“It’s one of those things where I think people get attached emotionally to the way things have been,” the president said. “We remember our piggy banks and counting out all the pennies and then taking them and getting a dollar bill or a couple of dollars.”
“This is not going to be a huge savings for government. But anytime we’re spending more money on something that people don’t actually use, that’s an example of something we should probably change,” Obama said. “One of the things that you see chronically in government is it’s very hard to get rid of things that don’t work so that we can then invest in the things that do.”
- Barack Obama, 44th President of the United States
Opinion on Obama’s Penny Speech 2013
Let’s be blunt. Eliminating the penny means admitting that inflation has run rampant and the one-cent, is, essentially and literally, worthless.
The penny is, however, money. Remember that it is still a legal form of currency. So when money becomes worthless, it is an admitting there is a problem with the money system.
Meanwhile, Obama and Bernanke are printing unlimited amounts of money. Buying up bonds and other various things to attempt to stimulate the economy. Eliminating the penny would bring attention to rampant inflation currently going on under Obama’s administration.
This would be a big ‘No No” to do. Therefore, side-stepping the issue is the politically motivated thing to do. And exactly what happened.
In fact, it is important to note that while this article may single out both Obama and Bernanke, this isn’t a political party issue. This is a United States political issue. Meaning, the policies from the mainstream political wings on both sides are manipulated by the financial institutions and their benefactors (think Federal Reserve is neither Federal or a Reserve). This has been going on since the inception of the latest Federal Reserve in the United States one hundred years ago.
The Coin Modernization Act of 2010 has officially announced their findings. So what is the answer?
‘We need more time.’
No news is the absolute best news as it means that we all have a lot more time to capitalize on pennies and nickels before the Government takes them in themselves.
Most intriguing is the part on the one-cent coin:
“At Present, changes to the metals formulation of the one-cent coin would not yield significant cost improvements over the current formulation because the current market price of zinc is competitive with the prices of the credible alternatives, steel and aluminum.”
What solution does this leave? Elimination of the one-cent as the only viable solution.
Buy pennies and buy nickels while you can. If supply drops to zero from a coin denomination elimination, whether you’re a bullion investor or a numismatic coin collector, prices inevitably must go up.
A friendly reminder that the Coin Modernization Act 2010 is to report its findings mid-December 2012. That means, any day now, we could get the update on whether the penny is being eliminated or having a metal composition change. This also goes for the nickel being eliminated or having a change in metal composition.
Most likely, any change in metal composition would be a change to steel. Right now, pennies are made of 97.5% zinc and 2.5% copper. Nickels are 75% copper and 25% nickel. Each costs more than twice its face value to mint.
The Coin Modernization Act of 2010 itself was passed on December 14th, 2010 and was enacted to:
‘provide research and development authority for alternative coinage materials to the Secretary of the Treasury, increase congressional oversight over coin production, and ensure the continuity of certain numismatic items’”
Since its inception, there are many rumors floating around of trials of new compositions for both the penny and nickel, particularly steel. Taking a look at Canada, one can see the penny was made of steel in Canada by the Royal Canadian Mint, and actually eliminated as of this year, 2012.
The Canadian nickel is currently made of a metal composition of 94.5% steel, 3.5% copper, and 2% nickel plating coming in at a weight of 3.95 grams.
So what happens next? Only time will tell. But one thing is certain.
History repeats. The price to buy pennies sky rocketed as soon as the announcement of the Canadian penny elimination came out. Will it happen again in the United States? Perhaps the impending “fiscal cliff” talks will push the change or elimination of the penny and nickel right over the edge. After all, the cost to make the penny is 2.41 cents.
Hindsight may be 20 – 20. But we can all conclude that buying pennies and nickels now creates huge potential gains for you with their respective face value to fall back on.
Buy pennies and buy nickels while you can. If supply drops to zero from a coin denomination elimination, whether you’re a bullion investor or a numismatic coin collector, prices inevitably must go up.
All forms of currencies have intrinsic value. This means the actual physical monetary value of the item itself. A penny is made of metal. Therefore, it has metal value based on the metal content. For example, a copper penny is made of 95% copper 5% zinc and weighs approximately 3.11 grams.
