Help me put this into perspective

[atticus]

Hi all,

I'm a newbie to all of this so bear with me. I started sorting recently due to finding an IH and a few wheats while going through my daily cash out at our restaurant. This has progressed, of course, to a full on addiction. haha.

I'm curious to put this into some perspective. How long after the silver coin ban did they lift it? My first inclination was to just sort and sell, but the more I read, the more intrigued that I am. I still find it hard to believe that I'll see the end of the cent in my lifetime, but then again, I do see a lot more credit card usage at our little place and can sort of logic it out from there, but...

Can someone talk me through the fundamentals on this? Ultimately, I'm still going to do it, because it takes my mind off the every day humdrum, so I'm not going to just sell my personal stash if no one responds, but I'd like to see what the argument is for doing it beyond that.

If it's easier, message me.

Thanks in advance,
Atticus

[68Camaro]

There are many simliar threads on this same topic, if you go look at the archives of the copper forum. To recap quickly in my words, I think there are three camps (and some people with a foot and a hand in each). There are those who hoard copper cents for the purpose of eventual sale to those who would melt it (salvage) after the melt ban is lifted. There are those who hoard copper for the sense it makes as a intrinsic value base coin in some future SHTF scenario. And there is the camp of those who simply sort and flip at a discount in the moment to those others of either of the first two camps who are willing to buy now.

Cents have already disappeared from other countries. Most of the remaining have long ago converted to plated steel coin. The US Mint creates them at a significant loss for each one made. There is a strong push to either eliminate the zinc cent (probably conversion to steel) starting in 2013, or to eliminate the cent altogether. Until the Mint gets the cent production cost below a penny, or gets rid of the cent altogether, they won't lift the melt ban. But it's almost inevitable that the cent will go away, eventually.

[Cu Later]

ill never melt. there for the grandkids. wish my grandpa saved his pre 64 silver.

[jacer333]

Welcome to the forum and to the copper community!

[atticus]

thanks for your responses so far. i've got to say, it's the SHTF theory that makes me most skeptical. i can rationalize most of the rest. can someone give me some insight into the time frame of the pre-64 silver coin melt ban? i'm coming up short on a search.

also, anyone want to weigh in on the copper ban from a standpoint of cents to nickels? i can see a turn-over of the ban in terms of copper cents, but considering the ban is for both cents and nickels, it would seem to me to be nearly impossible, legislatively, to overturn the ban for cents and not nickels at the same time. since nickels are still mostly copper, and in current circulation as such, how would that work? it would take a congressional effort to separate the ban between the two, right?

[68Camaro]

Not sure what you're looking for regarding the silver melt ban. There isn't a ban in effect for silver coin. It's only pennies and nickels that are currently banned from being melted. And don't know why the two coins can't be treated differently if they choose. Yes, they would need to pass another bill to amend the law. They would need to do that regardless. Congress that created the ban in the first place (at the behest of the Mint).

[atticus]

Thanks for your response 68. I was under the impression that they created a similar ban at some point after the 1964 material switch on quarters and dimes. is this not the case?

[henrysmedford]

Thanks for your response 68. I was under the impression that they created a similar ban at some point after the 1964 material switch on quarters and dimes. is this not the case?

From-- http://www.usmint.gov/pressroom/index.cfm?action=press_release&ID=724

United States Mint Moves to Limit Exportation & Melting of Coins

Interim Rule Goes Into Effect Immediately
WASHINGTON — The United States Mint has implemented regulations to limit the exportation, melting, or treatment of one-cent (penny) and 5-cent (nickel) United States coins, to safeguard against a potential shortage of these coins in circulation. The United States Mint is soliciting public comment on the interim rule, which is being published in the Federal Register.

Prevailing prices of copper, nickel and zinc have caused the production costs of pennies and nickels to significantly exceed their respective face values. The United States Mint also has received a steady flow of inquiries from the public over the past several months concerning the metal value of these coins and whether it is legal to melt them.

"We are taking this action because the Nation needs its coinage for commerce," said Director Ed Moy. "We don't want to see our pennies and nickels melted down so a few individuals can take advantage of the American taxpayer. Replacing these coins would be an enormous cost to taxpayers."

