element47 said:
I saw that video. I cannot deny the video of the man standing there, apparently in his warehouse, with his forklifts, with the racks of pennies, with his Ryedale separator machines, with huge tubs full of copper pennies. I can't see the feasibility, unless his rent is free, unless the fuel for his forklifts is free, unless his insurance is free, and he and his employees are willing to work for free. But you know, I don't know everything, in fact there's a lot I don't know anything about. I really, really do not get how he pays any sort of nominal overhead out of whatever margin and storage fees he's able to create. I recall that $200K figure, as well. Vault rates (to the customer) typically run about 1% a month. That's $2K a month. From which I assume he pays his 10,000 sq ft warehouse rent. And wages. And the security monitoring. Get my drift?
Haven't seen the video, nor researched tons of exact pricing, but ran across this post and had some ideas that might make this a bit more enticing than your description;
- 1. Let's presume the face value of the pennies is $200K
2. (a bit of a wild-card here, though pretty important in the final figures) - Just what did he pay for them?
- a. and he acquired them at/near FV
b. acquired them on consignment, with a promise to pay X% as he sells them off (most likely, with NO up front costs!)
c. acquired them at 2X or something and anticipates sorting them to find 'good' ones (most unlikely)
3. he sells them at 3x plus 'minimal' storage fee of $25/m per pallet, $15/m 1/2 pallet, $10/m quarter pallet (minimum)
Ok, with all that, is there any money to be made?
YES
First, there's that 3X - X% to look at - what if X% were as "HIGH" as 150% (what many would consider an "unreal" ROI - most would take much less)? There's about $300K profit....
even if folks were 'in the know' about copper prices and wanted the whole 300%, there's STILL money to be made
- you can put a LOT of pennies on a pallet and taking your $2000/m figure for the vault space,
- One penny has a weight of 3.11 grams
3.1 grams = 0.00683433013 pounds
http://www.enno.com.sg/manutest.html states their pallets will hold a 'stagnant' weight of 1650 lb (750 kg)
approx. 241,000 copper pennies per pallet (taking into account some weight is lost to containers, etc.
At that, to store $200K of pennies takes about 83 pallets, bringing in about $2075/m. That is presuming that each pallet ($2410) is bought by one person (not likely). If you sell them in $1000 lots (a nice number), then you are charging $15/m, which creates more like $2490. Now, take that one more time and sell them in $100 lots and charge the $10/m storage rate (seems a bit high to me, but hey, we are dreaming here...), you get to some pretty serious cash - $240/m per pallet = $19,920/m! (note that even if this is stored in a vault and not palletized, these numbers still work, they just may need a bit of other language)
My bet is that the pennies were purchased in bulk at $.015 or so - certainly less than $.02, from folks that want to get rid of the bulk storage after they sorted through and took the 'good ones' out of there. The money was made from the good coins, then they sold the bulk off for what they had in them, etc. (my coin store sells bulk bags like this) and that a combo of the storage scenarios above are done (bulk discounts, etc.), but I can see where there is some cash to be made on such a deal.
As for other bits you mentioned about forklift gas, employees, etc., I think there isn't much of that needed. Once the pennies are 'on the shelf' (with the warehouse charging a few bucks per pallet for each in/out movement), the only 'work' is keeping track of the numbers - who owns how many 'shares' basically - a simple spreadsheet.
Then, of course, there is that 'work' of getting out some good marketing - to the point folks will talk about this venture and wonder just how he's making any money!
