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2/22/2001 - Massive coinage

All of my non-Quarter coins go into Destiny's piggy bank. Or, rather, they go into a bowl on top of the TV, which Destiny then transfers to her piggy bank whenever she gets the chance. Quarters go into a little clay jar, for doing laundry, and Canadian coins go in a different jar, because the bank will only give them back anyway.

The last time we took the piggy bank down to the local branch of my bank, we handed it over to the teller and asked that it be deposited into Destiny's savings account. The coin-counting machine in back rattled and growled as Destiny & I discussed lollipop flavors. When the teller came back, she held out a handful of Sacajawea Dollars. "Do you really want these deposited?" Yes, I replied, declining to take back the gold coins. Destiny got her sucker, and we went home with an empty piggy bank.

The teller wasn't trying to be dumb; she works there regularly and isn't some part-time temp who doesn't know what money looks like. I suspect that she's more accustomed to encounters with Collectors -- the people who buy money at face-value, in hopes that it becomes more valuable than what the Federal Reserve assigns.

It can be a quite profitable and enjoyable hobby. Somewhere in my parent's house is a nearly-complete set of Lincoln head pennies that my brother & I assembled after spending hours going through a 5-gallon jug filled nearly to the top with small-denomination coins. Some older and rarer coins are in high demand, and thus demand high prices. I don't think I've ever encountered a valuable coin, but it doesn't stop me from setting aside stranger coins when I encounter them -- old Canadian pennies that have some guy's head on them instead of the Queen, those 1976 coins with patriotic symbols on the back, a $1 coin from a local casino which I forgot I had in my pocket when I left. Destiny has a little book designed to hold every variation of the State Quarters, but unfortunately we don't encounter 'P'-designated coins much around here. All together, I probably have $50-$100 in money that has more than a financial value.

I don't save the Sacajawea dollars, though. They weren't introduced into the marketplace so that people could slap down a $100 bill and get $100 shiny, new coins to stick in a box. The way money is reducing in value, a dollar isn't much more valuable than a quarter was 50 years ago. The larger the denomination, the less it is handled, and the less resilient it needs to be. $100 bills are rarely passed around, so they last a lot longer and cost less to produce. Usage increases as they get smaller in value, until we get the dollar bill, which is handled constantly. Two days ago I had 17 $1-bills in my wallet. By yesterday they had all been spent. There's no reason for such a highly-transfered piece of money to be made from paper, which degrades & falls apart the more it's handled. Coins, though they may be heavier, last much longer, and are not rendered useless just through normal handling. Coins, also, are actually made from valuable materials, which will still hold their value if something tragic happens within our economy.

The collectors who are stockpiling their Sacajawea dollars and statehood quarters aren't keeping them because of sentimental value, nor for their monetary value, and certainly not because of the value in melting the coins down for their metals. The people with hundreds of dollars worth of uncirculated dollar coins in their sock drawers are saving them based on the belief that someday, sometime down the road, someone will want to buy $100 worth of face-value for a much higher dollar amount.

Stockpiling doesn't increase the coins value, however. There may be a slight market in selling to late-comers, who were not able to get down to WalMart or their bank in time to stockpile before anyone else. Once everyone has all the coins they need, the market will cease to move. Value will drop, and I'm sure collectors would turn away from a "$0.25 each - Sacajawea Dollars!" bin at a coin shop, because they already have all that they need. None of the coins will be in circulation, and the US Mint will have to keep the paper dollars in use much longer. Or, they'd have to fire up a new set of Sacajawea dollars, each with a new year stamp, which will throw the collectors into another stockpiling frenzy.

The textbook answer is that things increase in value based on scarcity. Dollar coins may appear scarce in the marketplace, but there are plenty of them around -- in the sock drawers of everyone who had the same get-rich idea. Nobody has a blank spot in their collection where a gold dollar coin should be. Everyone who wanted a dollar coin probably already has one, thus destroying the market for the stockpilers.

What I recommend is this: Leaving 2 or 3 in your sock drawer, take your Sacajawea dollars out to your driveway. Get a heavy ballpeen hammer out of the garage, get out a bucket, and play tiddly-winks. One solid smack from the hammer to the edge of a dollar coin should pop that sucker up into the air, and with a little practice every coin will end up in the bucket.

After you've sufficiently dinged all of coins, go shopping. Put gas in your car. Buy a bunch of crap at thrift shops and sell it on eBay. Go to a movie. Do something worthwhile. Don't take them to your bank, though, because banks frown on damaged coins, but a flattened edge will be overlooked by most retailers. And, much to the benefit of the 3 coins you left in your stockpile, those damaged coins will also be overlooked by collectors. By taking 497 shiny dollars out of collector's circulation, and inserted them into marketplace circulation, you will have done some good. You will have increased the value of the coins you held on to, you marginally increase the value of every collectors coins, and you got something out of it when you went shopping. If you thoroughly considered your options, like buying groceries with dollar coins and investing the grocery budget, it's still possible to profit off those coins. With some foresight, you'll definitely profit far more by putting those coins back into circulation through strategic investment than to hold on to them. Tech stocks may be down, but they'll increase in value faster than the uncirculated coins in everyone's closets.

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