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Pennies Cost 2.4 Cents, Nickels 11.2 Cents

From CNN’s Money.Com:

Obama wants cheaper pennies and nickels

By Chris Isidore
February 15, 2012

NEW YORK (CNNMoney) — The U.S. mint is facing a problem — especially during these penny-pinching times. It turns out it costs more to make pennies and nickels than the coins are worth.

And because of that, the Obama administration this week asked Congress for permission to change the mix of metal that goes to make pennies and nickels, an expensive recipe that has remained unchanged for just over 30 years.

Well, Obama has already debased our currency every other way.

To be precise, it cost 2.4 cents to make one penny in 2011 and about 11.2 cents for each nickel.

Which makes them perfect symbols of the way our government works.

Given the number of coins that the mint produces — 4.3 billion pennies and 914 million nickels last year alone, those costs add up pretty quickly: just over $100 million for each coin.

So soon we won’t even be able to afford to make money.

But even though Treasury has been studying new metals since 2010, it has yet to come up with a workable mix that would definitely be cheaper, and it has no details yet as to what metals should be used or how much it would save to do so.

Maybe the Treasury should start sending out bands of vandals to steal metal from abandoned houses and street lights.

Even if a cheaper metal can be used, it might not take the cost of a penny down to less than a penny.

Just the administrative cost of minting 4.3 billion pennies costs almost a half-cent per coin by itself, leaving precious little room to make a penny for less than a cent, no matter the raw material used.

Again, this sounds just like our government.

The raw material cost of the metals used in a current penny is only about 0.6 cents per coin, according to prices quoted on the London Metal Exchange, and a breakdown of a penny’s composition from the mint. A nickel’s raw material costs comes to almost 6 cents per coin.

There have been times in recent years when a run-up in zinc and copper prices has taken the raw material cost of a penny above one cent.

Despite popular belief, since 1982 pennies have only been copper plated, not copper through and through. Much less expensive zinc makes up 97.5% of the mass of a penny, the rest is a copper coating.

Nickels actually have much more copper in them — 75% copper and 25% nickel, the same mix it has always had.

The mint did make steel pennies for one year — in 1943 — when copper was needed for the war effort. And steel might be a cheaper alternative this time. Steel is roughly one-quarter the price of zinc on the London Metal Exchange…

Of course this was done during the height of WWII. What is the excuse today?

Treasury had already made a cost-saving move on coin production in December when it stopped making dollar coins.

With 1.4 billion surplus presidential dollar coins sitting in bank vaults waiting to be circulated, and American consumers showing little appetite to start using the coins, Treasury estimates the halt in production of the coins will save about $50 million a year…

Of course the Treasury could just stop making pennies and nickels, like they have stopped making dollar coins. But that probably wouldn’t be a good idea.

When the real financial collapse comes, pennies and nickels will probably come in handy again. (Cf. the Depression, Great.)

This article was posted by Steve on Wednesday, February 15th, 2012. Comments are currently closed.

4 Responses to “Pennies Cost 2.4 Cents, Nickels 11.2 Cents”

  1. finebammer59 says:

    why we’re still stamping pennies is beyond me. (other than to make work for public service union employees)

    call me stupid, but i never understood a practical reason for stamping these designer coins we have now. (other than to make work for public service union employees)

    i hear folks prattle on about a precious metals bubble and i smile. where would the price of gold and silver be if it were not for the turmoil in europe?

    worry not. the wave is about to crash on our shores.

  2. Astravogel says:

    Many more advanced countires have already
    gotten rid of the penny. They just passed some
    legislation allowing round-up or round-down on
    this fraction of the monetary unit. I never missed
    them in Austraila, Europe, or Canada. In fact,
    Mexico and Australia use polymer- based folding
    currency, which last lots longer than the rag-based
    stuff we get, made, incidentally, in Massachusets,
    whose Senators scream bloody murder whenever
    the idea is proposed.

    • David says:

      We can’t do that! Don’t you remember how our economy collapse after we stopped minting the halfpenny! Oh wait… :)

  3. GetBackJack says:

    This ain’t no Klein Bottle with no gain or loss, this is worse than using Coal to make electric cars run.

    What if used actual silver as stated in the original Coinage Act?

    Wait, that’s too sensible …

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