The Nickel-Hoarding Billionaire
by Al Doyle ………
Imagine being very wealthy – possibly a billionaire according to some accounts. If a person had that kind of capital, what coins would they buy?
At a minimum, some rolls of $20 Libertys and Saint-Gaudens would make a nice stash for a high roller. If rare coins are sought, anything from U.S. Mint issues of the 1790s to condition census rare dates in various series are definitely a possibility.
What if the wealthy numismatist was interested in nickels? The 1913 Liberty 5-cent piece that recently sold at auction for $3,172,500 is definitely the kind of trophy that attracts big bidders. Dallas-based hedge fund manager Kyle Bass has a serious interest in nickels, but he takes a dramatically different approach than what might be expected.
Bass could easily afford coins in the six-figure and up range, but (for now) he is targeting much more mundane pieces. The contrarian investor sunk exactly $1 million into U.S. coins, but his purchase didn’t require numismatic expertise or third-party grading. That’s because Bass purchsed 20 million common-date Jeffersons at face value.
Why would a guy who deals in big numbers and sophisticated investing strategies bother with lowly nickels?
At the time of the mega-purchase of 20 million circulated nickels in 2011, the coins contained 6.8 cents apiece in metallic value per planchet. Nickel and copper have dropped since that time, and the current melt price is just under face value according to the Coinflation web site. Since Bass paid face value for his nickel hoard, there was no downside risk.
Obtaining such a vast amount of 5-cent pieces obviously requires more than ordering the coins through normal channels such as armored car companies. This multi-ton request had to be filled by the Federal Reserve. When the Fed asked Bass why he wanted a cool million in Jeffersons, he calmly replied “I like nickels.”
The purchase involved deeper motives than what might be perceived as an eccentric act. Bass made his reputation on successfully betting against heavily indebted nations such as Greece and Ireland as well as the large pool of subprime mortgages in America. That naturally led Bass to invest in gold and platinum through his Hayman Capital hedge fund as well as with his own money. Since Bass has no fear in going against conventional thinking, the world’s largest nickel hoard wasn’t a huge stretch for him.
“We’ve bought a lot of this stuff,” Bass told a startled Lewis. In Bass’ case, he was talking about the real thing. No futures, no contracts, no “paper gold”.
“Not gold futures. You need physical gold,” Bass declared to Lewis. When the author asked Bass what investment advice he would offer to his mother, the reply was a blunt “Guns and gold.”
Want to invest like one of the most successful hedge fund managers of the 21st century? You might not be able to afford gold, but anyone who buys firearms, ammo and nickels at face value will be doing a dead-on Kyle Bass impersonation.