Release: JUNE 17, 2022
Earlier this week, the Dow Jones average dropped almost 1,000 points in one day – over 700 points two days later. Since January, it’s down over 5,000 points. The NASDAQ has fared worse. It too is down 5,000 points but, percentage-wise, has lost over twice as much as the Dow. Hello, Bear Market and get ready for recession.
Adding to the sunshine are grocery staples climbing 22 percent since just January. Gasoline is up over 100 percent or $3 per gallon from two years ago. And, brace yourself…I hear gas pumps in California have been recalibrated enabling them to charge five digits or over $10 per gallon....
All this is the formula for people to placate their panic with alternate investments. It happened in the early 1980s when precious metals prices – especially gold – shot up alongside interest rates.
Gold has again climbed though not nearly keeping pace with inflation. Currently at $1,830 per ounce, it’s risen only $100 or so from two years ago. Not surprisingly, some doomsayers are predicting gold prices of $2,500 by year-end. We’ll see. According to a research analyst at Argent Capital, “Gold is the fear metal. People buy gold and bid up prices when they’re scared of the future. Copper is the industrial metal. They buy copper when industry is good.”
Copper has traditionally been a semi-precious metal. Gold, silver, platinum and palladium are precious metals. Though, things may be changing. Evidently, industry has been good. In two years, copper has almost doubled in price. Today, it is valued at 27-cents per ounce or $4.32 per pound.
For those who consider that “penny ante” consider that up until 1982 a penny was made of 95 percent copper and five percent zinc. That year, the percentages reversed to 97.5 percent zinc and a mere 2.5 percent copper – the reason today’s pennies are so light.
It takes 145 pre-1982 pennies to equal one pound. That’s, of course, a face value of $1.45. At current copper prices, the actual value of that one pound of copper pennies would be $4.32 – a difference of $2.87. Before anyone gets any ideas, understand it’s illegal to intentionally melt down US coinage. It would also be hard to find someone to buy a blob of copper at anywhere near the spot price of the metal.
Coin dealers have gotten onboard with the interest in copper. Some are selling copper “rounds” about the size of a silver dollar. Each of those rounds weighs one ounce and sells for $2.50 to $3.00 apiece. Clearly, copper prices would have to skyrocket for any of those to be even a moderately good investment. Don’t hold your breath.
Ben Franklin was the inventor of the US copper penny in 1787. At that time, the coin was a serious medium of exchange. Franklin’s cent was larger than a modern quarter and almost three times as thick – a lot of copper. It stayed that size until 1856 when it shrunk closer to our current penny.
Far and away, the most valuable modern pennies were minted by accident in 1943. The US was hip-deep in World War II. Copper was desperately needed for bullet and cannon shell casings. To address that need, for one year in 1943, the US Mint abandoned copper cents and struck pennies out of shiny, silver-colored, abundant (and rust-prone) steel.
The steel cents were exactly the same size, shape and design as the copper ones issued before. Only the date was different. Because they were produced at the same Mint facilities as 1940, 1941 and 1942 copper cents, a few blank copper planchets got accidentally mixed in with the millions of new steel planchets. Consequently, a precious few unintended1943 copper pennies were errantly mixed in with the new steel ones. It’s estimated around two dozen were struck. Depending on condition, the auction value of one of those extreme rarities is now between $240,000 and $1.7 million.
Not surprisingly, thanks to greed and the fact the coins are so easy to fake, counterfeits abound. Years ago, bad guys figured out all they had to do was coat a 1943 steel cent with a micro-layer of copper. Voila, a rarity. But, not so fast. The good news is, if you run across one, they are also the easiest fakes to detect. The trick…just hold a magnet next to it. Steel is magnetic. Copper isn’t. If the magnet sticks, game over.
For more collecting advice, visit www.PRexford.com