason being is that gold (and to a lesser extent silver) are viewed as substitutes for, or competitors to fiat currencies everywhere, especially during times of financial crisis when currencies are falling in value against gold and silver. But domestically here in the United States, gold and silver pose a specific and direct threat to the U.S. dollar and its role as the world's premiere (reserve) currency, whereas base metals do not because copper, aluminum, zinc, iron, and nickel are recognized and used primarily as industrial metals. So the need to suppress base metal prices may not be as aggressively or successfully pursued by the government as it would be for gold and silver.

Conclusion

Explored throughout this article were several long-term strategies and options to be considered as one decides the best way to preserve their wealth and purchasing power, an investment strategy that will require time and patience to be implemented and fully realized. It is a strategy based upon the belief that base metal prices will be priced much higher in the future, a belief predicated on the fact that the U.S. dollar is currently in the process of losing its status as the world’s reserve currency, and that fact alone guarantees that the price of base metals when priced in dollars will be much higher. This is a “work-in progress” so it can take years before the process is complete, or it can happen sooner.

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