“If you find any of these coins floating around, you may want to begin saving them..”

Explaining Addison Wiggins' "Last Legal Currency Loophole in America."

By Travis Johnson, Stock Gumshoe, January 9, 2013

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Well, we’ve already covered one non-stock idea this week (that was the “Phi Account” pitch about philatelic investments) … so we might as well jump right in and look at another. This time, it’s a lot easier and is based on pocket change.

And no, it’s not the same pitch for pre-1965 coins that have silver content, or for the oddball 40% “magic” silver half dollars that were teased by Dr. David Eifrig a few months ago … this is a tease for Addison Wiggins’ Apogee Advisory newsletter about coins that are actually in heavy circulation right now and easily available.

So what’s the story? Well, here’s a little taste to get you started …

“Simply holding on to these coins could be the safest (and easiest) investment idea we’ve found in the 32-year history of our business.

“And it turns out that it’s an idea that’s been hiding in our pockets the whole time.

“Here’s the thing… Chances are — if you’ve purchased anything in the past 24 hours — you’ve probably laid your hands on this coin.

“Looking in my own pockets, for example, I have three of these coins right now. You probably have a similar number in your pockets. Or underneath your couch cushion.

“And I bet you have dozens, even hundreds, sitting in piggybanks and coin jars around your house.

“What you may not know is how valuable this coin could soon become.

“In fact, when I first heard the projections of how it could double my money in the coming months, I laughed out loud.”

The basic idea is that you should start hoarding these coins because the current ones will be revalued in the marketplace after a projected future event that they think will happen soon — and they go back in history to give a few examples of this happening.

The examples you might remember are two fairly clear ones …

… in 1964, they changed the makeup of coins and effectively stopped backing the dollar with silver. Starting in 1965 quarters, half dollars and dimes were no longer made of 90% silver, and right away people started hoarding them, hoarding that continues to this day if you ever happen to come across one of these older coins. A beat-up 1964 dime is worth about two bucks, a similarly well-used 1965 dime is worth ten cents, so it just makes sense that you don’t see these coins in circulation any more unless you find an old piggy bank in the basement — almost all of them are being held and traded for their silver content, and this so-called “Junk Silver” has fueled many newsletter teases in the past. It is often the cheapest way to buy physical silver.

And in 1982, they changed the makeup of pennies to make them 97.5% zinc — they had previously been 95% copper. So as copper prices rose, some people started hoarding pennies. This wasn’t quite as dramatic as the silver switchover in 1965, but a 1982 penny does have enough copper in it that if you melted it down it would be worth about two cents — so people do hoard these and trade them as a play on copper. Actually, from time to time zinc prices spike, too, and have meant that sometimes the modern penny is worth more as a hunk of metal than it is as currency, though now the zinc value is down to about half a cent per coin.

The other example he gives is good ol’ Emperor Nero, who apparently secretly cut the silver percentage in Roman coins and spurred what may have been the first “coin hoarding” episode in history, in case you’re curious. Stock Gumshoe has an audience that tends to be relatively advanced in age compared to other websites, but even so I expect none of you remember that one.

So what’s next? Here’s a bit more from the ad:

“… the unique U.S. Mint “error” that I’d like to tell you about today…

“Unlike any other investment opportunity I’ve ever found, this one is the safest.

“There’s virtually no way to lose money on this.

“Next, it’s also 100% free of any costs.

“No commissions. No transaction fees. Totally free.

“Finally, it’s 100% anonymous….

“And best of all, this little-known “error” allows you to potentially make an instant 14% gain.

“In the coming years, the gains could run as high as 228%-plus….

“And some of America’s wealthiest investors are piling in, too…

“Take Kyle B., for example.

“Kyle B. manages a hedge fund in Texas. He was one of the few that got the housing market bubble correct… making his investors 440%.

“What’s he doing with his money now…?

“You guessed it.

“He’s hoarding the coins I’ve been telling you about in this letter.

“He recently walked into his local bank… and exchanged dollars for 20 million of these coins.

“‘You really ought to call your bank and buy some now,’ says Kyle B.”

