Today with the rising prices associated with gold and silver, some people are turning to the number #3 monetary metal - copper. The US government doesn't make any 100% (or close) copper coins anymore for collector's or circulation, and hasn't since the copper penny was phased out in 1982, so private companies are stepping in to meet the demand. The above picture of a copper American Silver Eagle - type round is just one example of the copper investment round in action. Other rounds featuring Ron Paul in copper have also been produced. Copper bars have made a rather heavy appearance on the scene as well.So, should investors who haven't boarded the physical gold or silver trains to date hop the copper express? In a word - NO!
The first, and most obvious reasons for leaving copper out of your physical investments is painfully clear. At $3.99 USD a pound it makes silver at $35.44 per ounce seem like a lightweight! If you could actually buy copper for spot price you'd have to buy 4000 pounds worth of bars just to manage a modest $16,000 investment! That's twice the weight of a small car! Who wants to store a couple of cars worth of metal in their broom closet?
Secondly, investing in physical copper rounds and bars is cost-prohibitive. A one ounce round of copper goes for about $2.00 on ebay! That's 800% over the spot price of copper. Copper would have to rise to close to $32 a pound just to break even on such a so-called investment!
Thirdly, no clear route of resale. You can take gold and silver coins, bars, and rounds to numerous coin shops, internet sites, and refineries and sell your precious metals quickly and easily. With copper...not so much. I called Midwest Refineries to find out if I could sell any copper rounds or bars to them for cash...and the guy just burst out laughing! When he calmed down, he said it just wasn't anywhere near economically feasible to deal with relatively small amounts of copper in the refinery process. In fact, they bought huge log-like copper billets or enormous piles of scrap when they were running a copper melt. These billets often weighed 4200 pounds and up, and were delivered on a regular contract with a major copper producer.
Bottom line: the only way you'll be able to re-sell your copper rounds is if you can find other poor souls who are willing to make a bad investment to relieve you of your bad investment!
So, is getting on board the physical copper investment train a sound investment decision? Heck, no!
PS: 5/19/11 - I just received an email promoting copper rounds from the respected Gainesville Coins. Their selling point is that the coins are only $1.81 premium per coin. To those buying silver eagles and rounds that sounds on the surface to be a good deal. For example: Apmex is currently asking for a $5.00 premium above spot on American Silver Eagles (ASE's).
Once again, however, if you look closer the numbers just don't seem all that peachy. Firstly, the one ounce copper round has a current metal melt worth of $0.28 - so when you add in the premium you get to just over $2.00 per round. It's all just a sales smokescreen, though.
Bottom Line: you're paying about 800% over current copper price of about $4 a pound for your one ounce copper round. Copper would still have to climb to $32 per pound before your "investment" in copper bullion can break even. Your only hope of seeing any profit, or even just get your money back, means you're going to have to find a sucker willing to take the terrible investment off your hands.
Rick
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One should indeed not buy copper rounds with these premiums.
ReplyDeleteGood blog Rick!
Good analysis, Thank you :)
ReplyDeleteYou brainless jellyfish are missing the point. Copper isn't only worth the premiums, they're practically going to be a requirement for barter and/or trade once the economy tanks. Do you really think that Mr. SmartGuy who collected silver or gold bars is going to be in a position to barter for necessary items? He's gonna need SMALLER denominations or else he'll be paying one bar each for a carton of milk or eggs. Copper is on the same periodic scale as gold and silver and is the only other colored metal besides gold and is infinitely more useful. Copper rounds is the way to go since the price of copper is now at an all-time high. Buy while you can!
ReplyDeleteJust save all the pennies you come across that are dated 1981 and older - those are almost pure copper and they cost one cent. At 3 grams per penny, $.10 buys you a troy ounce of copper. And a troy ounce of copper (as noted above) is worth about $.28 - an immediate $.18 return on investment. If only the government would let us melt them...
