The Ongoing Nickel Saga: Time to Hoard Nickels?
The Sudden SPIKE in Nickel Prices
What was supposed to be a 24 hour trading suspension has become extended to the end of the week. The London Metal Exchange is concerned about what will happen when the Nickel market opens up again.
Nickel is traded by metric tons and is usually traded around $10K - $20K. Suddenly, without warning, nickel spiked up OVER $100K before trading was terminated. We don't know how high it would have gone if the market wasn't immediately shut down.
The current "offical" price is frozen at $43K. This is so the media can say "2x" or "doubled" so as not to alarm everyone.
Why did they freeze trading? Why has the freeze been extended until the end of the week? What do they know that we don't know?
A Reassuring Forecast
The website Trading Economics assures the public that once trading is resumed, nickel prices will return to normal levels.
There are several problems with this chart. First is that the spike up STOPS at 43K, when in reality it exceeded $100K. Second, we don't know how long nickel trading will be suspended. At first it was 24 hours, now it's 96 hours, what will be next? Finally, the trend shows a leveling out, that even if trading normalizes, ignores the overall upward trend.
"96 hours to stop the SPIKE". LOL.
Nickel is NOT Scarce
What is odd about nickel prices going up so drastically is that nickel is a very common metal. It's sold by the ton.
Should We All Start Hoarding Nickels?
The short answer is probably no, maybe yes. A US nickel only contains 25% nickel, but with nickel currently 3.6X the price of copper, that 1/4th is worth... $0.047 just for the nickel content. Add in the copper and it's almost $0.09
Not a bad deal, a nickel is almost worth a dime in terms of metal content!
A True CANADIAN Nickel
99% PURE NICKEL
The term "nickel" for a 5 cent piece originates from Canada, when in 1922 the silver 5 cent piece was replaced with a pure nickel coin. If you have a Canadian nickel minted between 1922 - 1942, it's nearly 100% nickel content.
Fun Nerdy Math
If we assume a metric ton is currently priced at $100K (probably more), that would make nickel $0.10 USD / gram.
4.54 grams x $0.10 USD = $0.45 nickel per nickel
A 99% pure nickel nickel is almost worth a half-dollar in terms of metal content. CRAZY!
Interestingly, 1 metric ton (one million grams) of pure nickels (1M grams / 4.54 grams per nickel = 220,264) is a face value of (220,264 x $0.05 CAD = $11,013 CAD). Converted to USD = $8590.00 USD.
$8600 USD, right about where a metric ton of nickel should been priced at!
Bless the Most High!
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Thanks again for keeping us updated & informed, with your reporting, Ironshield - @ironshield. Have you checked out, the current Zinc, US Cent, on Coinflation? Another interesting fact, on Coinflation, the metal content, value, of a current, US Nickel vs US Quarter, would be equal, if the Nickel...
A $2.00 nickel roll from the bank contains $3.44 worth of metal!
The melt value for a $0.05 nickel is the same melt value of a $1.00 USD coin. So messed up.
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Wow, yes, unbelievable, Ironshield - @ironshield. I have sourced Coinflation, for decades, and never noticed, that, even better analogy, of the current dollar coin. Great update.
Nice post. I have been collecting nickel nickels for years. The time to hoard them began in 2015 here in the US corptocracy. Chears to many years.
Good move! Every "nickel" contains 1.25 grams of pure NICKEL!
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Great post @ironshield. Great data and interesting thoughts to ponder.
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Thank you!
Markets are emotional. And during stressful times such as this, they can become even more irrational. The price of nickel may just be a sign of that.
But shutting a market is never, ever the answer!
One of the things I have learnt in my time in the markets, "the solution for higher prices is higher prices".
Higher prices allow the creative human mind to look for profitable solutions. In this case finding ways of replacing nickel with something equally suitable and cheaper.
This time will be no different.
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Quite possible. Most likely it's simply someone cornering the market, or maybe the first hole in the dam.
Totally agree! Not only shutting the market, but keeping it shut for a week! What's the plan?
That's fun stuff to know. I wonder if it would be useful to start hoarding them quickly here haha. But I bet those that are selling them are well aware of this price jump so never mind :)
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Some banks don't even offer coins anymore, I wonder if nickels are about to disappear from circulation?
