The Copper Penny Is Worth More Than One Cent
The prices of most commodities have risen substantially since 2001, and some of the coins you have in your pocket or piggy bank are worth a lot more today than in the past.
Pennies used to be made from 95 percent copper, at least until 1982. The price of copper has risen dramatically since the turn of the century, making the meltdown value of a penny more than the face value of the penny. Commodity prices continue to rise and fall with market changes, which could affect the current metal value of the coin.
The Copper in a Penny
A pre-1982 copper penny contains about 2.95 grams of copper, and there are 453.59 grams in a pound. The price of copper in June 2016 was $2.17 a pound, which made the value of copper in each penny worth about 1.4 cents. The meltdown value of a penny was 40 percent more than the face value. Copper moved to a higher price at the end of 2016 of around $2.70 per pound, making the value of copper in older pennies even higher.
Pennies contain a nominal amount of zinc which adds to the metal value. Pennies were manufactured with 97.5 percent zinc after 1982, so pennies dated before 1982 have the greatest metal value. However, in 2016 the price of zinc also increased in value making the pre-1982 pennies worth even more than their face value and the later pennies have also appreciated.
Calculating the Penny's Meltdown Price
You can calculate the meltdown value of pre-1982 pennies using the following formula:
(Price of copper per pound x .00220462262 x 3.11 x .95)
At $2.70 cents a pound for copper, for example, the valuation works out to about 1.75 cents. That number will increase or decrease depending on the current market price for copper. You can check the latest price of copper at http://www.cmegroup.com/trading/metals/base/copper.html.
The nearest month contract is closest to the spot value for copper.
The Meltdown Price of a Nickel
Nickels were made of 75 percent copper and 25 percent nickel. At market prices for copper ($2.70) and nickel ($5.08), the meltdown value of a nickel is more than 5 cents. Newer coin issues made of zinc and other metals have solved some valuation issues, for now.
How to Collect and Profit From Pennies and Nickels
It may sound simple, but you can go to the bank or anywhere else that has large quantities of pennies or nickels and buy them at face value.
When it comes to pennies, the pre-1982 pennies will have the best metal content value, although it can be time-consuming to sort through and isolate only pre-1982 copper pennies. Some companies sell bulk pennies that have been sorted, but they will charge you a premium.
Nickels have been produced with the same metals since 1946, making it much easier to simply buy old nickels and not have to do any sorting. However, over recent years the composition of metals in nickels has changed as the mint experiments with different, cheaper metals.
A Warning About Legality
Quite a big roadblock exists when it comes to this investment idea. It's currently illegal to melt down pennies and nickels, so you would have to consider owning copper pennies and nickel nickels as a long-term investment.
In 2006, the U.S. government imposed a penalty for melting these coins, of up to a $10,000 fine and five years in prison, or both. The U.S. Mint has entertained the thought of stopping penny production because of the high price of minting the coin but has yet to officially do so.
Many other countries have already done away with their version of the penny. When the penny is abandoned, it is likely to become legal to melt the coins down for their copper content. The status of the nickel may also change in the future.
Investors and collectors have already begun hoarding pennies and nickels. It will likely become more difficult to find pre-1982 pennies in the years to come, especially if the price of copper moves higher. Pennies and nickels are worth more than their face values today and if prices of the metals rise, an investment in the coins could pay off handsomely in the future.
Storing thousands and thousands of pennies take lots of space. One thousand dollars worth of pennies equals 100,000 pennies, and $10,000 is one million pennies. If you could possibly get your hands on that many pennies, you may run into a storage issue as that many pennies weighs an awful lot.
On a smaller scale, nothing's wrong with sorting through spare change every week and putting the pennies and nickels in a container to save for the day when they could be worth a lot more.