“The last time this loophole existed – more than 30 years ago – taking advantage of it could have made you a fortune…

“As Newsweek reported, ‘In every case, the [‘error’] caused the value of the original coin to skyrocket…”

So which coin is he talking about? Well, it’s the one that we almost never mention: the nickel.

Nickels are actually mostly copper these days, but there is meaningful nickel in those coins too — the modern nickel, minted from 1946 to the present, is 75% copper, 25% nickel. And it’s pretty large and heavy relative to its value, so that metal is worth just over a nickel now if you were to melt the coin down (which is not legal).

So right now, if you buy up 4,000 nickels for $200 you’ll actually be getting $207 (roughly) worth of “melt value.” That number has been both higher and lower in the past, as the price of those metals fluctuates on the commodities exchanges, but the “error” that they’re talking about is the mistake that the Mint has tried to rectify in the past: that they’re minting coins that are worth more than their face value, so they don’t get circulated, which goes against what the Mint is trying to do (maintain an effective and orderly set of official circulating coinage that’s useful to society).

Plus, it costs the government more money to buy the blanks to make the coins. Pennies and nickels have often cost more to mint than they are worth, though that can be justified by the fact that these coins easily last decades in circulation, but that “extra” cost is occasionally looked at a way to potentially save some money with relative ease.

So it is possible that at some point the government could change the makeup of the nickel — but I would absolutely not buy up a huge pile of nickels based on your hope that this would happen soon, it almost certainly won’t. They have studied alternative formulations for all coins over the last several years, and the last official report from the Mint asked for more time … meaning that the current formulations are pretty much going to continue indefinitely unless they make a hard decision. For nickels, that decision in part rests on whether or not you want them to work in vending machines — they could easily move to a 95% zinc nickel and save a bunch of money and make them worth just a penny or so in melt value, but that would mean they would have a different electromagnet signature and wouldn’t work for vending machines in the same way, which would cost hundreds of millions of dollars for the vending industry.

Since the metals prices have fallen a bit in recent years from their peak, the impetus to change the makeup is not as strong as it was a couple years ago when a nickel was actually worth about ten cents — so since there’s a relatively low motivation to change, and a barrier to change, it’s hard to see this becoming a priority for the Mint or Congress this year. That doesn’t mean nickels aren’t worth setting aside as you get them, since copper and nickel are valuable metals that may well increase in value over time, and they’re “trading” for slightly under their melt value right now, but don’t go expecting that you’ll be able to sell the nickels you get for ten cents in July.

My guess is that the relatively low values for each coin mean that we’re not going to see rabid hoarding, and that even if the nickel composition is changed the current (then “old”) nickels will not disappear from circulation nearly as fast as the silver coins did in 1965 — I’d guess it would be more similar to the case of the copper pennies in 1982, there are folks who have stockpiled tons of pennies (they’ll sell ’em to you on ebay), but you have to have a lot of time on your hands and good eyes to make it worthwhile to sift your pocket change and set aside the coins that are worth two cents. I just grabbed a handful of change from the top of my dresser, and of the pennies in that handful a third were still pre-1982 copper pennies. So the laws of economics tell us that as copper remains valuable they will gradually recede from circulation, but thirty years later they’re still quite plentiful according to my completely non-scientific spot check.

It would take far higher commodity prices to bring actual hoarding that has any impact on the number of nickels in circulation, I’d guess — but still, you can set aside a bin in the basement and throw your nickels in, and they’ll always at least be worth a nickel so it doesn’t cost you anything but space and time.

By way of example with the 1982 pennies situation, which I think is far more similar to the potential nickel change than is the silver switchover in the 1960s, I tried to measure the gain of finding the buried treasures. It took probably half a minute for me to squint at 15 worn pennies long enough to read the dates and set aside the pre-83 pennies, and I found five copper pennies. So that means if I can monetize those pennies, which are worth about two cents, I earned five cents for my 30 seconds of work. Which is $6 an hour. My time may not be that valuable, but it’s more valuable than that … maybe it’s worth having the little Gumshoes squint at these little copper disks for an hour or two and sift through them, but it’s neither an investment strategy nor a likely windfall maker in my book.

