New cent and nickel composition?

So I read the article last night from Numismatic News concerning the following facts:

1. With the ceasing of dollar coin production, the seignorage given back from the mint the the treasury will drop considerably, highlighting the money being lost making cents and nickels.
2. There already is a bill introduced to force the mint to start making cents and nickels from steel.
3. In 2013 there is supposed to be a major report due to Congress on the future of the mint.

The author says all of these things are adding up to making it a very good chance the new compositions will be put into place, and current cent and nickel compositions will be a thing of the past. Another thing pointing to this is the fact the steel industry has a powerful lobby, and the steel would be of domestic origin, as opposed to the metals going into our coins now.

I think this would be big enough that we would witness 1965 levels of people hoarding old styles of coinage when the new ones were released. What do you all think?

Chris

P.S. I know, "what the heck is an ancient collector writing about this stuff anyway?"

 

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Wow. I will certainly be watching this issue then.

 

That's a compelling article. I think there will be more hoarding of nickels and pre-82 copper cents. The zinc stuff will still be plentiful without any further fanfare. I like the steel idea, especially if it brings more jobs back to the US. The rebirth of Pittsburgh, PA sounds like a great idea!

 

The cent and the nickel should be made of stainless steel with no added coloring.

 

I should think not. Back in 1999 or 2000 I thought that all of the 1965-1998 style quarters were going to vanish with the introduction of the State Quarters so I assembled two rolls of them from circulation. Over ten years later and those quarters are still very commonly seen and found in circulation. Speaking in terms of composition, just look at how pure copper pennies are still found in high numbers from circulation and they were switched to zinc 30 years ago. Sure people (pointlessly) hoard them but they are still very easily found all these years later.

 

Two years ago, a box of cents would yield, on average, about 28% copper in my area. Today, that's down to about 22%.

Copper cents aren't gonna last forever...

 

DO you have a link stating the demise of the dollar coin program? I have heard that this MAY happen, but I haven't seen any offical news that it will happen.

 

http://www.chicagotribune.com/busin...ns-no-one-wants-them-20111214,0,5476345.story

Here is one, but any google search will yield hundreds of stories. They are stopping all but collector coins.

 

I guess I will continue to pick the pre-82 cents and start hoarding them

 

Well, its my understanding Gresham's Law only works if one coin is seen by the general public as being more valuable than another. Most people I know did not believe the state quarters were going to make older quarters more valuable, nor are they even aware that cents have changed composition. Something like this, being different weight, look, and feel, coupled with news stories about the costs of the previous versions being much higher, (hence more valuable), is more akin to 1965 than to what you are describing.

There is a reason they continued to copper plate cents in 1983, they did not wish to make it obvious to the public the change, and thereby create a cent shortage in this country, in my view.

Chris

 

If the Feds permit the melting of pre-82 cents, then I certainly see extensive hoarding of the cents.

But the hoarding of nickels maybe less likely because the face value is five times more than the cent and that ruins the margins (at current nickel and copper prices).

Now if copper and nickel values increase significantly then both boats will surely rise.

 

Yes but those quarters 'melt value' is the exact same as the modern quarters. The pre 82' cents are worth over face value in melt and although nickel prices fluctuate a bit nickels are often worth more in 'melt value' than the face value also. Even though it's illegal to melt them down now people are already hoarding them as it's only a matter of time before they get debased and the laws on melting no longer apply just like junk silver.

 

Dollar Coin Alliance has details of the bogus political move by Biden and provides a chance for you to take action with a few clicks.

http://dollarcoinalliance.org/

http://dollarcoinalliance.org/get-involved/

 

WHAT? Haha, bogus political move to eliminate a useless and wasteful program that only a rare few people actually have any interest in? Get real, boss.

 

Hello Fred,

Let me tell you this funny story that happened about six weeks ago. I went to a Wells Fargo and bought five Sac/Pres dollars (I refuse SBA coins, too easy to confuse with quarters) from the teller's tray as I thought they would be fun to spend. I then went to a nearby Albertson's and my total came to less than $3. I gave the cashier three of the dollar coins and he didn't even know what they were! A bagger who was half his age had to explain to him that they were dollar coins, he said he hadn't "seen a dollar coin in ages". I couldn't help but laugh to myself about the whole thing, here was a seasoned cashier who deals with cash all day for a living and he was clueless about these things. Why was he so clueless? He was clueless due to a complete lack of use or interest with these coins from the general public.

 

Steel could potentially save the nickel for a few more years but nothing can save the cent anymore. It is now a money loser even if you give the Mint the material for free. The Mint has recently changed their accounting procedures to more closely match those used in industry. Under these procedures the current cent contains $0.0043 worth of material, and production and distribution costs are $0.0198 for a total of 2.41 cents for every cent made.

And since they have stopped the dollar coin for circulation, the mint is going to lose $210 million in profits from the dollar that could be used to offset the $116 million dollar loss from the cent and nickel. So the $50 million "savings" from stopping the dollar actually turns into a $209 million loss.

 

Those dollars weren't getting out into circulation, so there is no way that they are making as much as they say they are off them. Just because they mint them and stick them in a warehouse somewhere doesn't mean they've made profit, it just means that they've made paper profit by creating value where none is.

The beauty of fiat currency... and yes, non-precious metal currency is fiat as well.

That $50m a year saved is real money saved, production costs.

 

Right now, I would drop all coins below 25¢ as quarters are only barely useful in commerce anymore and all of the smaller coins are only useful for fine parsing of state sales taxes as well as replace the banknotes up to at least $10 with coins.

Remember that due to inflation, we have added nearly two full 'zeroes' to the USA Dollar since FDR dropped the gold standard in 1933 (I use the price of gold as my inflation constant and yes, that constant works) - the buying power of a one cent coin of the 1910s and 1920s is nearly equal to that of one DOLLAR today, and yet, except for dropping the $2.50 to $20 gold coins, the slate of basic coins between then and now is unchanged. Half Dollars were more common in circulation than quarters back then, nearly all everyday small-time commerce was in coins ONLY and to have even one or two $1 banknotes in the wallet was to be carrying 'real' money around.

Amazing.

Mike

 

I agree Mike that gold works as a contant now, but always be careful. Sometimes it doesn't. I simply use reported inflation numbers and compound them from the period I am look from and to. Its within 5% today from 1934 inflation versus gold pricing. However, go back 15 years ago, or 30 years ago from today and they were not so close, one being over and the other under.

Just a suggestion sir.

Chris

 

IMO the dollar coins will not be used until they stop printing the paper dollars and remove them from circulation. People will adjust when they have to, but not before.