Use Common Cents When Investing

A penny saved still may be a penny earned, but the real question for investors is whether a penny purchased actually is worth a nickel when it comes time to figure their return on investment.

Plenty of small-time investors are betting that the penny someday will be valued like its larger cousin, and so they are snapping up pennies.

Taking pennies out of circulation and collecting them is one thing, but paying a premium to buy pre-1982 pennies for their copper value is another, and for most investors, it would be a Stupid Investment of the Week.

The case of the penny is compelling because everyone has pennies and can relate to the most common of coins. Moreover, the math behind the move to buy pennies looks compelling. The real question is one of practicality.

The case for buying pennies goes like this:

The rising price of copper has made it so that the metal content of pre-1982 one-cent pieces is now worth more than the one cent the coin represents, falling somewhere around 1.2 cents.

You need roughly 155 of the pre-1982 coins to make a pound of copper. And with copper trading for more than $2 a pound and as much as $4 a pound a little over a year ago there’s definitely some economic merit in hoarding the coins if every $1.55 is worth $3 or more.

But there’s a difference between taking pre-1982 pennies out of circulation and putting them in a special place the way some people, myself included, have for years saved the so-called “wheat ear pennies” from the early 1900s and plunking down investment dollars to buy pennies at a premium, in order to cash in on their value as a commodity.

This is hardly the first time coins have been worth more as a metal than for their cash value.

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