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How the Ukraine Disaster Led to … Nickel Hoarding


In economic-speak, the Ukraine crisis has been a “supply shock.” In English, that means that in the United States you’ll now find record-high gas prices, liquor stores devoid of Russian vodka, and … uhh … Americans heading into their local banks and politely asking for hundreds of dollars in nickels.

Let me explain. Russia supplies more than 20 percent of the world’s high-quality nickel, which is a crucial component in everything from stainless steel to pipes to the batteries that power electric cars. But with Ukraine under siege, companies in the West have been wary of buying Russian nickel. This has increased demand for nickel from everywhere else, which, in turn, has bumped up its price on the London Metal Exchange. What happened next is as close to a Hollywood blockbuster as commodity finance can get: A Chinese businessman nicknamed “Big Shot,” who bet that nickel prices would fall, had to cover his mounting losses by buying back shares, shooting the stock somewhere into the exosphere. Within the span of 24 chaotic hours last week, the price of nickel rose 250 percent, forcing the London Metal Exchange to halt trading for the first time since 1985.

During all of this, of course—of course—some Americans found a roundabout way to make some money: hoarding nickels. Yes, the coin is worth just five cents, but the metal it contains—75 percent copper and 25 percent nickel—has long been worth more than that. According to Coinflation.com, a website that tracks the value of the metals in coins, the “melt value” of a single nickel currently stands at eight cents. Last week, during the height of nickelmania, it ratcheted all the way up to 16 cents. Actually melting down those nickels for profit is illegal, but that hasn’t stopped opportunistic investors from zigzagging between banks and credit unions to gather nickels, with the hopes of one day selling them off for more than five cents. Forget bitcoin and dogecoin; this small community of financial speculators is pouring money into real, physical coins.

Scooping up coins for their metal is, in fact, an age-old tradition. Five-cent nickels were first minted in the 1860s because Americans were squirreling away gold and silver coins during the Civil War. Over the past decade or so, a small but spirited subculture of prepper types has been hoarding nickels as a contingency plan against inflation Armageddon. According to Boomerang, by Michael Lewis, the hedge-fund manager Kyle Bass owns $1 million in nickels that he stores in a vault in Dallas.

Now that nickel prices have gone haywire, hoarding suddenly seems to have hit it big. In pockets across the internet, people are plotting ways to add to their nickel stashes and flaunting their hauls. On Reddit’s Wall Street Silver channel, users who call themselves “apes” (an apparent reference to silverback gorillas, because, you know, silver) are falling deep inside the nickel vortex. One post of a cardboard box plastered with $100 NICKELS is captioned with “I know a guy that works at a bank. He said he had one unopened box of nickels left …” The top comment: “Like Charlie and the Chocolate Factory—you got the golden ticket.”

On Realcent.org, the OG forum for coin hoarders, where bitcoin enthusiasts get branded as “crypto-cultists,” all the new competition has been met with a swirl of exasperation, frenzy, and paranoia. “The teller said ‘everyone hates nickels,’” posted a user who claimed to have just snagged some coins from a local bank. “Not for long, HAHA. 🤫” Another hoarder fretted about “the real social threat”: Oprah or a Kardashian tweeting about nickels.

As far as I can tell, most of these hoarders aren’t actually turning a quick profit off of five-cent coins by surreptitiously smelting them down in their backyards. “My plan is just to sit on it and see what happens,” Mark Pacino, a hoarder in the Los Angeles area, told me. “Worst-case scenario, I can just turn it back to cash.” When Pacino heard about all the nickel madness last week, he told me, he called up his bank and asked for $500 in nickels—his first foray into stashing the coins. The branch manager would supply him with only two $100 boxes, each weighing more than 20 pounds. “Everything was like a normal transaction,” he said, “until I went to pick up the nickel and the guy who brought them out from the back was asking me questions like, ‘So, are you a coin collector?’”

Clark Boyles, from West Virginia, had a tougher time at the bank. “I walked up and just told the two ladies at the front, ‘Can I have $100 in nickels?’” he told me. “They laughed me out of the bank.” Nevertheless, Boyles said he’s managed to snag $300 in nickels in recent weeks, and he’s hoping to land $700 more. Like Pacino, Boyles’s long game is to hedge his bets, preparing for a world in which nickel prices are so persistently expensive that he could sell his coins for more than their face value. Bass, the famous hedge-fund manager, declined an interview, but in an email he pointed to his nickel stash—which weighs 220,000 pounds, or by my calculations more than six empty 18-wheelers—as a way to teach his kids “the basic ideas behind central banking and the money printing press. It was an exercise in how the world works and what we, as a family, could do to defend against inflation.”

On the whole, nickel hoarding is still a niche interest. Sherri Reagin, the chief financial officer of Indiana’s North Salem State Bank, who serves on the U.S. Coin Task Force, told me that none of the bank’s nine branches has seen any noticeable increase in requests for nickels. This is probably for the best. No economist I talked with advised pulling out your 401(k) and going all in on nickels. Even so, I was surprised that they said the basic logic holds up. “I’ve thought it over and I’ve decided I’m not going to rush down to my bank and take out $1,000 of nickels,” Terrance Odean, a UC Berkeley finance professor who studies investor behavior, told me. “But of the things people do—I’ve seen a lot crazier.”

What makes nickel hoarding different from so many other shades of investing where your money could go kaput is that five-cent coins will always be five-cent coins, regardless of the value of the nickel they contain. The upside is potentially quite big. The U.S. Mint already lost $61 million by manufacturing nickels last year; maybe one day, the composition of the coins will change, or they’ll be discontinued outright. At that point, the ban on melting down nickels would likely go away too, Odean said. If not, maybe coin collectors—actual coin collectors—would want to start snatching up the newly extinct currency.

Just don’t count on nickel doomsday happening anytime soon. While the pandemic has pushed Americans further away from cold, hard cash, even pennies are still here. “Just given the experience of the penny, I don’t see us getting rid of the nickel anytime soon,” Robert Whaples, an economist at Wake Forest University who has studied the effects of going penny-less, told me. The more fundamental problem is that inflation can cut both ways. If we eventually hit the type of hyperinflation where people light $20 bills on fire to stay warm, then a nickel stash would more than pay for itself, because of the metal’s lingering value. If not, then the slow creep of inflation will just eat away at America’s nickel piggy banks while hoarders manage all the logistical headaches of storing coins in such ungodly quantities. In 2019, the blogger JP Koning crunched the numbers on Bass’s nickel stash and determined that, accounting for storage, forgone interest, and inflation, he was already down roughly $70,000 on his initial $1 million after eight years.

Five-cent coins, after all, will always be five-cent coins. In the 1930s, a nickel could get you a bottle of Coke. In the ’60s, it could get you a stamp. In the ’80s, it could get you a piece of gum. But good luck finding anything for that much these days.

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