Wednesday, February 6, 2013

Why we no longer need ridges on the edges of our coins

Someone wrote in to the Big Site Of Amazing Facts, asking why some coins had ridges around the edges and others didn't.....

Perhaps you noticed that United States dimes, quarters, half-dollars, and silver dollars have ridges, or grooves, around their edges. They were not put there for decoration, but had a very important purpose at one time in history.
During our country’s earlier years, all coins were made of gold or silver, and did not have ridges. Each coin’s value was based on the amount of gold or silver in it. For example, a $10 gold piece contained ten dollars worth of gold, and silver dimes contained ten cents worth of silver.
But some dishonest people sought to make an illegal profit from these coins. They filed off the edges and sold them for their value in gold or silver. The smaller-sized coin often went unnoticed, but this dishonest practice decreased the value of the original gold or silver coin.
To prevent this, the government began milling, or grooving, the edges so a coin could easily be identified if it was trimmed.
This is no longer necessary, since our coins are no longer made of gold and silver, but our government doesn't want to advertise that fact.

However, because Ben Bernanke is print money like it's wallpaper, the scrap value of a nickel is now 6.8 cents!  The junk metal in a nickel is now worth more than 1/20th of Bernanke's paper dollar!  One entrepreneurial guy has purchased about twenty million of them.
Think about it....As long as someone has to give you 20 of our five cent pieces of metal in exchange for a worthless $1.00 bill.....

Here's Zero Hedge:
He (Kyle Bass) still owned stacks of gold and platinum bars that had roughly doubled in value, but he remained on the lookout for hard stores of wealth as a hedge against what he assumed was the coming debasement of fiat currency. Nickels, for instance.

“The value of the metal in a nickel is worth six point eight cents,” he said. “Did you know that?”

I didn’t.

“I just bought a million dollars’ worth of them,” he said, and then, perhaps sensing I couldn’t do the math: “twenty million nickels.”

“You bought twenty million nickels?”


“How do you buy twenty million nickels?”

“Actually, it’s very difficult,” he said, and then explained that he had to call his bank and talk them into ordering him twenty million nickels. The bank had finally done it, but the Federal Reserve had its own questions. “The Fed apparently called my guy at the bank,” he says. “They asked him, ‘Why do you want all these nickels?’ So he called me and asked, ‘Why do you want all these nickels?’ And I said, ‘I just like nickels.’”

He pulled out a photograph of his nickels and handed it to me. There they were, piled up on giant wooden pallets in a Brink’s vault in downtown Dallas.

“I’m telling you, in the next two years they’ll change the content of the nickel,” he said. “You really ought to call your bank and buy some now.”

He's right.  Take a look at the dollars in your wallet.  Every one of them is made out of paper.  


John Tagliaferro said...

I began wondering why they did not just dip the gold coins in arsenic(?) or some other easily found solvent, rather than going the mechanical route that can be discovered easily. Pretty sure something else works on silver too.

Marshall said...

I was taught in school that the ridges were for blind people.
grab any two similar sized coins, and one will have ridges, the other smooth edges.

MingoV said...

The government knows he bought the nickels. He will not be able to sell them for their metal value because Congress enacted a law in 2006 that outlaws melting pennies and nickels. It also is illegal to export the coins and have them melted outside the USA. Bass blew it.

The Whited Sepulchre said...

This will be like their laws outlawing weed, gay marriage, and 16 oz sodas in NYC. Screw 'em.

The value will still be there in the metal, regardless of what some photogenic social climbers with delusions of adequacy vote on. If Bass wants to melt down some metal, he's going to melt down some metal.

Great investment. Give the bank two Bernanke bucks in exchange for a two dollar roll of nickels that's worth $2.72 as scrap. And the more paper that they have to print, the more the nickels are going to be worth.