Specifically, the new regulations prohibit, with certain exceptions, the melting or treatment of all one-cent and 5-cent coins. The regulations also prohibit the unlicensed exportation of these coins, except that travelers may take up to $5 in these coins out of the country, and individuals may ship up to $100 in these coins out of the country in any one shipment for legitimate coinage and numismatic purposes. In all essential respects, these regulations are patterned after the Department of the Treasury's regulations prohibiting the exportation, melting, or treatment of silver coins between 1967 and 1969, and the regulations prohibiting the exportation, melting, or treatment of one-cent coins between 1974 and 1978.

The new regulations authorize a fine of not more than $10,000, or imprisonment of not more than five years, or both, against a person who knowingly violates the regulations. In addition, by law, any coins exported, melted, or treated in violation of the regulation shall be forfeited to the United States Government.

The regulations are being issued in the form of an interim rule, to be effective for a period of 120 days from the time of publication. The interim rule states that during a 30-day period from the date of publication, the public can submit written comments to the United States Mint on the regulations. Upon consideration of such comments, the Director of the United States Mint would then issue the final rule.

Those interested in providing comments to the United States Mint regarding this interim rule must submit them in writing to the Office of Chief Counsel, United States Mint, 801 9th Street, N.W., Washington D.C. 20220, by January 14, 2007. The interim rule appears on the United States Mint website at http://www.usmint.gov. The United States Mint will make public all comments it receives regarding this interim rule, and may not consider confidential any information contained in comments.

[henrysmedford]

I just reread my post and look at this quote --

"We are taking this action because the Nation needs its coinage for commerce," said Director Ed Moy. "We don't want to see our pennies and nickels melted down so a few individuals can take advantage of the American taxpayer. Replacing these coins would be an enormous cost to taxpayers."

So what is the difference? If one hoards them, they are out of circulation just as they would be if melted down. Just lift the ban!

[beauanderos]

I just reread my post and look at this quote --

"We are taking this action because the Nation needs its coinage for commerce," said Director Ed Moy. "We don't want to see our pennies and nickels melted down so a few individuals can take advantage of the American taxpayer. Replacing these coins would be an enormous cost to taxpayers."

So what is the difference? If one hoards them, they are out of circulation just as they would be if melted down. Just lift the ban!

So that's your plan, huh? Not bad, I must admit. Hold them hostage until the govt offers to buy them back for the same price they mint new ones?

[68Camaro]

Thanks for your response 68. I was under the impression that they created a similar ban at some point after the 1964 material switch on quarters and dimes. is this not the case?

Joe answered that, but the point is that there isn't a current ban; the silver ban that he references was short and gone long ago. Joe's revelation in his following post makes sense - as soon as there as few enough coins left in circulation that it doesn't hurt the Mint (much) to lose what is left, they will left the ban. The silver coins were pulled by the population fast, so that ban didn't last long.

[henrysmedford]

I think when they put the todays ban in at the end of 2006 zinc prices were higher and there was some worry of zinc being melted also.
From the mint--

Prevailing prices of copper, nickel and zinc have caused the production costs of pennies and nickels to significantly exceed their respective face values. The United States Mint also has received a steady flow of inquiries from the public over the past several months concerning the metal value of these coins and whether it is legal to melt them.

[atticus]

Thank you all for this information. I must admit, my first instinct was to just sell a quick turnaround, but you guys have me considering long term now too. Maybe a little of both is in order.

Thanks again!!
Atticus

[cupronickel]

My understanding is that in 1965, the melt value of the 1964 silver coins was below their face value. Eisenhower promised the price of silver would never rise high enough to make hoarding worthwhile. So no melt ban was needed. Then the melt value exceeded the face value, and the melt ban was put in place until enough clad coins could be produced and put into circulation. Once enough clad coins were circulating the melt ban was lifted. By this reasoning the cent melt ban should have already been lifted. The nickel melt ban still needs to be in place. I guess the two are tied together and by the time congress acts, the zinc cents may exceed their face value as well. If they made steel nickels and cents, the melt ban would be lifted once enough coins were in circulation.

