It cost the United States Mint almost two cents to buy the metal required to produce one penny. Ironic? Yes, but even more importantly is it necessary?
In the age of credit cards and electronic payments, the change in our pockets matter less and less. When we were kids, all we knew was that five pennies could get us a piece of gum while a quarter, enough for a bag of chips, put us on the top of the world. Never did the thought, that the metal in coins was worth money, ever cross our minds — until we grew up to find a world of gold watches and platinum earrings.
Albeit the metals in coins may not be considered “precious”, there exists the curiosity — just what is the material worth of a U.S. coin. Have you ever thought of melting the coins in the piggy bank and selling the metal? Unfortunately, metal buyers won’t be fooled — not to mention it doesn’t necessarily bode well with the law.
Materials Costs to Mint U.S. Coins in 2010
|U.S. Coin Denomination||Unit Material Cost||Unit Monetary Value||Metal Composition||Units Shipped to Federal Reserve Banks in 2010 (in millions)|
|Penny||$0.0176||$0.01||97.5% zinc, 2.5% copper||3,487|
|Nickel||$0.0916||$0.05||75% copper, 25% nickel||359|
|Dime||$0.0454||$0.10||91.67% copper, 8.33% nickel||887|
|Quarter||$0.0956||$0.25||91.67 copper, 8.33% nickel||252|
|Gold Dollar||$0.1659||$1.00||88.5% copper, 6% zinc, 3.5% manganese, 2% nickel||414|
The figures that stand out most are the unit material costs of a penny and nickel. The metal in a penny costs 76% more than the penny is worth and the metal in a nickel costs 83.2% more than the nickel is worth. While it may seem as if the continued production of pennies and nickels is contributing to the nation’s mounting $14 trillion debt, notice that unit material costs of the other U.S. coin denominations are substantially less than the unit monetary value. And, of course, the cost to print paper bills is significantly less than the value of the currency notes.
Why Pennies and Nickels Cost Nearly Double Their Value
The reasons for the nearly double cost of pennies and nickel value include coin composition and cost of raw materials. The U.S. Mint has to purchase the metals required to mint coins and are therefore susceptible to the economic phenomenons of supply and demand. Increased demand and cost of mining such metals means higher prices and the U.S. Mint pays more to produce our coin currency. Proposals to modify metal composition have been met with opposition.
Nearly 3.5 billion pennies were minted in 2010, which cost about $62.3 million. Many people have suggested the elimination of pennies as a denomination of coin currency in order to stop losing money on the production of money.
Should the government be “penny pinching”? Let us know in the comments: