Posted on 01/24/2007 2:47:39 PM PST by presidio9
Talk about pennies from heaven.
A potential shortage of coins in the United States could mean all those pennies in your piggy bank could be worth five times their current value soon, says an economist at the Federal Reserve Bank of Chicago.
Sharply rising prices of metals such as copper and nickel have meant the face value of pennies and nickels are worth less than the material that they are made of, increasing the risk that speculators could melt the coins and sell them for a profit.
Such a risk spurred the U.S. Mint last month to issue regulations limiting melting and exporting of the coins.
But Francois Velde, senior economist at the Chicago Fed, argued in a recent research note that prohibitions by the Mint would unlikely deter serious speculators who already have piled up the coinage.
The best solution, Velde said, would be to "rebase" the penny by making it worth five cents rather than one cent. Doing so would increase the amount of five-cent coins in circulation and do away with the almost worthless one cent coin.
"History shows that when coins are worth melting, they disappear," Velde wrote.
"Rebasing the penny would ... debase the five-cent piece and put it safely away from its melting point," he added.
Raw material prices in general have skyrocketed in the last five years, sending copper prices to record highs of $4.16 a pound in May. Copper pennies number 154 to a pound. Prices have since come down from that peak but could still trek higher, Velde said.
Since 1982, the Mint began making copper-coated zinc pennies to prevent metals speculators from taking advantage of lofty base metal prices. Though the penny is losing its importance -- it is worth only four seconds of the average American's work time, assuming a 40-hour workweek -- the Mint is making more and more pennies.
Velde said that since 1982 the Mint has produced 910 pennies for every American. Last year there were 8.23 billion pennies in circulation, according to the Mint.
"These factors suggest that, sooner or later, the penny will join the farthing (one-quarter of a penny) and the hapenny (one-half of a penny) in coin museums," he said.
I hate bringing in pennys. The bank clerks look at you like you just plopped a steaming pile of do do on their desk.
Are all pennies pure copper?
I like paying annoying institutions and government agencies in pennies - for the exact same reason.
Not since 1982, no.
They're mostly zinc.
That's what I thought, thx.
I've often wondered why people don't just round up or down to the nearest 5 cents and stop using pennies anyway.
Here in NYC, I have had homeless guys say "no thanks" to pennies.
I've got three gallons of pennies -- they're just not worth carrying around.
What is zinc going for these days?
I know nickel metal is worth much more than copper -- what is the composition of a nickel?
I think they should just stop making pennies and nickels, and start producing $1, $2, and maybe $5 coins, with MALE PRESEDENTS or cute GREEK GODESSES on them.
>>Are all pennies pure copper?<<
I believe 1982 and prior. It's not worth sorting them though, unless you're unemployed.
Speaking of NYC, that's exactly what most businesses do here.
Yippee! I've got half a large wine bottle full of pennies. lol
Why dont they make pennies = dimes, dimes = quarters, quarters = dollars and dollars = ten dollars, tens = hundreds and so forth. Then we can all be thousandaires and drink bubble up and eat rainbow stew.
I recall learning in school that debaseing ones currency is a bad thing.
It is completely unacceptable to me that there is no US currency with Ronald Reagan on it. A $1 Reagan coin is a natural. People would start referring to them as "gippers" almost immediately.
Talk about slow jouranlism. Copper peaked more than a year ago and has been falling since.
Or have several grand children :-)
udder non cents
I think it's past the point where they should. I don't even use pennies anymore --- if I get one in change I just throw it away, or it gets lost behind the car-seat or buried in the couch.
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