[cupronickel]

Another possibility is that after new steel coins are made, the melt ban is lifted only for Brinks and the US mint. For everyone else the melt ban is still in place. In that case I say we hoard them all !

[68Camaro]

My understanding is that in 1965, the melt value of the 1964 silver coins was below their face value. Eisenhower promised the price of silver would never rise high enough to make hoarding worthwhile. So no melt ban was needed. Then the melt value exceeded the face value, and the melt ban was put in place until enough clad coins could be produced and put into circulation. Once enough clad coins were circulating the melt ban was lifted. By this reasoning the cent melt ban should have already been lifted. The nickel melt ban still needs to be in place. I guess the two are tied together and by the time congress acts, the zinc cents may exceed their face value as well. If they made steel nickels and cents, the melt ban would be lifted once enough coins were in circulation.

If the total amount of cents currently in circulation is "enough", and given that of those there are something like 80 billion copper cents still in service (anywhere from 5-20 years worth of annual production), which if pulled from service would have to be replaced with new zinc cents at a net loss of about (give or take) 1x face ($800 million), I don't think there is motivation for the Mint to lift the copper ban yet.

[cupronickel]

If they lifted just the cent melt ban, only the copper cents would disappear, which they already are. The zincs would circulate alongside the new steel pennies. The removal of the copper cents from circulation would make room for the new steel cents which might be profitable for the mint to make. I don't know if there is another example in history of a current production coin whose melt value exceeds the face value (besides the nickel).

[willy13]

Even ignoring material costs, the manufacturing cost of making a cent is above its face value. It will cost more than a cent to manufacture a steel cent. Thats why some say we should just get rid of the cent all together...

[cupronickel]

If that is the case, then the zinc may be the last one cent piece the US ever sees.

[Engineer]

Looking at it from the macro level, lifting the export or melting ban would only encourage us to export our national wealth of copper pennies to China. It would be a terrible decision on the part of our government, but since TPTB seem to be intent on bankrupting the US, it could very well happen. I don't think it will, however, until they're ready to maximize their profits from the exploitation of our national wealth. Here's one scenario to ponder:

Step 1: Make a test run to iron out the bugs in large scale sorting, transportation, and storage. The $5M Coinstar order could be a practice exercise.

Step 2: Once they get a good collection system in place, Supersorters working for hedge funds, etc. would suck the majority of copper out of the actively circulating penny supply. Promote a copper penny ETF as the greatest investment ever.

Step 3: Secretly short the copper penny ETF while lobbying congress to announce an end date to the penny being legal currency without relaxing the melt/export ban.

Step 4: After congress announces an end date to pennies, they could collect on the ETF shorts, while 99% of the US would carry their penny hoards to the nearest Coinstar machine or bank sorter, allowing them to collect the rest of the copper.

Step 5: Buy the copper pennies back from the busted ETF at a little under face value.

Step 6: Make a backroom deal with the treasury secretary for the mint to buy coppers at melt value.

[cupronickel]

Engineer,
The problem is that there are no more container ships available going to China. They are all already filled with our garbage. In addition, everyone knows that you can't put copper onto a ship. It's too heavy and the ship would sink.
Maybe we should start our own penny ETF.

[henrysmedford]

Engineer,
The problem is that there are no more container ships available going to China. They are all already filled with our garbage. In addition, everyone knows that you can't put copper onto a ship. It's too heavy and the ship would sink.
Maybe we should start our own penny ETF.

Brinks send Canadian coins to the US to be melted from http://www.brinksinc.com/journalArchive/Brinks_Journal_Issue11.pdf

In 2008, discussions and negotiations commenced to provide
Alloy Recovery Program services (ARP) in Toronto. The ARP
separates steel plated coins from alloy coins in quarters, dimes
and nickels, at which point the Mint demonetizes and sends them
to U.S. smelting operations to extract the specific alloys that will
be for sale on the world market.

So the US government could do the same. Like Canada you could not melt but the government can.

[cupronickel]

If that happens, then I would need to wait longer to realize their value. But if enough were melted then maybe there would be collectors willing to pay more than just the melt value.