To 321gold home page

Home   Links   Editorials

Ashtray Outperforming My 401K

Alec Nevalainen
Coinflation.com
January 10, 2006

Losing money making money. That sounds strange, but that's exactly what occurred when The United States Mint produced 95% copper/5% zinc cents in 1982. Material and production costs exceeded $0.01 to manufacture the cent and they changed the composition to 97.5% zinc mid-year (how they're still made today).

Now, the copper in the pre-1982 cent wasn't worth more than a cent at the time - it took 23 years for that to happen. On February 18, 2005 copper settled at $1.5126/lb and the pre-1982 copper cent had an intrinsic value of $0.01006437.

I thought the milestone was interesting, so I wrote an article titled, "
Gresham's Law Returns." 321gold and PrudentBear published a link to it, but the response was little to none. It's only one cent, not exactly front-page news.

Fast forward to January 6, 2006 where copper settled at $2.1208/lb. To calculate the intrinsic value of the pre-1982 cent, use the following:

2.1208 (copper price per pound) x .0022046 (this value converts the copper price from pounds to grams) x 3.11 (gram weight of the copper cent) x .95 (percentage of copper in total weight) + .8849 (zinc price per pound) x .0022046 x 3.11 x .05 (percentage of zinc in total weight).

Do the math and you come up with $0.0141171. What does that mean? If you have 100 pre-1982 cents, you now have $1.41 in copper/zinc (40% gain in one year).

On a percentage basis, the coins in my car ashtray doubled the gains made in my 401K last year. Now, I'm not expecting to retire on what's in the ashtray, but it's an illustration of what's happening right now in the metal markets... and money with intrinsic value.

To find out the intrinsic value of U.S. Coins (including pre-1965 silver), visit
http://www.coinflation.com.

Alec Nevalainen
email: alec@rockbend.com
website:
coinflation.com

Copyright ©2006 coinflation.com. All Rights Reserved.

Recent Gold/Silver/$$$ essays at 321gold:
Feb 18 Silver47 Adds Critical Metals to its 168 Million Ounce AgEq Project in Alaska in Support of the Reformation of the US   Bob Moriarty 321gold   
Feb 18 America's Gold: Mark It To Market?  Stewart Thomson 321gold   
Feb 17 Gold is now within 15% of the Fibonacci Target  Bob Hoye 321gold   
Feb 16 USD Danger & Gold Market Opportunity  captainewave 321gold   
Feb 14 Gold Is Red Hot & Silver Even Hotter  Morris Hubbartt 321gold   
Feb 14 Americans to Chase Gold  Adam Hamilton 321gold   

321gold Inc