With nickels, the numbers on the coins are a little bigger so you can read ’em a little faster … but if you’re imagining a world of nickel hoarding and sorting the current payoff is much lower per coin, each nickel is currently only worth 5.2 cents in melt value so at current metal prices the future you would need to “find” five of them to make a penny, which means the motivation to sort them out might be lower … and which means the folks who stockpiled current nickels might find them less valuable than they hoped. But, of course, the current you doesn’t need to sift them out by year, all nickels are the same now (save for the relatively few silver wartime nickels that are still around — and hoarded just like the other pre-1965 silver coins) so just setting them aside or stockpiling a few rolls each time you go to the bank requires little labor.

If there is a change in the next few years then your pile of nickels could provide a meaningful return, assuming copper and nickel prices rise, but the strategy comes with quite a lot of friction compared to your typical investment strategy — or even your “junk silver” coin investing. $1,000 face value in nickels weighs about 220 pounds and takes up a fair amount of space, so you can get them from your bank easily enough, and at no real cost, but if you’re counting on this to pay the rent in 20 years you’ll need to work those back muscles and find a place to store those coins. And know that if there isn’t someday a change in the makeup of the nickel, or if copper and nickel prices remain at current levels or fall, there’s essentially no chance that this big heavy bag of coins will be worth more in ten years than it is today. It won’t be worth less either, at least in nominal terms, so there is a backstop of sorts … it will be worth a little bit less with inflation, of course, but so will those twenty-dollar bills you taped to the bottom of your sock drawer for a rainy day. And odds are that if inflation is really meaningful over that period of time, then melt values will probably rise, too, possibly providing more impetus for a change in the coin’s makeup in the future.

Bottom line? If you need something to do with five minutes of your day, sure, set aside your nickels or buy a roll or few now and then, they might be worth more someday. But the nickel isn’t going to change in the next year, by all accounts, and even if it did you’d have to have both the coin ingredients change and copper and nickel prices roughly double to make the current nickel be worth ten cents. Unless and until it changes (and they didn’t change it when copper and nickel prices were twice current levels, so they’re clearly not in a huge rush) you’ll find it hard to get more than five cents per nickel. You may not ever be forced to take four cents for your nickel, but you also might never get six cents … so it may not be as much of a waste of time as reading my blather, but I think the likelihood of “doubling your money in a couple months” with nickels is approximately zero.

P.S. There has been meaningful (and headline-generating) interest from investors in these nickels, by the way — the “K. Bass” that they tease in this ad is Kyle Bass, who runs a major hedge fund, and he did reportedly buy a million dollars worth of nickels in 2011 because he said the value of the metal in the coins was 6.8 cents, so nickels were available at a discount. They’re no longer at as meaningful a discount and I don’t know if he still holds them, but it’s also worth noting that he has something approaching a billion dollars under management in his fund ($740 million as of the last numbers I saw), so this nickel buying was roughly 1% of his fund. If he still holds them, he can still sell them for a million dollars. I don’t know if he had a particular catalyst in mind, or just thought he’d park some of his cash in nickels since there was potential for the discount to eventually lead to them being worth more than five cents, so far that bet has neither gained nor lost anything (other than whatever it cost him to transport and store 20 million nickels (which would weigh about 100 tons).


Leave a Reply

65 Comments on "“If you find any of these coins floating around, you may want to begin saving them..”"

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yelpik
Irregular
105
yelpik
January 9, 2013 1:58 pm

I’m going to wait for the trillion dollar platinum coins.

maynardduncan
Member
1
maynardduncan
January 9, 2013 2:21 pm

Travis,
Same conclusion I reached. You’re very timely with this one. I just got it this week.
There’s a website for coin hoarders that shows current values, taking into consideration all metals in the coins, including Canadian and Mexican, and the method used to compute. It’s http://www.coinflation.com/

Judy Appleton
Guest
0
Judy Appleton
January 9, 2013 2:57 pm

A friend just found a silver dime the other day.
It may be good to get pennies with old dates. I found a wheat penny. last week. I do not save coins, but I probably will start again. I read an article that said the government will probably change the metals in coins and melt them down for the market value of the metals.
It is apparently being written about.

