The Copper Penny Is Worth More Than One Cent
The prices of most commodities have risen substantially since 2001, so some coins we have in our pockets are worth a lot more today than in the past.
Pennies were made from 95 percent copper up until 1982. The price of copper has risen dramatically since the turn of the century and now the meltdown value of a penny is actually worth more than the face value of the penny. Of course, commodity prices rise and fall with market changes and that could change the metal value of the coin.
A pre-1982 copper penny contains about 2.95 grams of copper. There are 453.59 grams in a pound. The price of copper in June of 2016 was $2.17 a pound. That made the value of copper in each penny worth about 1.4 cents. The meltdown value of a penny was 40% 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.
There is a nominal amount of zinc in pennies 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 Meltdown Price of a Copper Penny
The formula for calculating the meltdown value of pre-1982 pennies:
(Price of copper per pound x .00220462262 x 3.11 x .95)
At $2.70 cents a pound for copper, the valuation is about 1.75 cents. That number will increase or decrease, depending on the price of 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 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 you can find 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. It will be time-consuming to sort through and isolate only pre-1982 copper pennies. Nickels have been produced with the same metals since 1946.
This makes it much easier to simply buy old nickels and not have to do any sorting. Nickels have been produced with the same metals since 1946. However, over recent years the composition of metals in nickels has changed as the mint experiments with different, cheaper metals. There are some companies that sell bulk pennies that have been sorted, but they will charge you a premium.
A Strong Warning
Obviously, there is a big roadblock when it comes to this investment idea. It is illegal to melt down pennies and nickels.
Therefore, 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 as high as a $10,000 fine and five years in prison, or both. The U.S. Mint will stop making pennies in 2017 because of the high price of minting the coin.
Many other countries have already done away with their version of the penny. When the penny is abandoned, it is likely that it will become legal to melt the coins down for their copper content. The status of the nickel will not change in 2017, but it may 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 is 100,000 pennies. $10,000 is one million pennies. If you could possibly get your hands on that many pennies, storage will become an issue as that many pennies weighs an awful lot. On a smaller scale, there is nothing 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.