Friday, December 3, 2010

Simple Investments for Inflationary Times

I've been beating the drum on the coming inflationary times, and commenting on where you can see it right now.  In the last few weeks, the story has been breaking that JC Penney, the GAP and some other clothing stores expect cotton prices to be up drastically - perhaps 30% - by the spring - just three months away.  That doesn't necessarily mean clothing prices will be up 30%, but the amount of increase in materials pricing the clothing companies can absorb isn't that great.  It's entirely possible the price we pay may be up 25% or more by April. 

With Christmas coming, and Hanukkah in full swing, clothes may be appreciated as gifts; it's hard to get more practical.  If you're going to need to replace some of your clothes soon, make it sooner rather than after the price increases. 

Another practical item is always food. With food prices going up now, and worse inflation to come, any food that you can put away is worth grabbing when you can.  Every store runs specials: when they have a "buy one, get one" or some such offer, take advantage of it. 

Don't overlook coins.  This isn't a very well kept secret, but the US nickle is currently worth over 6 cents in melt value.  That means if you had 5 nickles, they're worth over 30 cents, not 25, and you can see that the more you have the better off you could be.  US coins have been devalued many times over the years; in 1965, they stopped minting silver quarters, dimes and half dollars, and changed to a sandwich of copper and nickle.  The penny became copper clad zinc in 1983.  1982 and earlier pennies made of solid copper are worth 2.6 cents in melt value, and are still out there in circulation.  With nickles at 125% of face value, they can't make them the same way for too much longer, especially with inflation being designed into the system.  Will they try to remove the old nickles from circulation, like they did with the silver certificate dollars in the 1960s, or just substitute cheaper versions, like they did with the pennies in 1983?  I don't know. 

It couldn't hurt to keep nickles and copper pennies you get.  Even if they don't buy them back, there may be opportunities to sell them at the real melt value. 

1 comment:

  1. My wife and I have been collecting our coins ever since the metal value of the penny exceeded the face value (back in 2006 I think). We've got well over 200 dollars in face value coins, and several thousand of them are pennies. I don't know how many are solid copper, but I'd imagine quite a few of them. Some day I'll sort them, some day when I'm real bored. I also stash any silver coins that I get (quarters, half-dollars, silver dollars, and at least one liberty half-dollar). It was her idea, I'm an exact-change kinda guy, but she figured it was a good idea and now I think she's right.