kb
Guest
0
kb
July 21, 2015 2:09 am
every so often I go to a bank and get $30-$50 in quarters and dimes and 10-14 in nickels and 3-5 in pennys or rather CENTs as the US never made a coin called a penny only 1 cent pieces, penny is from the UK I think. Any way I rarely get much maybe a silver dime ever other time or two, so not really worth your time, yet once I got 5 full rolls of silver dimes grouped together by year including one full roll of mercury dimes. I also got 3 rolls of ww2 cents and 2 of… Read more »
JohnnieB
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JohnnieB
January 10, 2013 5:55 am

Thanks Dana for the website, I had NO idea that there was anything like this. Amazing to me that wherever a slight market exists, people will come up with an answer 🙂

Mike Hylton
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Mike Hylton
January 11, 2013 11:24 am

Thanks for the info Travis!

Robert Campsmith
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Robert Campsmith
January 9, 2013 2:58 pm
I have been collecting Morgan dollars for years. When one of the geniuses came out with his “legal way to get free silver” it reminded me. I own a bank, well, stock in a local bank, so I went to the head teller and asked her about rolls of half dollars. She let me in on a little secret. The girls at the bank are not as dumb as you think! Every time they get a half dollar through their window, they look at it. If it is pre-1965 they buy it on the spot. If they get a roll… Read more »
jms
Guest
0
jms
March 16, 2013 8:18 pm

I used to work for the Illinois tollway in the early 1980s. We all did the same thing. I learned to check the edge of every coin that passes through my fingers. I still do it to this day, but rarely find any silver coins. Over the course of that summer job I found 30-40 silver dimes and quarters, and one half-dollar.

Josie1
Guest
0
Josie1
January 20, 2016 2:52 pm
In 1965 I got my first job at a grocery store. I started saving all silver coins that passed through my hands. In 1971 I was a bank teller and continued to get lucky. I got one of those unchecked rolled coins, they were all 1964 Kennedy halves. In Hawaii 1969 someone paid their bar tab in the dark, the waitress paid me the bar cashier and I got a $10 bill with Hawaii printed on it. My limited research discovered they made the most of the $10 bill. I still continue to check my pocket change but I haven’t… Read more »
Jim
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0
Jim
January 9, 2013 3:17 pm

Ah, thanks for covering that. As a coin collector, I’ve been curious about that particular come-on, but not curious enough (apparently.)

drtomfhay
Member
0
drtomfhay
January 9, 2013 3:59 pm

You didn’t address the legal aspect of melting the coins, or what kind of equipment you would need. I don’t think you can do it in an iron skillet on the stove! And what metal company would by them for melt value if it’s illegal to melt them?

Dick
Guest
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Dick
January 9, 2013 4:04 pm

That’s what I call the apogee of penny pinching or like the British say “penny wise but pound foolish”.

misterht01
Member
9
misterht01
January 9, 2013 5:04 pm

I will try and get the Addison Wiggins’ Apogee Advisory newsletter for a nickel cause it is not worth a Dime.

Steve
Guest
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Steve
January 9, 2013 5:59 pm
Disagree with you folks, I got several hundred dollars worth of nickels and put them in my basement. No risk, they will always be worth five cents, whatever inflation reduces that to, as currency and they may increase in metal value as copper becomes scarcer. U.S. gold and silver coins before they disappeared from circulation have provided quite hefty returns. Even if you can’t smelt these (in the U.S) they are a known quantity of resource metals and will increase in price as the metals become scarcer and harder to mine. This a no brainer IMO, not huge rewards, perhaps,… Read more »
Ira Cotton
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Ira Cotton
January 10, 2013 1:18 am

It seems to me that the risk of inflation far outweighs the possible appreciation of the metals in nickels. Yes, the base metals in the coin may appreciate a bit, but the face value will start depreciating rapidly once the Fed ends QE.

Steve
Guest
0
Steve
January 10, 2013 8:14 am

You could say that about gold and silver also, those pre-65 dimes are worthless except for their silver value .
For all we know, some non-U.S. power is stocking up on our nickels for future nickel and copper smelting.
I’m making a four hundred dollar bet against the stupidity or venality of people like Ben Bernanke and Tim Geithner, who was laughed at by Chinese students on a visit there several years ago when he assured them that the U.S. dollar would not be inflated away.

