What Happens When Pennies and Nickels Become Too Expensive?

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Saying it will “impact the deficit” is about as naive as one can get. When loose change becomes too expensive and officials start looking for ways to trim millions, as deficits and debts reach trillion-dollar milestones, it speaks volumes about the current state of affairs. Even worse, when politicians have to cut pennies and nickels from the budget because of gridlock, it provides little hope for real change.Uncle Sam Money New Feature 300x270

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Speaking at a virtual town-hall last week, President Obama expressed his outlook on the coin situation. Cutting production of the penny “is not going to be a huge savings for government, but anytime we’re spending more money on something people don’t actually use, that’s an example of something we should probably change,” he said. “The penny is an example of something I need legislation for; and frankly, given all the big issues, we’re not able to get to it.”

For investors wondering how to front-run any decision by the government regarding the production of coins, they may want to channel Kyle Bass. The Hayman Capital fund manager who correctly predicted the credit bubble, is a big believer in gold, platinum, and nickels. In Michael Lewis’ latest book, Boomerang, Bass reveals that he obtained twenty million nickels for storage, totaling one million dollars. He explains, “I’m telling you, in the next two years they’ll change the content of the nickel. You really ought to call your bank and buy some now.”

Naturally, there are laws about melting U.S. currency for its contents, but one can’t help but to imagine that the current Nickel would become a collector’s item if it receives a Roman makeover.

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