U.S. Mint declares melting of cents and nickels illegal.

http://www.usatoday.com/money/2006-12-14-melting-ban-usat_x.htm?POE=NEWISVA

Since the other threads were shut down, feel free to post your political view of this action. Personally, I don't think this will stand up in a court. After all, if you own cents and nickels, can't you do whatever you want to them, including a meltdown?

 

As I understand it they can do this, but I am not a lawyer.

 

Forgive me, purists, I am going to use "penny"... the mint uses the term, bank wrappers say pennies on them, banks look at me strangely if I ask for 10 rolls of cents... it's just a much more fun sounding word as well.

Ok... I don't get this at all. A couple of months ago, we hear all of this talk about the penny being an obsolete denomination.... good chance it will be discontinued, thus saving the government heaps of cash. Now we are being told that the coin must be protected under federal law.... HUH?!?!

So, I was at the local convenience store the other night, and there is a rack full of "Remember When" cardlets. Curiously, I open up the cardlet for 1964 and flip to the section that lists prices of goods in that year. I see that pretty much straight across the board, the price for everything today is 10 times what it was in 1964. So our penny has been reduced to the buying power of 1/10 of a cent as compared to 40 years ago. The smallest denomination ever minted was the half cent and was discontinued as there was no real demand for it.... or maybe the people just didn't want to have to deal a denomination that was a fraction of a denomination that was already a fraction... I don't know, I wasn't there, but I do know that people don't like fractions, and those poor, sorry saps didn't even have fancy cell phones with built in calculators that they could carry around with them to figure it all out. Imagine the math induced headaches that were suffered. This, however, is not the point. The point is that the penny currently is worth 1/5 of a half cent at 1964 prices. The dime has the purchasing power of a penny, the half dollar is the power of a nickel. It takes $10 to buy what $1 bought 40 years ago. It is no wonder people have no love of coins in commerce anymore. We could essentially ditch the penny and the nickel and mint coins up to $10. This would give coins essentially the same power as they once had... with the $10 coin being the "new dollar coin".

As a sentimentalist, I would hate to see the penny and the nickel go, but sentiment and good economic policy are often far removed from each other. These two denominations are, for all intent and purpose, worthless. What can you really buy for a nickel anymore?

However, throughout the history of the minting of these coins, the cost average of their content is far below their current intrinsic value. We as a nation are sitting on a huge commodity pile... let me also note as a nation that consumes much more than it produces anymore. We have a massive trade deficit to China, a country that is consuming commodities at an enormous rate.

Hmmm...

Just imagine for a moment that people were allowed to take their pennies and nickels and recycle them. Then the copper, zinc and nickel gets shipped off and sold to China, India, and whatever other country wants to pay for it. That's money coming into our country in the form of PROFIT. It does nothing more than strengthen our economy. Please, someone, explain to me why this is not a logical scheme.

Of course, now we go back to the point that not long ago and for quite some time there has been talk of discontinuing the suddenly sacred and protected penny. If this does occur in the near future, what do you think will happen? As people and businesses return pennies to the bank, they will be shipped back to the FED who will keep them and not recirculate them as there is no more use for them. What do you think will happen to them? My bet is that they will be returned to the mint to be melted down and sold off as zinc and copper. They can't be reused as both coins contain an amount of zinc in them and none of our other coinage uses zinc.

I'm not trying to start a conspiracy theory, I just don't see any other logical direction this can all take.

My vote is let the denominations die... there is no real use for them anymore, and let the American people take a little profit for themselves in the process.

Just my 2.5 cents... (Today that's a quarter as compared to 1964)

 

Accept it, dollar not worth what used to be, now it is third world money.

 

Whose money is worth what it used to be? What country has not seen inflation and a sharp rise in prices over the past several decades?

 

K is correct, the dollar has taken a whoopin' and it aint over yet.

 

Oh, I don't deny that at all. I have been watching, and I know that there is worse to come... especially if China decides to unload their dollar holdings. We've screwed ourselves in many way through outsourcing and imports to the point that we don't produce near what we consume. We've created this massive credit system. It's not looking good for the dollar. I'm just wondering whose money IS what it used to be. What country in this world can buy the same product for the same amount of money as they could 40 or so years ago.

 

On the topic of the Mint's No Melt regulation, so what? If I have a bag of 1000 U.S. pre-82 "pennies" with a face value of $10 and a copper metal value of $20, don't you think people would buy those bags at $12, $13, $14 etc. all the way up to maybe even $20 for those who think the metal value is going to continue going up? Melting them down would only introduce uncertainty. I and most everyone else believes that pre-82 US minted cents are each 95% copper. If you handed me a melted down lump of copper, I'd have to have it assayed to determine the copper content.
It's just like pre-64 US silver coins. They're being sold every day in $1000 face value bags at a price reflective of their silver metal value as investments and hedges against inflation or collapse of the US monetary system - not to be melted down. Although maybe some jewelers buy some silver coins and melt them for the silver, but I'd bet they have plenty of other easier sources.
I think the Mint has just created market for a mini-version of the silver "junk coin" bags. If that market actually does emerge, the irony will be that the Mint will have compounded the hoarding problem that they allegedly made the regulation to ease. It's also possible that $10 or $20 bags of US one cent coins is just too small a profit for anyone to actively go after.
What would be really interesting would be if the Mint offerred to buy (from individuals only, and maybe with a maximum cap) at 1.5 cents each pre-82 US one cent coins. That cost would be less than their alleged 1.73 cent cost to make a new zinc cent and it might motivate ordinary citizens to put back into circulation the estimated $10 billion in coins in penny jars and dresser drawers. In order to prevent buying the same coins over and over again, the Mint would have to do something like drilling a hole in them before putting them back into circulation.
Maybe that's an impractical idea, but I think I'll continue to look at my change, sort out and save the pre-82 US "pennies" regardless of the Mint's new regulation.

 

The idea being that the coins end up at the end user still in coin form... not pre-melted. This guarantees the content of the metal without having to be assayed. I have read that China has bought up loads of demonetized European coins since the Euro was introduced.

I know my dealer (also a jeweler) routinely sends loads of 90% silvers out for melt. Whether the company he sends them to actually melts them or simply recirculates them as coins, I don't know, but he gets them in such quantity that he can't sell them fast enough, so he is forced to ship them off to the "smelter" (his word) to be sure he locks in a profit in the event of a market shift.

 

That would be a good thing, IMO. I'd like nothing more than to drive up the costs of Chinese and European goods.

Ruben