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LargelyIgnorant

Gresham's Law

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Gresham's law is commonly stated as: "When there is a legal tender currency, bad money drives good money out of circulation".

In 1992, the 1p and 2p coin were changed from solid bronze to copper clad steel.

Like many people, I had a load of 1 & 2p coins sitting around. I've put all the post 1992 copper clad steel coins into coin bags, ready to deposit in my bank account.

I've separated all the pre 1992 coins, and intend to keep them in a box in the garage and will end up with a lot of bronze if I contiune to do this over the years.

Bronze is $2.80/lb

Which equals £1.42/lb

A 1p coin weighs 3.56g

3.56 grams = 0.00784845653 pounds

-> A bronze 1p coin has an intrensic value of 1.11p

and

2p = 7.12g = 0.0156969131 pounds

-> A bronze 2p coin has an intrensic value of 2.23p

My question is, looking 30-40 years out, would I do financially better to put the pre 1992 coins in the bank too, or will inflation mean that the solid bronze coins is a better long term bet?

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I also keep the pre 1992 copper coins, I expect that the price of copper in sterling will rise even more over the next few years and this will cause a great deal of the coins out there to be melted down, this is what happens durring a high inflation.

Now if we are talking 30-40 years out, its not just the price of copper that could give them value, even if the price of copper comes back down in sterling. The fact that most of them have been melted down could give the remaining ones a rare value.

Spinks coin cataloge recomends that you DO NOT CLEAN coins at all, as this would destroy any rare premium that they could have in the future, eg: a 1902-10 penny can be worth upto £7 pounds, but if you clean it, there is nothing to date it and it would lose 90 percent of its rare value, as it could then just be a fake that has been made recently.

Copper coins should bever be cleaned or washed, they may be lightly brushed with a brush that is not too harsh.

Also there is this link from the telegraph last year

http://www.telegraph.co.uk/news/main.jhtml...2/ixuknews.html

Edited by enrieb

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