This stuff is always fascinating. I've been hoarding coins for years now. I never spend any of them. Of course it's not like I'm getting much every day. Maybe a couple dollars a week in change. That doesn't add up very fast. It's interesting to see that the "most valuable" coins are actually the ones with the least face value; pennies and nickels.
Out of curiosity, how realistic is it to actually melt down and separate metals for their base metal value? It would seem like it might be "fun", but unless you are doing it on a large scale, I would think it would probably cost more to set it up than it's worth.
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Good observation, I noticed that too. Last I checked, you can purchase copper pennies on ebay for about 0.02 each. Maybe the price has gone up.
People have done this for years, although destruction and resale of coin metals is highly "frowned upon" by governments when/if they ever find out about it. Frowned upon as in $10,000 fine and or imprisonment. https://abcnews.go.com/Business/story?id=2725597&page=1 So don't, under any circumstances, be found melting pennies or nickels.
I recall something similar happening in the past about copper or something like that. So I think I would avoid buying nickel as it tends to be way too bulky. Do you think it's just a supply chain issue and would it be solved if technology improved mining?
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It's tricky to say, it's been suggested that because of the action in Ukraine, there's been a sudden surge of demand for stainless steel and the supply of nickel (a critical component) is very low. Nickel is abundent, but it will take years to implement technology to improve mining and supply. Unless the price drastically drops as soon as trading resumes, high nickel prices might be the new normal.
Been busy in crypto space that I lost tracking the market price of my two favorite local nickel companies: Nickel Asia Corporation and Global Ferronickel Holdings, Inc. Many traders use the price action of top nickel companies in the US market as trading indicator the following day. I just noticed that after a two-day rally and a healthy retracement, it seems that another run is about to take place.
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I can't help but wonder if this is the first sign of an inflationary issue. Commodities always "float" on top of weakening money, so these prices spike first. Also, the prices of many commodities are artificially suppressed, but if the mechanisms fail, we may see real market value reveal itself.
It could be. If in crypto space, the diamond hands are appreciated, I think in commodities, especially the precious metals like gold and silver, similar stronger hands are needed. Benefitted for some time since 2015 trading stocks in this sector. Once I see long-term convincing trends, perhaps that's the time I would revisit my watch list.
I love nerdy math! Especially nerdy economic math! The spike on that nickel chart reminds me of cryptoworld when a coin pumps, that's crazy! This does make me happy about my penchant over the years to save rather than spend coins, yay! Interesting times for sure.
Oh, and speaking of all things nerdy, I came here in a roundabout way from Listnerds, awesome article!
Math and I have a funny relationship: I like it when it helps me understand something, I despise it when it's pointless. Thanks for visiting from listnerds!!!! Getting a bunch of dv's on my mails, I need to do better or no listnerd tokens for me!
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Okay, now I am curious about the pointless math comment, I mean, I thought that was how people who got some of those more interesting grants made a living😁
That said, you need Nerdvotes! Now that I have my blog post done for the day I'm heading over that way.....
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Some math is a form of magic, it takes imaginary information and makes it seem real and practical. It's pointless, because it's complicated and never ends and useless... And those grants perpetuate a lot of pointless math. Interesting, but pointless.
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All metals will go up in value i think with inflation the way it is and the fact that a government can block your internet access, physical precious metals are making more sense these days.
Also i think i don't know for sure but it could be possible you need a lot of metal for war.
Just saying
Great post @ironshield
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Thank you for your comment! Even with blockchain, we're seeing there are some steps the government can make that will make electronic trading dificult.
Sort of like gasoline/petrol, get it while we can afford it!
Wish I was notified much earlier lol!
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Still looks like as good of a deal as yesterday. I would be afraid I missed the up spike. I will watch for now. Thanks for the info
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This has happened before, on a smaller scale, May of 2007. I suspect trading will be suspended until the trades become normalized and it will appear as a sudden plummet in value. Market manipulation is very common. My guess is that "war-time" emergency something-or-other will be used to manipulate the price back down, but it may take weeks. We are not allowed a free market... only a "stable" market.
In the meantime... how much are people paying for their nickel supply?
Third time in less than 24 hours.
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Third time what? Do you have a source link?