I’ll take the bet.

kb
Guest
0
kb
July 21, 2015 1:52 am

The lose is in the money that you do not earn by investing those nickels in the stock market. As long as you have a long time for your investment to grow, you will make money even in a crash event. The market will rebound with profit. 8%per year will double your money in 8-10 years. That not hard to do. the S&P index is your best bet 8-15% per year average.

tim
Guest
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tim
January 9, 2013 7:33 pm

Its 1946 to 2010… not present on the nickle. I have been saving them also for years and still do. … 20 pounds = $80.00

tructor
Member
7
January 9, 2013 7:33 pm

I bought four rolls of quarters ($40) a few weeks ago from local bank, just for the heck of it, and to see if any pre-1965 silver ones were there. Well, after looking at 160 quarters and not finding even one older than 1967, I was satisfied this is stupid. The bank wanted a minimum order of $2500 for rolls of half-dollars. Based on my experiment with quarters, I said no thanks. Anyone find “free silver”?

who noze
Guest
0
January 9, 2013 10:21 pm

anyone know what happened to dni metalsm i wrote them and they replied this prompted another letter only to have it returned adressee unknow

Daniel Victor
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Daniel Victor
January 9, 2013 11:48 pm

Interesting.If you did get high inflation,those nickels would hold most of their value.Since they are also legal tender,that’s pretty close to real commodity money,as opposed to a fiat currency.That’s what intrigued Addison Wiggin.

Jay Kay
Guest
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Jay Kay
January 10, 2013 10:15 am
A few months ago, I stopped by the bank and bought 1,000 pennies for my young daughter. She looked at every one and recorded the dates in two columns: either pre-1983 or post-1983. She found 340 of the pre-1983 pennies and 660 of the post-1983 pennies. Of the pre-1983 pennies, only one was a wheat penny (which means it might be worth as much as a nickel). This whole thing was a fun diversion for her, and I may get her more pennies in the future. Having said all of that, I have a couple of questions. People are always… Read more »
bob13122
Guest
0
bob13122
January 10, 2013 10:58 am

The “Big Boys” separate coins with a machine which propels them at a stopping plate. The coins ring, the sound is picked up by a microphone and analyzed. Coins of different metallic structure have different resonant frequencies, and the sorting machine then blows one of two air jets to move the coin into its proper bin. We don’t stand a chance once this gets economically feasible for nickles and pennies.

Kyle James
Guest
0
Kyle James
January 10, 2013 3:40 pm
Travis, Interestingly enough I started reading a lot more into junk silver and coins after reading your article a few months back on silver. I think it was an irregulars article? Anyway as I got deeper into researching and bouncing around the web to sites like coinflation I started reading about the pennies and nickels that you are discussing here. I think you are absolutely correct that this isn’t something that is truly on the governments radar but eventually will have to be resolved. Instead of going out and buying nickels or pennies I’ve just started looking through my change… Read more »
Rusty Brown in Canada
Guest
0
Rusty Brown in Canada
January 11, 2013 1:34 am

“So right now, if you buy up 1,000 nickels for $200 you’ll actually be getting $207 (roughly)…”

I don’t know where you are buying your nickels, but here in Canada, if we buy 1,000 nickels, it only costs us $50.00.

Horace Heffner
Guest
0
January 11, 2013 5:51 am

The 20 million nickels, at 5 grams each, weigh 100 million grams, or 100 thousand kilograms, or 100 metric tons, or 110 tons.

Roger Q Callaway
Guest
0
Roger Q Callaway
January 11, 2013 8:52 am
Nickle is valuable as an alloy constituent of steel, where it increases toughness. The nickle taken out of coinage during WWII was used in armor. Presumably at the moment there is plenty for nickels and for armor. I can remember reading of a better use when some country’s money lost most of it’s value through inflation. Some tradesman used a lot of washers in his work. He realized it took 5 pennies of the local currency to buy a washer, and that he could punch a hole in one penny and use it as a washer, saving 4 pennies per… Read more »
bob13122
Guest
0
bob13122
January 11, 2013 11:52 am