Deletebullcrap
DeleteCorrect. There won't be enough people holding gold or silver to support any meaningful barter/trade. First thing, if necessary, I'll use are copper rounds. I'm going to do my best to keep hidden my other metals. The fruit and vegetables will rot while they are waiting for the few PM holders to come forward. My copper is my SHTF insurance. My PM's are wealth storage.
DeleteSounds like someone has never heard of silver dimes, quarters, or halves before. Silver comes in many amounts smaller than one ounce. You should check into that....
DeleteOuch! It sounds like somebody paid too much for their car insurance...or their copper rounds!
ReplyDeleteSeriously, cool your jets, Sparky. If you really want copper at somewhere near melt pricing, then fill up your piggy bank with old pre-1982 pennies. At the current pricing copper would have to increase by a factor of eight just to BREAK EVEN on your investment! And it is important to make smart investments as well as doomsday prep, just in case the worst happens and the world never quite goes to hell.
Yeah....... Let me know where you can find a few pounds of those pre 81 copper pennies.
ReplyDeleteyou can buy 100 dollars face value pre 82 copper pennies for around 170.00 on Ebay from several sellers. Since the copper penny is worth 2 cents in melt value its not a bad investment, but only if and when the ones holding our purse strings make it legal to do so. Junk silver coins in small denominations I think is the best investment in this current economy, and its legal to melt them. Wonder why? Copper is cheaper and can be made into bullets, thats why its illegal to melt them. Oh heavens no !! That might start an uprising against the government !!!! hahaha
DeleteI think the US Govt. continues to need the pennies and nickels in circulation coinage. Most people aren't even aware of the true value of an older penny or nickel, so they remain in circulation. Therefore melting them is illegal. Once the 90% silver coins were pulled out of the money supply when their silver content greatly exceeded their face value, the government had nothing left to lose. (See Gresham's Law - Bad Money Drives Out the Good).
DeleteThe copper rounds make nice gifts and many are nice looking but they just are not worth their weight. If your collecting for a possible SHTF scenario, stick to "junk silver". If your worried about having small denominations, load up on Barber or Mercury dimes. The numbers have always favored silver over gold.
ReplyDeleteI have found that if one looks at the collectors market rather than the PM market, when it comes to copper rounds, you are better off. I have found the coins with Ron Paul to trade at a rather nice return as do the "legalize it" or any other cannabis reference coin. Buy in the $2 range online and resell at $3.50 - $4. Many who buy even at the $4 know the value of copper and know it is not an investment, it is a memento. The sucker who thinks it is an amazing deal is the one who gets to buy as many as they want at $3 each. Either way, I end up at the silver shop, and not with the copper!
ReplyDeleteJust wait and see about the "collectors market" after a SHTF scenario like you are always mentioning. You might note that when things get bad, the collectors all seem to vanish. All except the ones looking to sell at pennies on the dollar compared to what they paid... and even at that they can't find any buyers. If you can find suckers to pay 6 times the spot price for a metal portrait of Ron Paul, more power to you, but there's a limited number of suckers out there. Investing is much safer than relying on finding suckers.
DeleteSpeaking of which I have a limited number of real copper relief portraits of Abraham Lincoln available for sale. Only half a Federal Reserve Note each. Want to buy some?
I read an article about a guy who bought a million dollars worth of nickles. At best, his investment would yield profit due to the copper and nickel content . At worst, he still has a million dollars. ( a million dollars worth of nickels is extreme but you get the idea behind it)
ReplyDeleteA million dollars worth of nickels would weigh 220,460 pounds, and require at least five 45-foot trucks with lift gates to deliver! You're talking $40,000 just to deliver this cargo, and monthly rental fees for storage. Assuming you can find someone in the future to buy this colossal load of nickels, it'll cost someone yet another $40k!
ReplyDeleteSorry, the logistics of nickels is haywire and makes no sense. Silver is a perfectly affordable metal that has a significant upside. Along with gold people have been using them as money for 5000 years. If it's not broken, don't kill yourself coming up with outlandish fixes.
