Paper clips are a small metal item used to hold papers together. Bert is a proud collector of paper clips.
According to Bert at the beginning of "Let's Sing a Song That Everybody Knows", paperclips are very valuable, and are not something to play with on a moving bus. In Bert and the Broken Teapot, Bert considers selling his paper clips in order to pay for David's broken teapot. In Christmas Eve on Sesame Street, Bert goes as far as trading his paper clips for a present to buy Ernie. However, he eventually got them back, and keeps them in a cigar box that Ernie got Bert for Christmas.
Ernie doesn't care much for Bert's paper clips. According to Ernie, paperclips are the only thing more boring than Bert's bottle cap collection. However, Ernie once had a paper clip collection of his own. In an early sketch (first seen in Episode 0010), Ernie cleans out his toy box, and comes across a paper clip collection, which he referred to as his own.
Ernie's flower box for the Twiddlebugs includes a fence made from paper clips (whether this is from Bert's collection, Ernie's collection, or if it's even a collection is unknown). In one Twiddlebugs sketch, the Twiddlebugs find a paper clip, and think up many different uses for it. (EKA: Episode 4153)
Bert once showed Ernie a way to pick up paper clips without using his fingers, by using a magnet.