October 19, 2021
How much is a nickel worth?
Pop quiz:
How much would someone pay for a nickel?
Five cents, right?
Wrong.
Lemme tell you a little story about the 1913 Liberty Head nickel...
Summarized from Wikipedia:
The Liberty Head nickel, is an American five-cent piece. It was struck for circulation from 1883 until 1912. For almost thirty years large quantities of this coin were produced to meet commercial demand, especially as coin-operated machines became increasingly popular. Although no 1913 Liberty head nickels were officially struck, five are known to exist. While it is uncertain how these pieces originated, they have come to be among the most expensive coins in the world, with one selling in 2018 for $4.5 million.
That’s right...
Someone paid $4.5 million dollars for a nickel.
Why would someone do that?
Because a 1913 Liberty Head nickel is made out of $4.5 million dollars of precious metal?
Nope. They’re 75% copper, 25% nickel.
Because it took $4.5 million dollars of labor to create a 1913 Liberty Head nickel?
Nope. The Liberty Head nickels were mass produced for nearly 30 years. The five from 1913 where surely cranked out of the same factory, with merely a date change.
Because 1913 Liberty Head nickels are scarce?
Nope. My daughter’s surviving Playdoh sculptures are scarce, but people aren’t lining up to buy them for millions of dollars.
Here’s the thing...
Someone paid $4.5 million dollars for a 1913 Liberty Head nickel because:
- They wanted it really bad
- They had tons of money
- They didn’t see any acceptable alternatives
What something is worth comes down to three factors.
I call it the “Max Price Formula”, and it looks like this:
(Desire * Money) / Options
In the case of the 1913 Liberty Head nickel, there are only five known examples (i.e., Options are low), there are plenty of people with enormous buying power (i.e., Money is high), so the real question is...
Why would anyone Desire a nickel from 1913?
Hit reply and give me your best guess :-)
Yours,
—J