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KAI RYSSDAL: A penny’s not going to buy you very much these days. There aren’t even many truly penny stocks left out there… eBay’s got a few things listed for one one-hundredth of a dollar. But your computer probably doesn’t need a floppy disk drive anymore now, does it’
No wonder we toss them into jars on our dressers. But with the price of copper near record highs, some people are banking on pennies paying off big. Mary-Rose Abraham reports.
Mary-Rose Abraham: Here’s what you’ll find in Todd Kraemer’s garage at his home in Michigan: an SUV, a large collection of tools and equipment, a few boxes of odds and ends… and four tons of pennies.
Todd Kraemer: So now I’m probably about 1.1 million pennies, and I’m adding something on the order of maybe a 100,000 copper pennies per month.
That’s about $11,000 in pennies. And Kraemer, whose only been collecting them for a year, isn’t even particularly fond of the coins. He sees them as an investment.
Kraemer: I’m quite happy to pay one penny for something that’s worth 2.2 pennies.
Or something that might be. Pennies before 1982 are 95 percent copper. Based on the current price, the copper in a pre-’82 penny is worth about 2 cents. So Kraemer figures his penny stash is really worth about $24,0000. And he’s not stopping at that. He visits about eight local banks a week where the tellers know him simply as “the penny guy.”
Kraemer: Most of the banks I interact with think I’m outright crazy. You walk in with a few pieces of paper that fit in your wallet, very lightweight, and then struggle out the door with 120 pounds of metal.
About one-third of the pennies will be worth their weight. The rest Kraemer rolls up and returns to a whole other set of banks, what he calls “dump banks.” He used to sort the coins by hand. Now he has three machines that separate the pennies based on weight.
It’s hard to know how many penny hoarders are out there. RealCent, an Internet forum, has 500 members with names likes Penny Prospector and Metal-o-phile. Andy Redlon goes by Ryedale. He invented the coin sorter — also called Ryedale — and says he’s sold about 100 of them in the U.S. and Canada.
Andy Redlon: I have engineers, accountants, doctors, lawyers… People that are just generally aware of the intrinsic value of metals in general.
Copper prices have almost tripled over the last three years. That’s according to Jonathan Day, a senior broker at Cannon Trading in Beverly Hills. The firm deals in copper and other commodities. Day thinks hoarding pennies is an iffy investment strategy.
Jonathan Day: Like anything, there’s a possible chance of a good return. But there are a lot of factors that are going against you with your penny investment.
Starting with the fact that it’s illegal to melt down or export pennies and nickels. Violators face a fine of $10,000 or five years in prison. Hoarders say they’re waiting to see if the year-old ban will be lifted. But what they’d really like is for the penny to be retired. Then they can legally turn their coins into scrap metal.
Day: You’re basically banking on the hopes that the penny will be discontinued.
While they’re waiting for that, hoarders might also take a closer look at their millions of coins. There may be something really valuable buried in there, like a 1955 double-struck penny. One of those could be worth thousands of dollars. Then hoarders would really be getting their two cents worth.
In Los Angeles, I’m Mary-Rose Abraham for Marketplace.
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