Penny Legislation Change
Say, “Goodbye!” to the Zinc Penny.
And, “Hello!” to the Steel Penny.
It’s 1943 all over again, except instead of a copper shortage, it’s a copper affordability shortage.
UPDATE FOR PENNY AND NICKEL METAL COMPOSITION:
COIN MODERNIZATION ACT 2010 REPORTS 2012
December 15th, 2011 new legislation proposals have called for the elimination of the zinc penny and introduction of the steel penny. This bill was introduced by Representative Steve Stivers, not surprisingly from Ohio, where there is a vast and long-standing steel industry. Regardless of the regionally beneficial reasons for introducing this bill to make the penny out of steel, the current cost to make the penny significantly outweighs the face value of the penny, which is a national issue. Given the current economic and political climate of pressure on Congress to find cost cutting savings to avoid government shutdowns and tax hike increases, one would expect this bill to pass. The bill comes hand-in-hand with another bill to change the metal composition of the nickel to steel as well. The 2012 penny composition is still zinc, but if this bill passes, the 2012 penny composition may become steel.
Copper Penny Prices
What does a metal composition of the penny mean to copper penny prices? Market predictions expect a spike in value of the copper penny, shortening the gap between the current market value of the copper penny and the price of copper. In some cases, there is strong evidence that the value of copper pennies will exceed the price of copper given its extra benefits from its face value, quality, and recognition benefits. Coin metal composition changes mean society has recognized the coin no longer has an active societal function that has a greater value than its cost. This has historically led to the eventual elimination of the coin in question. However, back to the current issue on the why the composition change.
Coin Composition Change
When a coin is made, there are three main stages to its development and practicality: Production, distribution, and use. Respectively, these could also be called: Cost, Value, and functionality in society. The production of the coin is the cost to physically create the coin. Distribution is the cost to transport the coin to users and the price the producer (in this case the United States Mint) can sell the coin for. Use is simply the willingness of the coin buyers to have a use for the coin, whether selling numismatically for coin collecting or in trade as a currency.
The sale price in the distribution stage, with zinc pennies, is lower than the production cost. Meaning that even with charging a premium above face value, the United States Mint does not have enough demand for the new Lincoln pennies to offset the manufacturing cost to make the zinc pennies. Therefore, a zinc penny is a bad business decision. This bill is an attempt to make the sale of the penny a good business solution, which assumes the latter stage (use of the coin in society) is still practical.
Cost to make the Penny
Figures are in U.S. Cents Source from the U.S. MintPenny Production Cost
Life of the Penny
If you think this is the end of the line for the life of the penny, then you probably shouldn’t start breaking out the bubbly and dancing quite yet. The United States government has a history of slow moving changes and bad decision making. This bill might not pass as it could lead to very high cost to vending machine companies and coin counting machine users across the country.
What you should take away from this bill, whether it passes or does not pass, is that the penny is showing up on the chopping block more and more often. The more the penny is in the public spotlight as being fiscally unsound, the closer we get to the end of the penny. This has many positive aspects.
The main positive aspect being we can cash in on our copper penny investment at high prices (or knowing we can cash in at any time once it is legal to melt). Another aspect is actually that it will cost the buyer more money to buy the copper pennies. You may read this as a negative aspect as a buyer because it will cost you more to buy into your copper penny investment. But this fact needs to be looked at more closely.
The truth is, good investments cost more. Rising cost means the investment is rising in value and further proves it is a real winner. If this bill passes and the penny becomes steel, we’re one large step closer to a huge value increase in our copper pennies nest egg investment. But don’t worry. For now, there is still time to invest in copper pennies. You can even pick up pennies directly from your bank if you wish to do the sorting yourself (read about penny boxes versus penny bags).
The key of any investment is to research, study, and learn before investing. We have a simple question and answer style FAQ on pennies and tons of information on pennies to help guide you. You can also dive into learning more about how inflation effects the economy or you can skip the basics and buy copper pennies today.
Make Money with Pennies
Want to make money with your copper pennies? The next step after learning about why time is an important fact in copper penny investing is to read How to Make Money off of Copper Pennies.