To make 1 cent, it costs 1.67 cents as of 2015. This is a significant cost to the U.S. government, and as a result, to the U.S. taxpayers. In the past year alone, the cost of the penny and nickel have resulted in two times the loss in production costs between 2009 to 2010:
“Per-unit metal costs increased in [Fiscal Year] 2010, driving up the total unit cost of all denominations from last year. The nickel per-unit metal and fabrication cost rose 2.3 cents from [Fiscal Year] 2009, increasing the nickel total unit cost 52.9 percent to 9.2 cents in [Fiscal Year] 2010….
Higher unit cost and demand for the five-cent coin increased the overall loss the United States Mint incurred from producing these denominations in [Fiscal Year] 2010. Penny and nickel coins were produced at a loss of $42.6 million, nearly double the [Fiscal Year] 2009 loss of $22.0 million.”
– This quote can be seen on the U.S. Mint’s Annual Report, 2010 (page 27 & 28).
Want to see a breakdown of the rise in cost to make the U.S. penny?
– a more in depth breakdown with a ten year plotted chart.
The Penny, is it profitable?
A detailed explanation with profit graph on the profits and losses of the U.S. Mint in making the penny.
On the U.S. Mint website: “There was a study conducted in 1976 of this and other suggestions regarding our coinage system. However, the idea of eliminating the penny received strong objections from an overwhelming majority of State revenue collection departments, retail firms, and commercial banks.” 1976? Isn’t this study perhaps a little outdated? Actually, the facts show that Jarden Zinc Products has been the sole supplier of U.S. penny blanks since 1998 and they do a ton of lobbying (Example, Another Example) [Note, the example links were removed as the government site has removed the source pages. No explanation why, unfortunately].
If you go to the U.S. Mint website and type “Jarden Zinc Products” into the search bar, interestingly enough, the results are, “Sorry, no records found.” However, on the U.S. Department of Treasury website, a search results in discovering that Jarden Zinc Products has violated U.S. law by exporting goods overseas to Sudan without the Office of Foreign Assets Control’s permission – Source One, Source Two.
It’s safe to say that the Pro-Penny lobbyists have money they can throw at congress to keep the penny alive for a while. But inflation will bring about the end of the penny. After all, inflation not only makes the penny less valuable each year, but also means the actual cash value of the money the lobbyists are spending is also less powerful since the buying power is reduced.
The U.S. Mint is supposed to generate revenue and be profitable. Ten years ago, making the penny achieved this goal. Five years ago, trends showed a break-even point. Now we can clearly see the trends that the penny being profitable is in the past, not the future.
Producing something that is known and expected to be a loss, it not good business without clear benefits. And last time we did the math, taking something more valuable (the metal making the new pennies) and turning into something where law states it is less valuable (since it can’t be melted we have to accept the penny at face value) just does not make sense. This can’t last. And the longer it does last, the more valuable copper pennies become. Why wait to buy your pennies?
Imagine if you had capitalized on silver coins when they were regularly available in circulation. If you had, you would quite literally have around a margin difference of 2000%-3000% return of metal value compared to face value on silver half dollars and a 2200%-4500% return on silver nickels.
The latest findings, as of December 2012, of the United States Mint
The Coin Modernization Act of 2010 has officially announced their findings:
‘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.”
Now is your chance to buy copper pennies, and capitalize on copper before it is too late, and copper coins follow silver coins, disappearing into wise historical investments.