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starwarsgeek171
Penny Hoarding Member
USA
651 Posts |
 Posted - 01/23/2008 : 10:45:24
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Coin Shortage Could Turn Pennies to Nickels
NewsMax.com Wires
Tuesday, Jan. 23, 2007
Talk about pennies from heaven.
A potential shortage of coins in the United States could mean all those pennies in your piggy bank could be worth five times their current value soon, says an economist at the Federal Reserve Bank of Chicago.
Sharply rising prices of metals such as copper and nickel have meant the face value of pennies and nickels are worth less than the material that they are made of, increasing the risk that speculators could melt the coins and sell them for a profit.
Such a risk spurred the U.S. Mint last month to issue regulations limiting melting and exporting of the coins.
But Francois Velde, senior economist at the Chicago Fed, argued in a recent research note that prohibitions by the Mint would unlikely deter serious speculators who already have piled up the coinage.
The best solution, Velde said, would be to "rebase" the penny by making it worth five cents rather than one cent. Doing so would increase the amount of five-cent coins in circulation and do away with the almost worthless one cent coin.
"History shows that when coins are worth melting, they disappear," Velde wrote.
"Rebasing the penny would ... debase the five-cent piece and put it safely away from its melting point," he added.
Raw material prices in general have skyrocketed in the last five years, sending copper prices to record highs of $4.16 a pound in May. Copper pennies number 154 to a pound. Prices have since come down from that peak but could still trek higher, Velde said.
Since 1982, the Mint began making copper-coated zinc pennies to prevent metals speculators from taking advantage of lofty base metal prices. Though the penny is losing its importance -- it is worth only four seconds of the average American's work time, assuming a 40-hour workweek -- the Mint is making more and more pennies.
Velde said that since 1982 the Mint has produced 910 pennies for every American. Last year there were 8.23 billion pennies in circulation, according to the Mint.
"These factors suggest that, sooner or later, the penny will join the farthing (one-quarter of a penny) and the hapenny (one-half of a penny) in coin museums," he said. END
starwarsgeek171 says, "Since there is NO HYPERINFLATION coming [in fact, it's going to be a recession, as I predicted) read past posts], my post regarding penny should = 5 cents doesn't seem so crazy now, does it?
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El Dee
Penny Hoarding Member
USA
547 Posts |
Posted - 01/23/2008 : 11:29:05
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Year old news. It would solve one problem and create others.
The obvious thing this Ivy League economist hasn't grasped is that metal speculators would make even MORE profit from such a plan. Imagine for a microsecond what happens when the news of such a plan breaks. Every single penny will be sucked from circulation until the morning of the transition day.
Then, a year after transition day, how are all the poor bank cashiers supposed to check each penny to see if it's one of the old ones exchangeable for 5c or one of the new ones that are already worth 5c?
And what happens to all the nickels when you revalue pennies?
The Brits didn't make the farthing worth a pence. They dropped it. It makes more sense to drop the cent and make nickels out of steel, like Canada. That way, evil hoarders like us wouldn't make nearly as much money as if they should turn 1c into 5c.
But I hope they hold off until I fill my barrel.
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Trust the government? Ask an Indian. |
Edited by - El Dee on 01/23/2008 15:24:48 |
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HoardCopperByTheTon
Administrator
USA
6807 Posts |
Posted - 01/23/2008 : 12:01:50
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| Would this make my half cents worth 2.5 cents? I'm all for it. I've got my 910 pennies. But it ain't gonna happen. This suggestion came out a year ago.. and nothing happened since. |
If your percentages are low.. just sort more. If your percentages are high.. just sort more.
Now selling Copper pennies. 1.6x plus shipping. Limited amounts available. |
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starwarsgeek171
Penny Hoarding Member
USA
651 Posts |
Posted - 01/23/2008 : 15:23:02
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A. Only copper pennies would be revalued (zinc would be collected/melted by gov't. = $$$)
B. NO new pennies would need to be made for years (they will come out of the woodwork like you can't imagine).
C. Nickels would not be needed anymore [Gov't. melts them as well ($$$) and also saves big $$$ dropping nickel production].
D. Taxpayers would save a fortune [no more penny/nickel production - new pennies (if ever needed) would have to be made of copper].
E. Economy will get "magic money" boost!
F. We will all make out like bandits.
G. Obviously I know this will NEVER happen, yet it is not an argument without merit.
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HoardCopperByTheTon
Administrator
USA
6807 Posts |
Posted - 01/23/2008 : 15:40:26
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Why would only copper pennies be revalued? I have lots of zincs too.
Are they going to sit there and check the date on every penny? How would they deal with 1982's? |
If your percentages are low.. just sort more. If your percentages are high.. just sort more.
Now selling Copper pennies. 1.6x plus shipping. Limited amounts available. |
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starwarsgeek171
Penny Hoarding Member
USA
651 Posts |
Posted - 01/23/2008 : 16:11:38
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HoardCopper, because the copper pennies would have true value (somewhat close to 5 cents), while the zincs really wouldn't. Wouldn't it be nice to have at least one coin that's worth something? The zincs could maybe be bought back by banks at 1.2 cents apiece. The zincolns, as well as the 82's would be sorted out with all the Rydales the banks, CoinStar and the government would buy to collect the coppers and eliminate the zincs from circulation! Trust me, I understand your interest in zinc, as I am also considering saving my zincs from now on (very long-term strategy), but I don't see zinc approaching 5 cents in my lifetime. Maybe my future grandchildrens'.
However, I guess El Dee is right, it would be simpler to just drop the penny and make cheap steel nickels. They'll keep the melt ban going indefinitely, and people will eventually give up hoarding, and they'll cash in their coppers because they can't do anything but hold on to them. Then the gov't. will get its copper back at face value using their new Ryedales.
Either way, Ryedale sells lots of sorters! |
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