Question about pulling copper from circulation..

[Diggin4copper]

Im new to the game, and I have a question or two that maybe someone has thought about before.. I understand that the Canadian mint pulls good nickles from circulation and replaces them with steel nickles, presumably reaping the profit. How long has that been going on? Does the fact that the US Mint is one step away from the circulating money supply (Going thru the Fed) keep them from doing the same here for pennies? Just curious to what the forum thinks.. Thanks! Diggin

[Copper Catcher]

Welcome to the discussion....

CANADIAN COIN NEWS - volume 43, number 2 - May 17 - 30, 2005 says the RCM has begun taking nickel coins from circulation, defacing them and selling them as scrap. Pre-2001 10 and 25 cent coins are first on the list even if they are not worn out. Aka Royal Canadian Mints ARP (Alloy Recovery Program)

http://journal.brinksinc.com/?id=journalissue11&page=4

http://www.mint.ca/store/dyn/PDFs/RCMCorpPlan2008.pdf

The topic has been talked about a little:
viewtopic.php?f=7&t=611&p=4254&hilit=royal+canadian+mint+reclamation+program#p4254

Below the melt ban there was a company called Jackson Metals that was trying to cash in.
You can Google the name to get the entire story.

[misteroman]

is it really worth it for them to go through all that work for the dimes metal?

[HoardCopperByTheTon]

is it really worth it for them to go through all that work for the dimes metal?

Yes it is. It's all about the seinorage rather than the metal value. Replacing dimes that are not worth a dime in metal with dimes made with a much cheaper metal is highly profitable.

Do you think they will ever destroy enough of the clad dimes to actually give the remaining ones some collector value?

[JadeDragon]

The math works so much better for the Mint than for us:

Our cost to buy a Canadian Ni dime: 10 cents
Melt Value of the metal: 5.75 cents
Profit: Gotta wait.

Mint's cost to buy the Canadian Ni dime with a steel dime: 1 cent (I have no idea the real cost, but they say it costs over a cent to make a steel penny so say it costs a penny to make a steel dime)
Profit on the exchange: 9 cents
Melt Value of the metal: 5.75 cents
Less cost of sorting out old dimes - less than making a new dime, so less than 1 cent.
Estimated profit per dime: 13.75 cents
And they did not add any cash to the money supply so no effect on inflation.

[dpwozney]

When the RCM melts a dime made of pure nickel, they no longer have the “10 cents”.

RCM's profit per dime is the melt value per dime minus the cost of making a steel dime minus the cost of sorting per dime.

RCM's profit per dime = (the melt value per dime) - (the cost of making a steel dime) - (the cost of sorting per dime).

If the cost of making a steel dime is one cent and the cost of sorting per dime is one cent, then RCM's profit per dime = 5.75 cents - 1 cent - 1 cent = 3.75 cents.

[JadeDragon]

When the RCM melts a dime made of pure nickel, they no longer have the “10 cents”.

RCM's profit per dime is the melt value per dime minus the cost of making a steel dime minus the cost of sorting per dime.

RCM's profit per dime = (the melt value per dime) - (the cost of making a steel dime) - (the cost of sorting per dime).

If the cost of making a steel dime is one cent and the cost of sorting per dime is one cent, then RCM's profit per dime = 5.75 cents - 1 cent - 1 cent = 3.75 cents.

I think you missed the 10 cents they sold the new dime for. The mint gets to keep the value of the new dime, plus the metal in the old one, minus the cost of the new dime and the cost of sorting it out.

[dpwozney]

When the RCM melts a dime made of pure nickel, they no longer have the “10 cents”.

RCM's profit per dime is the melt value per dime minus the cost of making a steel dime minus the cost of sorting per dime.

RCM's profit per dime = (the melt value per dime) - (the cost of making a steel dime) - (the cost of sorting per dime).

If the cost of making a steel dime is one cent and the cost of sorting per dime is one cent, then RCM's profit per dime = 5.75 cents - 1 cent - 1 cent = 3.75 cents.

I think you missed the 10 cents they sold the new dime for. The mint gets to keep the value of the new dime, plus the metal in the old one, minus the cost of the new dime and the cost of sorting it out.

The RCM also has to pay for the pure-nickel dimes that the RCM gets from circulation; people are not going to give the RCM their pure-nickel dimes for free.

1. The RCM creates a new steel dime. So far, the overall cost to the RCM is 1 cent.

2. The RCM sorts, takes, and buys a pure-nickel dime from circulation and pays for it with the newly-created steel dime, putting the steel dime into circulation. The exchange is made. So far, the overall cost to the RCM is 2 cents.

3. The RCM melts the pure-nickel dime and sells the nickel metal for 5.75 cents for an overall profit of 5.75 cents - 1 cent - 1 cent = 3.75 cents.

[68Camaro]

How is the melt value 5.75 cents? I would think it would be best grade feedstock requiring only minor refining, and would get nearly spot price, which coininflation shows as 12.75 cents (though that's USD), give or take.

Frankly I think the new nickel cost is likely to be closer to 2 cents, while the sorting cost is more like 0.1 cent (which totals about the same). Throw in a 1 cent fee for collection, transport, processing and with the proper melt value in the equation makes the profit more like 9.65 cents per nickel. Nearly a dime per nickel. A tidy sum, no doubt...

Rich

[dpwozney]

How is the melt value 5.75 cents? I would think it would be best grade feedstock requiring only minor refining, and would get nearly spot price, which coininflation shows as 12.75 cents (though that's USD), give or take.

JadeDragon and I were talking about the Canadian dime, not about the Canadian nickel.
The February 8th melt value for the 1968 - 1999 pure-nickel Canadian dime is USD “$0.0581763” according to Coinflation.com.

[68Camaro]

Ah! Well stupid me, I didn't even realize that there was a nickel "period" for the CA dime, though I did just look it up on the RCM site since coininflation didn't have those details. Gotcha. Thanks.

[JadeDragon]

The RCM used to use pure Ni in nickels (to 1981), dimes, quarters, halves and large dollar coins (until they switched to Loonies). They stopped in 1999 for the dimes, quarters and halves. The reason we focus on nickels is that there is a lot more Ni per face value in a Ni nickel than in a dime or quarter. The Ni in the nickels is cheaper to buy at the bank.

[NashuaSolstice]

what is the projection for Nickel around 20 years from now?

[ScottyTX]

The RCM also has to pay for the pure-nickel dimes that the RCM gets from circulation; people are not going to give the RCM their pure-nickel dimes for free.

Yeah was just thinking the same thing. Unless the Canadian government has the right to confiscate coins from the general public, someone/some institution has to be given .10 for each dime they turn in.

[68Camaro]

Huh? They are given a steel dime in place of a nickel dime; transparent to the public. Face value of each still the same. RCM has no right to confiscate; they are doing it as part of normal circulation.