Thursday, December 14, 2006
Time to cash in your change jar?
Soaring metals prices mean that the value of the metal in pennies and nickels exceeds the face value of the coins. Based on current metals prices, the value of the metal in a nickel is now 6.99 cents, while the penny's metal is worth 1.12 cents, according to the U.S. Mint.
That has piqued concern among government officials that people will melt the coins to sell the metal, leading to potential shortages of pennies and nickels.
Under the new rules, it is illegal to melt pennies and nickels. It is also illegal to export the coins for melting. Travelers may legally carry up to $5 in 1- and 5-cent coins out of the USA or ship $100 of the coins abroad "for legitimate coinage and numismatic purposes."
Violators could spend up to five years in prison and pay as much as $10,000 in fines. Plus, the government will confiscate any coins or metal used in melting schemes.
Analysis supporting his view that the dollar is doomed to a precipitous decline in value is the central theme of Mish's Global Economic Trend Analysis (a fascinating, if disconcerting daily read).
After an interesting discussion of the history of laws prohibiting the melting of US coins, and the gold confiscation in the 1930s, Mish notes
Right now, a nickel is the closest thing to "Honest Money" we have. We are in the ironic situation where the value of the dollar is falling but the value of a nickel is rising. In what time frame will the current (and probably soon to be confiscated) nickel be worth more than a dollar?
An interesting question indeed in light of recent dollar activity.
5 Comments:
By 
, at
Thu Dec 14, 05:16:00 PM:
Is there any compelling reason to keep the penny around? I've always wished the government would just get rid of them, and then prices would have to be set in increments of $0.05, which would IMO be better than having all the stupid pennies around.
By 
Jimmy Carter, at
Thu Dec 14, 06:52:00 PM:
If the penny were to be discontinued, then after a number of years the nickel would be the most complained about coin. Where does it stop? The penny.
Also, bussinesses would conveniently round up therefore causing arbitrary inflation on goods and services. Although miniscule, it adds up over the long term.
By sammy small, at
Fri Dec 15, 01:12:00 AM:
Back in the 70's when I was in the Air Force and based in the UK, pennies were banned on base.
All the prices of goods on base were still priced to the cent individually, but after the cashier rang up the all the items being purchased, the total was simply rounded up or down to the nearest 5 cent increment. It worked great back then, and would work just as well today on a broad scale.
By , at
Fri Dec 15, 02:23:00 AM:
Not too long ago Australia phased out its one and two cent coins. All the terrible consequences were predicted: inflation, confusion, dragons eating the sun, whatever.
Nothing bad happened.
By Georg Felis, at
Sun Dec 17, 10:08:00 PM:
I was just cleaning out my pocket today and found a steel penny from WWII, in darned good shape for being 50+ years old. Any thoughts about bringing back steel for coinage?
