Hoarding Nickels as Metal Prices Soar

It's a common recession-era trope: hard-hit Americans are "clutching every last nickel." But there's good news for these frugal nickel clutchers: they may be buying into the investment opportunity of a lifetime.

That's because the U.S. nickel, melted down, is now worth more than seven cents, thanks to soaring metals prices. And with the coin's value rising, an eccentric group of investors is quietly working to cash in before the rest of the country catches on.

Meet the nickel hoarders.

This small, secretive community of coin enthusiasts is spread throughout North America, but they gather on an insidery Internet forum called Realcent.org, where they use handles like "PennyPauper" to debate the intricacies of the copper market and swap tips on converting their savings accounts into basements full of nickels.

It may sound nutty, but their logic is fairly sound: U.S. nickels are made up of 75 percent copper and 25 percent nickel, a composition whose market worth first surpassed face value in 2006. Now, with a bullish metals market and a weakened dollar driving the coin's value upward, hoarders see an opportunity for arbitrage—pestering cashiers for specific change and sweet-talking bank tellers into selling them boxes from the back room. "It's like everyone is just giving out diamonds for free and nobody knows it," says one hoarder, who estimates that he has up to $15,000 worth of nickels stored away in various "secure locations." (Incidentally, he requested anonymity so as to avoid attracting attention from would-be robbers.)

If history is any indication, the hoarders may not have long. In 1965, with the price of silver climbing, the U.S. Mint diluted the composition of both the dime and the quarter. It did the same thing to the penny in 1982 when copper became too expensive. In every case, the composition change caused the value of the original coin to skyrocket: pre-1965 dimes can now sell for $3.50 each, the quarters are valued at more than $8, and pre-1982 pennies are auctioned off in mass quantities on eBay for nearly three cents apiece. "Somebody who kept a thousand dollars' worth of change 50 years ago could now exchange that bag for $28,000," says Curtis Penner, a hoarder from Alberta, Canada. And with the U.S. Mint losing tens of millions of dollars on nickel production, Penner believes it's only a matter of time before the coins get debased, turning his nickel stash into a gold mine.

Of course, federal law currently prohibits melting down nickels (and pennies), thus making it impossible to realize the coin's true value. But as coin values climb, pressure on the U.S. Mint to lift the melt ban is getting stronger, and hoarders think the Treasury will eventually give in.

The bottom line: if all goes according to plan, it won't be long before hoarders can start selling off their caches to scrap-metal companies and late-to-the-action investors.

In the meantime, some have already figured out how to make a tidy profit off the nickel rush. Adam Youngs, 23, runs Portland Mint, an Oregon business that sells nickels in bulk to serious hoarders: $10,000 worth of Jeffersons for $10,888. "It's very hard for an individual to get that many nickels on his own," says Youngs, pointing out that some banks have already begun rationing the coins and imposing fees for large orders. He estimates that since he launched the company two years ago, he has served about 10,000 people—and the number is growing every day.

Youngs isn't the only one who's noticed a recent uptick in interest. Lately, Realcent has been filled with nervous chatter about anonymous competitors lurking in their neighborhoods. "Well, my teller at my only pickup bank told me that she has another coin guy ordering boxes," reads one post, and it concludes, "Folks if it's happening in my backyard, time to hold onto your socks." Underlying the anxiety is a stark statistic: if just 10 percent of the American population catches on, hoarders will be able to acquire only an estimated $34 (face value) worth of nickels before every last one has been removed from circulation.

So why risk their windfall by talking to NEWSWEEK about the nickel's secret value?

In Youngs's case, the answer is obvious: higher public awareness equals more potential clients for Portland Mint. But individual investors have their reasons too. As one hoarder puts it, "I already have a position in nickels, so it works to my advantage if demand goes up."