Hoarding rolls of pennies as investment
Daniel Dayan admits that some people think his investment strategy is a little weird.
Mr. Dayan, a 36-year-old producer of body piercing jewellery from the Montreal area, has what you might call a buy-and-hold approach. When he heard Canada was eliminating the penny, he bought three million of them, going to the bank and taking home a box once a week until the government removed them from circulation last spring.
Mr. Dayan believes he’ll quintuple his money by selling them to collectors in 10 to 15 years. By that time, he thinks Canada will have eliminated all physical currency and moved to completely digital payments.
“Everybody thought I was crazy,” Mr. Dayan said. He said he convinced a few friends of the plan’s wisdom, but “the rest are zombies, I don’t know. You give them the proof, you give them answers but they don’t listen.”
At a time when some investors are speculating on the digital currency Bitcoin, others are taking the opposite approach. On YouTube and Internet message boards, there’s a community of people who take to the Web to show off their finds from purchasing and sorting through massive amounts of pennies, nickels and dimes.
Some coin roll hunters, as they’re called, are hobbyists, sorting through boxes of coins for additions to their personal collections. But others are in it for profit, looking for coins from years when the metal they were made of is worth more than their face value — like Canadian pennies made before 1982, which are actually worth about 2¢ in copper if melted down.
Dan Cauley, a 31-year-old arborist, said he takes home hundreds of dollars in coins every week to the “small suburban area” where he lives — he wouldn’t elaborate, for fear of attracting competition. He said he mostly does it as a hobby.
“Coin roll hunting is a high volume, low return process. Very large volumes must be gone through on a consistent basis to make any finds,” Mr. Cauley said in an email.
Jean-Paul Lam, an economics professor at the University of Waterloo in Ontario, and a former Bank of Canada economist, said mistrust of the international monetar y system helps explain both interest in both crypto-currencies like Bitcoin and the cold, hard cash from precious metals obtained through coin roll hunting.
The strategy has a road block, however — it’s illegal to melt coins for their metal value, even out-of-circulation pennies. Mr. Lam said Mr. Dayan may be right that his pennies will increase in value over time, but he would be wise to increase his time horizon and lower his expectations.
“Five times? Maybe it will increase by a few percentages over the next few years,” Mr. Lam said. “Find a good stock or something like that. I think he will find a better rate of return there.”