Pennies, Melting, and 1965

According to http://www.coinflation.com/, pennies minted prior to 1982 are worth over 2 cents each in their copper content alone. In response to this fact, the Federal Government, ever the “freedom loving” organization, has implemented a new law. It is illegal to melt coins for their metal content. It is also illegal to transport over $5 worth of coinage outside of the United States. Punishment is five years in prison and/or a $10,000 fine. Welkome to Amerika!

Regardless of these tyrannical restrictions, I have begun to hang on to my pre-1982 pennies. (I’m also keeping nickels, currently valued at about 6-7 cents in metal content.) My reasoning is that the government will surely not continue this madness for long before they decide to make the switch to cheaper metals. Bills have already been proposed to do just that.

Some of my friends and family are making fun of me. They taunt, “So Mike, are you really going to risk prison time or steep fines in order to double your money by melting pennies?” My answer is simply this. Any FBI/CIA/Secret Service agents who happen to be reading this please note this important response. I HAVE NO INTENTION OF MELTING ANY U.S. COINAGE. There. That should clear things up. I have stated on the record that I am not planning on doing anything illegal. Yet, I still want to save them.

Here’s my logic. If someone in 1965 or 1966 had taken this same approach with U.S. dimes, quarters, and half dollars, they would be doing very well today financially without ever having to melt a single coin. 1964 was the last year that U.S. Coinage was minted in 90% silver. If you manage to find one of these coins in circulation, you can sell it to a coin shop for quite a profit. Today, a 1964 dime is worth about 90 cents in its silver value alone. A 1964 quarter is worth about $2.26. A 1964 half dollar is worth about $4.53. These values represent an increase of 906.40% over their face value. A 1981 and earlier penny is currently worth 2.26 cents or 226.22% of its face value. The difference is that it is still pretty easy to find pre-1982 pennies in circulation, though they are getting less common than they used to be. Secondly, it doesn’t hurt anything to hang on to pennies. You have to save 2500 of them just to get 25 bucks in face value, so it gets impractical to store them if you accumulate too many. The worst risk you take is the lost interest if you had that money in the bank. Big deal! What are savings accounts paying now, 1.5%? If you get in a bind and need the money, you can always spend pennies, as they continue to be legal U.S. currency. Copper and Nickel are the last holdouts to the “hard money” this country was established on. A copper penny is “real money” as compared to a bank note. As copper continues to rise, I believe there will be a very real market for copper pennies even if they are never melted. After all, silver coins have value as “silver” though they aren’t melted down for industrial use. I believe the same will be said of pennies in the short term.