This means a copper penny holds 2.9545 grams of copper and 0.1555 grams of zinc. Of course, wear and tear as well as various anomalies can change this figure. But the point to make is that this is a physical tangible value associated with the penny.
Currency Value
A penny also holds a currency value. This value is one-cent or 0.01 of a dollar. The purpose of this value is its trade value and use in a marketplace as a medium of exchange in place of a barter economy. A currency value is very subjective in a global marketplace when incorporating exchange rates and other factors.
It is good to note that currencies like the dollar are heavily devalued due to mass printings of more money into the money system. This means the intrinsic value bolsters compared to the currency value from the impact of inflation.
Numismatic (Collector) Value
Finally, a penny holds coin collector numismatic value. This often has to do with rarities of coins, makes, quantity of units produced, models, years, various errors, and other factors.
Penny Value Conclusions
What’s the point? Simple. You can convert these three value terms into three different values:
Intrinsic = Investment Value
Currency = Back up Value
Numismatic (Collector) = Supply & Demand Value
Metals are useful to society, and have a historic proof of keeping up with inflation at a minimum, often outpacing inflation. What does this mean? Your pennies are devaluing from inflation because of their face value but increasing in value because their metal value is not decreasing with inflation. While everyone else keeps their money in the digital world of banking, you are holding physical value that is increasing at a faster pace than money sitting in a zero percent-to-low-percent interest bank account.
Worst case scenario, you still have currency value to fall back on as a back up plan. If the metal value breaks historical statistics and turns the other way around, you still have a currency value, proving that unlike a bet in the stock market, your pennies won’t reach a value of zero.
Finally, pennies will be eliminated from circulation at some point. Every country has done it but the United States. Therefore, once it happens, the total quantity of pennies in circulation will drastically be reduced. Demand, however, for coin collectors will almost certainly stay the same. As a result: Supply drops. Demand holds steady. Value goes up.
That sums up the three multi-values of the pennies. Thoughts? Feel welcome to leave a comment below.
What’s so special about these coin bags full of newer zinc pennies? It’s about perspective and experience. To some, these are worthless trinkets because of their metal zinc content. Sort out the older coins and deposit these for face value.
But is this an accurate assessment? To a Lincoln Cent Collector, the adage of trash to treasure is a close to home truth. While the bullion investors avoid these pennies considering them one-cent trash, the collector finds all sorts of intriguing numismatic value.
Why do these newer pennies have such great possibilities? The newer the coin, the less hands have touched it, the fewer eyes that analyzed it, and greater possibility that the rarer pennies are out there to be found. Not only that, but newer pennies have a greater chance to be plucked from circulation at near pristine, if not mint state, condition.
So while some look only for older dates, Lincoln Wheat Cents, and copper bullion, there are many out there with the commendable experience to analyze and pick out the valuable little Lincoln treasures that others merely toss about as one cent coins.
Take the time to learn about these little one-cent treasures before they disappear into the abyss of inflation.
We will buy pennies in roll or box form that are Brilliant Uncirculated grade. This means never opened. The penny rolls or penny boxes can be of any year.
Full disclosure. When selling to a coin dealer, you receive dealer pricing, which is below retail pricing. Therefore, to maximize your profitability selling your pennies, you will want to sell at retail pricing. Of course, that means doing the research and work yourself.
If you want to skip the hassle of doing the labor yourself and want to simply sell, feel welcome to contact us and we will offer you a reasonable dealer price. You will be responsible for any shipping costs and insurance for shipping.
When contacting us, please make sure to include what you have. This means quantity (face value), whether rolls, boxes, or both, the year, and mint mark. Use the link below to contact us.
Take five minutes. Learn a little and your understanding will impact the lives of so many you interact with that have autism yet you may never know it.
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Low-risk investing is wise for any long-term investor looking to have gains while preserving wealth. Nickels offer a great solution for low-risk tangible investing.
Penny Nickel Composition Change Findings
Coin Modernization Act 2010 Reports 2012
Copper Penny Hoarders
Canada Eliminates the Penny
The Three Multi-Values of Pennies
How & Why to Invest in Copper Bullion
Invest in Copper Below Market Price
