Tuesday, February 1, 2011

Does Investing in Pennies Make Cents?

All pennies minted in the United States prior to and during the first part of 1982 were composed of 95% copper and 5% zinc. After 1982 the composition of pennies was changed to 97.5% zinc and 2.5% copper. Pardon the bad pun, but does investing in 95% copper pennies make any (cents) sense? Copper prices have hit new highs, and the theoretical melt value of a 95% US copper penny is close to $0.03!

So the key question is buying pennies a good idea? I say absolutely no, and here's why:

  • The Melting Ban:
    On December 14, 2006, the United States Mint implemented interim rules that made it illegal to melt or export nickels and pennies. On April 17, 2007, the U.S. Mint announced a final rule to limit the exporting, melting or treatment of one-cent (penny) and five-cent (nickel) United States Coins.
What good will it do you to own ten million pennies (face value $100,000) and three times as much in copper melt value if it's ILLEGAL TO MELT THEM?
  • Bulk:
It takes 10 million pennies to get a face value investment of $100,000. Such a penny cube would be six feet high, wide, and thick & weigh 31.3 tons! That means you're going to need a couple of semis and a forklift for delivery or whenever you want to move these things.

Plainly shipping and warehousing costs would be a significant drain on any large penny investment. Companies like the Portland Mint offer storage options, but that means they retain the pennies while you just get the bills for the storage, which isn't cheap. Of course, there's always the worry of proving ownership should the Portland Mint go out of business or even change ownership.

In short, invest in gold and silver and take delivery of your metals.

Time is running out fast! Hyperinflation seems unavoidable as fiat paper money is being printed as fast as the US presses can run. To protect your wealth and your family, buy gold and silver now from these top companies (below):



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  1. What if the government decided to put a ban on melting silver and gold coins? Are you saying it would make no sense to own silver and gold coins? Pennies will trade as coins without the need to have them melted just like silver and gold coins will. In fact pre-1982 pennies might trade easier for smaller items if there were an economic melt down of the dollar.

  2. Thanks for your comment!

    Laws forbidding the melting of various coins definitely effects their value. Essentially, the government is saying that you really don't own the coin you hold. They do. As such, your penny may be worth double or triple its face value in copper theoretically, but no refinery or anyone who is not a speculator (or a criminal) will be willing to easily pay you what the nominal raw material is worth. That is a significant negative currently associated with hoarding pennies for investment purposes at this point.

    However, my main concern with pennies is simply their bulk. I can carry $20,000 worth of silver coins under one arm fairly easily. In survival situations portability is crucial. Unfortunately, you're just not going to carry $20,000 worth of copper pennies using anything other than a forklift. In addition, I don't know if you're married or not, but if I tried to park multiple pallets worth of pennies in my house there would be hell to pay!

    Lastly, I'm not saying that pennies or even nickels are completely worthless as potential future profitable investments. I guess I just think that gold, and particularly silver, have a lot further to go price-wise and they're just a lot easier to handle.

  3. The time and cost is the problem, and that's exactly why you don't see melting as silver did in the 1970s, the time and effort to melt to gain a fraction of a penny was not worth it, there is a big difference between silver coins, a silver coin had 10-20 cents more silver back in the day, so in essence it was profitable.

    It would take a ton of pennies just to equal say 10-15 pounds of many silver dollars, in addition storage and warehousing and transit is a problem, if you live in apartment, or let's say your home is being foreclosured, can you easily move a ton of pennies out, no
    then you have to sort the zinc, its not worth it unless you have the capital and large scale investment which is what a company proposed doing before the ban.

    On the other hand a thief is less likely to easily steal such item, but likewise a bank could seize your home or the government, I do believe that pennies however may trade at 2-3 cents rather than melted down, after all one need not melt silver coins per oz.

    Is it a wise investment, partially, it makes little sense to give it up for a cent, on the other hand in contrast to gold, copper is more volatile depending on the economy, so its no a great value measure, however the flip side is that it has like silver and industrial demand and usage.

  4. Gold Silver AND Copper are good investments. Quick question to all "copper haters".
    Which developing country needs massive ammounts of Gold or Silver?

    1. How about China and India. Both countries love gold and they're buying it left and right. However if you're talking "need" then let's talk silver. It is the one precious metal hat has more industrial uses every day.

      It's not that I hate copper. It's just that it's a bulky industrial metal that is tightly controlled by a handful of miners and producing countries. Silver and gold are the best investments in the old and new decade. Why would you want to fill your garage with old pennies hoping that maybe one day it will be legal and possibly practical to melt them?

      It just isn't worth the hassle.


  5. Great points, Rick.
    I save all my copper pennies, presumably for "making change" or small purchases or whatever in a hyperinflation scenario. Nickels too. But I do not waste good investment capital on huge quantities of either. SILVER, now, yes. I stack as much silver as possible. A Ryedale penny sorter is about 10 oz. of Silver (used ryedale) and I doubt that there is enough time to really make that investment worthwhile, 2012 is almost over, hyper-time is almost HERE.