Guess too many people asked the U.S. Mint about melting copper coins for profit, now that pre-1982 cents are worth more than twice face value.
Apparently the Mint is against this new business idea and is nipping it in the bud. (Thanks to Guzzo for posting a comment about this.) Melting coins wasn't illegal up until this week (only fraudulent use was), but now melting coins for the metal content is illegal. It's also illegal to export coins in any meaningful denominations for melting abroad.
Deep down, I couldn't see the Mint standing by and letting its coins get melted, creating a shortage of pennies and nickels, and placing “an enormous cost to taxpayers” on replacing the coins, according to U.S. Mint director Ed Moy. But if Gresham's Law applies there should still be some shortage in pennies and nickels that are now “good money,” though probably not to the extent that silver coins were removed from circulation after 1964.
Silver U.S. coins of course trade well above their face value — about 10 times face value. Silver sometimes is called the “poor man's gold” because it has some of the rarity of gold but is less of a burden to purchase. Copper is rising with most other commodities, but is it ever going to be the “poor man's silver?” I could see a 1980 penny eventually containing ten cents' worth of metal, just like a 1956 dime contains $1.00 worth of metal.
But will folks hoard cents like they hoard silver dimes or gold coins as a store of value? Copper is a much less efficient store of value than silver or gold, but it has value nonetheless. It's certainly less appealing now to hold on to copper cents because any private industrial re-use is outlawed, but it appears as if it's no longer illegal to melt silver coins (it was illegal from 1967-1969, shortly after the composition of the quarter, dime, and half-dollar changed). So could this week's Mint announcement be only a temporary measure to stop opportunists, until the threat of coin shortage is gone?
I haven't collected that many (maybe about $4-$5 worth of pennies as I find them in my change). Maybe that's about right for now. Not really enough to make people suspicious. 😉
I held onto 25,000 pre-'82 copper cents for years hoping to cash in on increasing copper values. I found it a pain to lug around 200 pounds of pennies through several moves of my household, so I eventually cashed them in for one cent a piece. I'll stick to gold and silver for now, thanks.
http://1sttimeinvestor.blogspot.com/2006/10/selli…
Interesting stuff. I like your historical approach to it – people have been melting coins as long as there have been coins to melt!