PfBlueprint caught this AP article on CNN regarding the rising cost of minting Lincoln cents and a fairly short-timeline legislative push to revise the composition of the Lincoln cent and the Jefferson nickel to something more cost-effective.
Both coins now cost more to mint than their face value. On top of that, the nickel's metal content now exceeds its face value. 97.5% zinc cents (“Zincolns”) aren't intrinsically worth more than their face value now, but they were last year for a time. (The older (pre-1982) 95% copper cents are now worth well over their face value in metal content.)
This demonetization was inevitable following departure from the gold standard and arrival of fractional reserve banking. Silver was removed from dimes and quarters in 1965; reduced-silver halves remained in production until 1971. Lincoln cents were stripped of most of their copper during 1982.
The demonetization of the dimes, quarters, and halves drove most of the silver ones out of circulation: Gresham's Law. We still have copper cents and nickels in circulation because their intrinsic value per pound is a lot lower than it is for silver, so it's less practical to pull them out of circulation wholesale. (I do it on a small scale, though.) There is a growing cottage industry to help people sort the Wheats from the chaff should they want to. (It's currently illegal to melt cents and nickels, and it's also illegal to export these coins in anything but trivial quantities.)
Despite the economic incentive just to can the Lincoln cent, part of the Presidential $1 Coin Act of 2005 called for a four-design series of the Lincoln cent next year to commemorate the 200th anniversary of Lincoln's birth. Thus the cent can't be banished without repealing this law. In 2010, though, the cent is to undergo a “permanent redesign” — which could be nothing, I suppose — but it would be a bit less obvious to phase out the cent after 2009.
Welcome to the effects of inflation.