One thing about it you forgot to mention. your pile of nickles would sure be theft proof. If you had a secure location that you owned outright, without loans, and knew you would never sell, and had a spare million you wanted kept safe, I couldn't think of a better way. Nobody would care to steal such a load. The value just isnt high enough to bother, from a criminal bent of mind.
DeleteAs with anything don't just buy. do some research. I bought my .999 pure copper 1oz rounds for .99 each. I didn't buy from the first web site google gave me. Yes they way we are headed they just may take the place of money. I for one don't wanna trade my silver for eggs. Cheaper items will bought with cheaper metals. I never bought mine to become a millionaire.
ReplyDeleteIf you're buying copper...rounds or bars, think long term. if you're looking for a quick flip for cash, of course its a huge waste of money. Look around and buy smart, there are deals. I'm loading up on bars and rounds, AND copper pennies. One day its gonna be worth a lot...believe it! Just try to see through to the other side. There is real barter and trade value in copper. Research China and South America and their copper demands. A small amount to round out a physical metals portfolio, isn't going to hurt anything.
ReplyDeleteMoney wasted is titanium and tin bullion. No real barter or trade value and investment bullion is way too expensive, especially Titanium.
Its stupid to do nothing and put all your money in to precious metals. A loaf of bread for gold? Sure, now there's using your noodle!
Why would copper rounds be worth anything when most homes are loaded with copper wires and copper pipes...makes no sense.
ReplyDeletePrepare for the worst intelligently...all those saying you'll need smaller denominations....they make them in silver rounds and older silver coins. Coppers too common to be a real investment for most people....and as mentioned, since you can't melt the pre-1982 pennies..plenty are around...
If copper is so common why do people strip it out of vacant buildings as fast as they can.
DeleteI know a local security company that said during the financial crisis people were stripping copper pipes off business rooftops while they were operating!
Sounds like someone wanted that copper badly!
Also nobody has mentioned that the 1 AV ounce bullion copper is cheaper in larger quantities (approx $0.90 per ounce on ebay as of 2/11/15) and that bullion copper is 99.999% fine where as industrial copper is much lower (except for the production of electronic semi-conductors which uses Alloy 101 OFE Copper).
So MEH!
Copper is currently trading for the equivalent of $0.16 per ounce. If you pay $0.90 per ounce for bullion copper, you're paying a premium of around 560%!
DeleteIf you're dead set on stocking up on copper, you may be better off dressing all in black and raiding construction sites on moonless nights! Rick
"bullion copper is 99.999% fine "??
DeleteI think you are confusing "fineness" with percentages here. Two different things.
Fineness is the amount of a metal in a sample of 1 unit, thus .999 means: 99.9 percent that metal, and .1 percent of something else, or 1/1000, one thousandth part of whatever unit being used.
The only way metals are sold down to five nines pure(.99999 fine, or 99.999 percent) is for laboratory use, and five nines fine silver costs more per unit of weight than four nines gold!
Having seen where a civilization went down the tubes, I can tell you from personal experience that copper will be traded and become the defacto currency almost instantly. In countries that were considered well off and then crashed (including Germany and Russia) during periods of unrest and reformation people were indeed pulling the copper from their walls. The problem is of course, that you can pull from your own walls and have no electricity (or ever have it again) or pull it from someone else's walls. The latter tend to shoot you for that. If you are looking to make money short term, then 'no' copper is not a real good investment. However, if you are buying it for some security, then as with all limited resources, it will gain value slowly, despite what the critics may say (the proof is in the growth charts)
ReplyDelete.16/oz for copper or .19/round for 9mm. Ammo seems better for barter and definitely has more bang for your buck.
ReplyDeleteAnd you cant buy copper for that 16 cents an oz. You have to pay one to two Federal Reserve Notes for a copper round at present. That would be more like three to six rounds per ounce. Seems like a better currency to me. At least it has other uses, like Romex wire would.
