Allen Rowe: Could copper be the new bullion?
March 16, 2014
In the past few years there has been a new commodity-based product being offered to the public as a bullion alternative: copper. Companies have begun to strike copper rounds and bars to mimic the idea of investing as one would in gold or silver. When buying one of these new products, ask yourself what you are actually getting for what you are buying.
In the market it is not uncommon to see copper 1-ounce rounds priced at $3 to $4 each. Some of the larger retailers of these rounds will sell them for about $1 each. If you are paying $1 for each round, that is about $31 a pound. Copper has recently been trading around $3 per pound on the commodity market and has never broken higher than $4.50 per pound. There may not be a cheaper place to buy these copper rounds, but how much can one expect when they go to sell them?
Wheat pennies, our cent from 1909-1958 with the wheat-ear-reverse design, are a popular way for collectors to buy copper coinage. A bag of these old pennies will cost around $200 and has about 32.5 pounds, or 390 ounces, of copper. Now one not only has a store in copper value, but also coins with a collectable value.
Another great option is to sort through our country's pennies. Until 1982 they were made with 95 percent copper. Since, the cent has been made with zinc and is only copper-coated to save on cost. The old copper cents contain double their value in copper alone. If you are looking to buy and store copper, just buying (and sorting) penny bags is a way to do just that. It does take time to sort out the coins minted before 1982, but the cost for your copper premium is only time.
There is a downside: it is illegal to melt or destroy a U.S.-made penny and it carries a $10,000 fine if you are caught.
Realizing a higher copper value for your face-value stash is not a readily achievable reality at this time, but the laws or times could change and having a store of these old copper pennies could prove a tremendous investment.
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One can look to coins other than our country's as a way to buy, too. Many older foreign-coin bins create a way to buy copper coinage as an alternative to save up the metal. And if one is creative, he or she can target specific countries that produced so many coins that collectors are turned off and therefore the coins carry little to no premium.
Our coinage, like most around the world, was based upon three metals: gold, silver and copper. Both gold and silver have exited the currency scene, and copper is now being replaced by cheaper alternatives in much of the coinage around the world. With the value of commodities staying higher than currency itself, looking to buy into copper may be smart, but only if you do so without paying for the hype.
Allen Rowe is the owner of Northern Nevada Coin in Carson City.