–Historical footnote on drilling coins for washers — a worker would drill a 10-centime coin (French “dime”) and use it as a symbolic washer when finishing the assembly of a Bugatti automobile, in the golden years of the original Bugatti factory.

rigdale
Irregular
2
January 12, 2013 9:44 pm
When our youngest was graduated from college, he brought over a gallon jug of pennies, wanted our help to roll them. After awhile, I started rolling the shiny ones separately, and bought them, a coffee can full. Years later, I realized our 6th grade grandson couldn’t ubegin to understand the concept of division. Out came the penny can, and we counted groups of 10 and played with 100/10 =10, and all other combinations, getting into 5s, 25s, he loved it and didn’t want to quit for 4 hours, until I promised a repeat in 2 days. The day between was… Read more »
bonnieember
Member
0
February 9, 2013 3:10 pm

So, I never listened to the end of the Sales Pitch Vid for this “Coin Info.”

How much did they want, to sell this info for?

Larry L
Guest
0
Larry L
February 15, 2013 2:04 am

In 1982 there were 16.72 Billion pennies minted for both of the 95% copper coins and of the 97.5% zinc with a copper coating. It is hard to tell the ring between the copper and the zinc. What we do is NOT keep any 1982 pennies, only the pre-1982 copper pennies.
I did hear the government was talking about making the 1 cent and 5 cent coins out of steel.
Happy treasure hunting!

Herman King
Guest
0
Herman King
April 10, 2013 9:12 am

Where do I get these coins by bulk?

JS
Guest
0
JS
October 12, 2013 9:12 pm

When my 20 year-old daughter died in 1977 as a result of an auto accident, my husband and I
started picking up coins others had dropped. I rolled the pennies the other day and have 45 full rolls, collected in >35 years. Too bad I didn’t know to separate the pre-1982 pennies !

fox
Guest
0
fox
November 6, 2013 9:18 am

got a roll of 40% silver half dollars from the bank for face value jackpot!

vivian lewis
Guest
0
February 27, 2014 3:59 pm
My mother was a great believer in silver dollars and moreover worked at a bank. She gave me a huge roll of 25 dollars worth when I hit my 25th birthday and another $25 lot for my 25th anniversary. And still more when I turned 50. So thanks to Mom I hold $100 face value of silver dollars. They are in the safe. But we have an even better collection of old British copper pennies which weigh about an ounce each and are virtually pure copper. (When I first visited Britain you had to put these pennies into a machine… Read more »
tgjames
Irregular
5
tgjames
June 15, 2014 2:02 pm

According to the internet site http://www.coinflation, currently a $100 worth of nickels is worth $95 !! Plus, you have to store it, and lug it, and cant melt or export it. (As of june 15, 2014)

Another speculative idea whose time has not yet come.

Silver Savior
Guest
0
Silver Savior
September 28, 2015 4:38 pm
No one seems to be taking a long term approach to this. They want to day trade on ebay. I save five gallon buckets of zinc, copper pennies, nickels and silver. I get them in my change since I pay cash for everything. I buy copper pennies off eBay at a premium. It’s fun to see how many buckets I can accumulate and I do this even while having a full time job. Sorting without a machine is a peice of cake. One day probably 30 years from now I will probably start selling. What is the downside? It’s fun… Read more »
Colleen Turner
Guest
0
Colleen Turner
January 11, 2016 2:02 am
I am new to coin collecting. I work in a convenience store and until 2 weeks ago, never looked at the coins in my register as anything other than change. But, 2 weeks ago as I was starting my shift, the other cashier was ending hers and counting her register drawer. I could not help but notice the silver in her hand. I bought the silver coins from her and this is what I bought, 1.) One, 1922 Silver Dollar 2.) One, 1921 Silver Dollar 3.) One, 1960 Benjamin Half Dollar 4.) Ten, 1964 Kennedy Half Dollars 5.) One, 1957… Read more »
I guess your name is Travis listen my name is George doing and I'm writing to you because I have some very very important corns
Guest
0
I guess your name is Travis listen my name is George doing and I'm writing to you because I have some very very important corns
January 23, 2016 10:16 pm

I have some very important corn that I need someone with expertise to look at

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