Deletei am going to go with copper it isnt about making a profit. it is about survivalpremiums to get copper may be high but in the long run will be worth it.from a money view if you had all 100 dallor bills and no ones fives tens twentys or fifties.i would rather have a ounce of copper to trade for food.no one gonna give me change for an ounce of silver or gold if the dollar crashes or the stock market.it makes sence to have copper gold and silver or any of the metals for survival because metals will allways have a value no matter what one you have cause they are used in everything.and why not own copper it is one of the most used metals on earth.take for instance the old west they traded the skin of an animal for food and other items they used all types of fur not just one.each type had a different value.and as far as values say you pay 50 thousand for an automobile do you have a 50 thousand dollar car when it is paid off no.you lost all that money and have what to show for it maybe a car that is worth 5 to 10 thousand dollars.think about this if all you had was gold.would you trade an ounce for a loaf of bread.people are looking at today and think copper bullion is a joke but will it be years down the road if you look at history it has a tendancy to repeat its self.you didnt see a lot of copper trade 200 years ago because the price on things wasnt that expensive look at the price on everything now and as we go forward things go up every year.so when it comes down to it in the end wouldnt you be better off will any type of metal then none of it at allyou wouldnt be so quick to judge a person if they stockpiled copper.say you and a friend go to get rid of what you have say you have copper and your friend has gold or silver the gold or silver may be worth more but the copper has more uses so in the future a person will be most likey intrested in the copper then the gold or silver this is why you dont see a lot of gold and silver used in cars computors wiring plumbing amunition and what ever else they use copper in.people can laugh at a person that gets copper bullion now but if you think about years down the road it does make sence to own copper and any type of metal reguardless the value of it think about this is the population going to go up or down the more people the more copper is needed and the supply could very well dwindle and i think it will so i will have copper bullion to.you know what happens when there is a shortage of something.in the 70s they had a gas shortage or they say so what if a person had stockpiled gas with as cheap as it was to get before the shortage how much money do you think the person would have had.how much profit if you are looking at it like that.look at what has happend with gold and silver the prices have skyrocketed but lets not forget they were once cheap to get to and people laughed at other people for buying them when the price was down. if you dont think copper will follow you should rethink the way you think.cause if all you have is gold and silver and someone wants copperfor what they are doing do you really think they are going to use gold or silver instead.and history repeats itself during ww 2 i didnt see the goverment making gold or silver bullits that is why there is a steel penny.the end result is to each their own. but remember this gas and oil prices didnt go up to the highs they are at overnightanother reason i am on board with copper. gold and silver started the same way as copper. money rounds and bars and then gold and silver eagles. lets see we have copper money now rounds and bars what if they did decide to make a copper eagle. after all copper is used to make coins and so was silver and gold dont let copper prices fool you.people pay a priemium to get gold and silver why would you not to get copper.
ReplyDeleteTotally on board with this idea. I think people are looking at what copper is doing TODAY rather than after THE BIG CRASH. Pennies bought a lot of stuff in the depression and that's where we are headed. Also I don't have enough $$ to get junk silver but I can afford copper and get alot more for my money than I can with junk silver. With my investment money I am buying silver rounds to have a nest egg. Also pt that you made, people are not looking at copper now. That's always the best time to buy knowing that a BIG CRASH is ahead. I would prefer the pre 1982 coins but if I can't get that i will buy the copper rounds.
DeleteI wonder why the US Gov. Doesn't mint a copper dollar. It could be solid copper and worth a real dollar unlike post 1964 so called silver dollars
ReplyDeleteIn a real sense the government does make copper dollars. The Presidential dollar coin is composed of 88.5% copper, 6% zinc, 3.5% manganese, 2% nickel.
DeleteI like commodities that are not popular.
ReplyDeleteIn Venezuela -- hyperinflation -- 4,000% and more. When hyperinflation hits the U.S., a copper round will be worth 40 times what you paid for it, don't you think?
ReplyDeleteFor hyperinflation fears I recommend buying silver. It’s an established precious metal anyone can afford at about $17 per Troy oz.
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