"Obama administration this week asked Congress for permission to change the mix of metal that goes to make pennies and nickels"Ha! The stat in the article is that the current cost of a nickel is ~11 cents. Meanwhile, the melt value is 5.6 cents.
A 1946-2011 nickel is only worth 6.48 cents now, thanks to falling nickel prices.
That was always going to be the downside of owning nickels.
The United States Mint today announced that it is requesting public comment from all interested persons on factors to be considered in conducting research for alternative metallic coinage materials for the production of all circulating coins.This should be a good one for the comments section.
Comments must be submitted on or before April 4, 2011.
E-mail: coinmaterials@usmint.treas.gov
Someone asked me in the comments section whether I thought I would really buy nickels in size. I gave an analogue from late 2006 that shed some light on the dilemma.
At that time it was possible to get free options on real estate, chiefly condominiums, by signing purchase contracts (with "outs") for projects that were still multiple years away from completion.
The developers were willing to offer these free calls because the banks would (stupidly) condition their financing based upon the percentage of units under signed contracts.
Collecting free options is all well and good - you have positive expected value. The problem was, it seemed really unlikely that the real estate bubble would last much longer.
So, the probablity distribution (though skewed positive with positive EV) was dominated by a payoff of zero.
Sound familiar?
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