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With the rising price of copper there has been
a buzz lately that the time may be ripe for hoarding copper
pennies. To wit, the price of copper has risen from $0.60
to $3.50 (almost 500%) in less than five years and from $1.50
to $3.50 (133%) in barely more than one year. It is understandable
that people are starting to think about hoarding pennies;
but it is also complete folly.
The problem is that there is very little copper
in a US penny. Since 1982 the US penny is made of copper plated
zinc; its composition is 97.5% zinc and 2.5% copper. A modern
penny weighs 2.5 grams, which means it contains 2.4375 grams
of zinc and 0.0625 grams of copper. At current metal prices
of $3.50 per pound of copper and $1.55 per pound of zinc,
the US penny contains 0.0482 pennies’ worth of copper
and 0.806 pennies’ worth of zinc for a total contained
metal value of $0.008542. As you can see, the metal value
of a penny is still less than a penny. You didn’t really
think the government would mint coins at a loss, did you?
Now, the situation is very different for pre
1982 pennies. Pennies minted between 1793 and 1837 were made
of pure copper. In 1837 the penny was debased and for the
next twenty years was made of bronze (95% copper and 5% tin
and zinc). In 1857 it was debased again to 88% copper and
12% nickel, giving it a whitish appearance; and then from
1864 to 1962 it was once again made of 95% copper and 5% tin
and zinc. The exception was 1943 when the penny was made of
zinc-coated steel due to the critical use of copper for the
War Effort. In 1962 the small amount of tin was removed from
the penny and its composition -- until 1982 -- was 95% copper
and 5% zinc. So if you can lay your hands on pennies minted
between 1864 and 1982, you could make a penny.
Pennies minted during those years -- with the
exception of the 1943 steel penny -- contained 95% copper
and weighed 3.1 grams. Thus, each of those pennies contained
2.945 grams of copper. At $3.50 per pound, each penny therefore
contained $0.0227 worth of copper; more than twice the face
value of the coin. Assuming you can get a smelter to pay you
90% of the metal value of the copper in a penny, it means
you can get two pennies worth of copper out of each pre-1982
penny.
So, if each pre-1982 penny contains two pennies
worth of copper you could make a penny profit for each penny
you smelted. But how practical is that? To make $10,000 in
profit you would need to smelt one million pennies, and one
million pennies weigh 3.1 metric tonnes, or 3.4 US tons. To
store and transport that many pennies to a smelter would most
likely cost you more than $10,000; and that is assuming you
could lay your hands on a million pre-1982 pennies.
The average lifespan of a coin is about thirty
years, so by now most of the pre-1982 pennies have long since
been reused by the US Mint to make new copper-plated zinc
pennies. If you can find a pre-1982 penny it would make a
neat conversation piece but I am afraid that as a money-making
scheme, trying to hoard pennies is about as lame as hoarding
paper dollars.
Paul van Eeden
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