Melting Coins Now Illegal In the U.S.

A number of readers have noted the action by the U.S. Mint to outlaw the melting down or bulk export of coins. This has come about because the value of the precious metals contained in coins now exceeds their face value. The Mint would rather not have to replace pennies (at a cost of 1.73 cents per) or nickels (at 8.74 cents). The expectation is that Congress will mandate new compositions for some U.S. coins in 2007.

Comments

Just get rid of pennies

[Anonymous Coward]

A worthless coin anyway.

get rid of pennies altogether?

[jimfinity]

It might just be more feasible to get rid of pennies altogether.

here is an article i have found to be particularly illuminating.

http://www.straightdope.com/classics/a981009a.html

How can they do this?

[stry_cat]

How can the US Mint make something illegal, only Congress has the power to pass laws. Someone please explain.

Do AWAY with pennies and nickles

[gelfling]

Take them out of circulation, and then the Mint can do whatever they like with the alloys. Or if they're smart, they'll use alloys for a $1 coin and stop making the $1 bill.

Re:Do AWAY with pennies and nickles

[FallLine]

Removing the penny would seriously hurt the value of the dollar globally.

Yes, that would all be do to an incorrect perception, but it would still hurt the dollar.

Says who? There is no good economic rationale for keeping it.

1) Other countries have made similar moves without any significant pains (e.g., Australia).

2) The vast majority of transactions are non-cash transactions these days and they can still be computed in cents (or, for that matter, even fractions of a cent).

3) Even amongst cash transactions, the penny is of little use (virtually all vending machines, most customers get rid of them, etc)

4) The nickel is worth about as much today as the penny was in 1970 after inflation is taken into account. If the lack of any currency with a real value of less than 5 cents in 2006 dollars didn't cause huge problems before 1970, why should any sane person believe it will now?

Re:Devalue

[Skreems]

Ah, but that assumes that the government actually cares about the deficit, and would rather pay down the national debt than blow untold billions of dollars on pork barrel spending for their own states.

Re:"precious metals" in pennies?

[plasmacutter]

Yep.. youre the third person to point it out.. i'll put on my dunce cap and sit in the corner ; )

Re:Paper?

[Thansal]

we all laugh, but I thought that destruciton of currency was ALREADY illegal. Serachign around tryign to see if I can find a link....

Why would they make more anyway?

[Katmando911]

How hard is it to realize that if it costs your more than 1 cent (or 5 cents) to make something worth 1 cent (or 5 cents), then don't make it. Basic enconomics Duh, if the pennies and nickels are worth more as materials than they are as currency then we SHOULD melt them down and use those materials for some better purpose and find some cheaper material to make our coins.

Re:If this keeps up...

[penguinrenegade]

It's actually okay to mutilate coins as long as the intent isn't fraudulent.

Pressed Penny FAQ

It takes some doing, but it's possible to have fraudulent intent to mutilate. For instance, making a 4-legged buffalo nickel into a 3-legged (rare) variety is fraudulent. Dropping pennies in a machine at Disneyland for souvenirs is perfectly okay.

Re:If this keeps up...

[walt-sjc]

First, getting rid of the penny would not affect electronic / check transactions.
The only change would be cash transactions, which would be rounded (probably up) to the nearest nickel.

When the half-cent was abolished in 1857 it was worth more than eight cents in today's currency. It's time for the penny to go, along with the paper dollar. In another 20 years or so, they may as well get rid of the nickel too.

Re:Paper?

[Impy the Impiuos Imp]

Especially given that coins were precious metals precisely to give them legitimacy, such that you could go sell them as precious metal should the government collapse. It was also a hedge against inflation -- few people would ever try to demand six pounds of gold for a loaf of bread, it would never get that far.

Governments did forbid scraping metal off the edge of the coin, or other such defacement oriented around stealing the metal, or even directly melting it down. But if the government collapsed, nobody was gonna enforce that anyway, and you still had your value.

I find it interesting that the government thinks of this as a profit measure -- oh golly, it now costs us more to make the coin then we get writing +1 cent on our bottom line when we stamp it out.

Well that's what you get for deflating your value rather than letting the intrinsic value of the metal buttress the perceived value of the coin. Ironically, making it illegal will only hasten the collapse of value.

Re:Does anyone else here see the bigger problem?

[RKBA]

the value of copper has gone up significantly since 1998

You have it backwards just as almost all so called "news reporters" do (including even financial reporters). The value of copper, gold, nickle, etc., hasn't changed at all. The reason copper and all other items cost more than they used to is because the value of the US Dollar has declined. One ounce of pure gold still buys a good quality men's suit just as it always has.

Re:Does anyone else here see the bigger problem?

[feepness]

It isn't just a decrease in the value of a dollar, it's also an increase in the value of the metals.

I'm sorry and this isn't personal but I'm amazed at how little financial acumen we collectively have. This is the financial equivalent of being surprised that 40% of all sick days are taken on Monday and Friday.

The dollar being worth less and things costing more are exactly the same phenomenon. The value of the metals did not inherently increase. Were this lmited to a specific metal or commodity I would believe it, but it is very broad based and therefore can be traced to a monetary phenomenon (record low interest rates, loose lending practices, and increased consumer/government debt).

Re:Does anyone else here see the bigger problem?

[rrkap]

The dollar being worth less and things costing more are exactly the same phenomenon. The value of the metals did not inherently increase.

The value of metals DID increase relative to other commodities. So the parent post is right to say that it is a combination of a general decline in the value of the Dollar and an increase in the price of Zinc and Copper.