Friday, June 30, 2006

Here A Penny, There A Penny, No More?

Image Credit: USAToday

Oil is up, Gold is up, it turns out that the prices of the common metals that make up our coinage are up as well.

It now costs more to manufacture and distribute a penny (or a nickel) than it is worth as money. This turn of events has some in Congress wondering if they should vote to scrap these coins altogether.

Don't try melting down the hoard you may have in the coin jar though, it will cost you more in effort and energy, not to mention marketing than the metals you have at the end of the process ... so just keep the jar, it makes a good paperweight/doorjamb.

Excerpts from USAToday via Yahoo! News -

Coins cost more to make than face value
By Barbara Hagenbaugh, USA TODAY

WASHINGTON — The next time someone offers you a penny for your thoughts, you might want to take them up on it.

For the first time in U.S. history, the cost of manufacturing both a penny and a nickel is more than the 1-cent and 5-cent values of the coins themselves.

Skyrocketing metals prices are behind the increase, the U.S. Mint said in a letter to members of Congress last week.

The Mint estimates it will cost 1.23 cents per penny and 5.73 cents per nickel this fiscal year, which ends Sept. 30. The cost of producing a penny has risen 27% in the last year, while nickel manufacturing costs have risen 19%.

The estimates take into account rising metals prices as well as processing, labor and transportation costs. Based on current metals prices, the value of the metal in a nickel alone is a little more than 5 cents. The metal in a penny, however, is still worth less than a penny.

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Metals prices have been soaring this year as a strong economy worldwide has led to an increase in demand. The prices of metals used in coins are all rising: Zinc is up 76% this year, copper is up 68%, and nickel is up 42%, according to the London Metal Exchange.
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The Mint is one of the few government agencies that makes a profit.

The Federal Reserve, which distributes money to banks, pays face value for coins. If a coin costs less to manufacture than the face value, the Mint makes a profit.

Last year, the Mint's coin-making profit was $730 million. Mint officials estimate the added penny and nickel expenses will reduce the Mint's profit this year by $45 million.

Coin compositions, which are set by Congress, have been changed in the past because of rising costs. The penny has been altered several times since it was first changed from pure copper in 1837 to add other metals.

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You guessed it, as usual, the Government still "makes a profit" through a ponzi scheme supported by the law of the people!

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