The Three Multi-Values of Pennies
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.
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:
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.