TAKING STOCK: Buffalo nickel not worth a New York mint

Dear Mr. Berko:

The Federal New York Mint is selling one-pound bags of silver-clad Buffalo nickels of various dates for $49, which includes a free stone arrowhead with each order. If there are approximately 45 to 50 nickels per pound (my guess) and if silver clad Buffalo nickels are worth an average of 75-cents each, about $35 per bag, then this sounds like a great investment. According to the New York Mint: "The market price for Buffalo nickels has risen 76 percent in the last ten years alone." I spoke to the Mint to ask if there would be a discount if I invested in 100 bags, about 5,000 nickels, and I was surprised that they offered me a 30 percent discount, which they said was at cost and would include five rolls of Liberty Head nickels from their excess coin inventory plus special boxes of arrowheads. Do you think this is a good 10 to 15 year investment? I hope you will respond quickly because the official at the Mint could only hold this price for seven days and needed a good faith deposit that I gave them for the purchase on one bag. My son, several other family members and friends are looking to buy these nickels too, and all of us are waiting for your approval.

TM, Wilmington, N.C.

Dear TM:

A wise man once told me: "If you want to understand the American psyche what you need do is understand baseball. But if you want to understand the naivete and stupidity of the American consumer, all you need to do is sample American advertising in the broadcast and print media."

When I read your email I thought you were serious. So I called, and after talking to you I discovered you're as serious as a bill collector. I've been to Wilmington several times and have close acquaintances that live there. It's is a charming, delightful city because it has charming, delightful people. But sadly more folks like you are falling off those turnip trucks that keep crossing the city limits. I tried to reason with you and help you understand why you'll never make a penny on those nickels. But you didn't want the truth because you're convinced this is a "once in a life time opportunity." And I know it's impossible to reason somebody out of an idea they haven't been reasoned into. But I'll repeat what I told you on the phone because other readers may be similarly enthusiastic.

I told TM that (1) The Federal New York Mint is not part of the U.S. government and it's not in New York. It's a private, for-profit corporation located in Burnsville, Minn., just north of Apple Valley. (2) All nickels, including the Buffalo nickels, are 75 percent copper and 25 percent nickel. The only silver-clad nickels were those made during WWII when nickel was a scarce war material. So there's no silver value in the Buffalo. (3) Those arrowheads are made in India primarily for export to the United States. You can buy them all day in New Delhi for a nickel and in U.S. western clothing stores for 50-cents. (4) The bag price of $49 is for one-quarter pound (4 ounces) of Buffalos, not one pound. This is clearly hidden in the small print in the middle of the advertisement. (5) There are 100 nickels per pound so a quarter-pound bag only contains 25 nickels. (6) If you include the $19 for shipping and handling, those 25 Buffalos cost $68. So you're paying $2.72 per Buffalo. (7) The Buffalos you get are low grade, not collector's quality and worth (wholesale) 30-cents each. (8) Only specific date Buffalos, graded MS 65 or better, enjoy a 76 percent, 10-year appreciation. (9) So in 15 years, if your Buffalos triple in value, you're still a lot of nickels out of pocket. And (10) the wholesale value of the very common, low-grade Liberty Head nickel is about $1. Any coin dealer in Wilmington will tell you that.

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Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775 or e-mail him at mjberko@yahoo.com. Visit Creators Syndicate website at www.creators.com.

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Published: Mon, Dec 17, 2012