The prices of most commodities have risen substantially since 2001, so why would anyone suggest a penny is worth more than a penny?
The rise in commodity prices is the reason why. 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.
A pre 1982 copper penny contains about 2.95 grams of copper. There are 453.59 grams in a pound. The current price of copper is $3.50 a pound. That makes the value of copper in each penny worth about 2.2 cents. The meltdown value of a penny is more than double the face value.
There is a nominal amount of zinc in pennies and it really isn’t worth bothering to calculate the added value to a penny. Pennies were manufactured with 97.5 percent zinc after 1982, so you only want to look for pennies dated before 1982.
The formula for calculating the meltdown value of pre 1982 pennies:
(Price of copper per pound x .00220462262 x 3.11 x .95)
At $3.50 cents a pound for copper, the valuation is about 2.2 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.
What about the Nickel?
Nickels are made from 75 percent copper and 25 percent nickel. At market prices of copper ($3.50) and nickel ($8.40), the meltdown value of a nickel is about 5.1 cents. The meltdown value of a nickel fluctuates closely with being just above or below 5 cents. The good thing about a nickel is the value of the metal, nickel, is typically twice the value of copper. The zinc in pennies is not worth much.
How to Collect and Profit from Pennies and Nickels
It may sound simple, but you can go to the banks or anywhere else you can find large quantities of pennies or nickels and buy them at face value. With pennies, it will be more work since you have to look for the pre-1982 pennies. That can take some work. Nickels have been produced with the same metals since 1946. This makes it much easier to simply buy nickels and not have to do any sorting.
There are some companies that sell bulk pennies that have been sorted, but they will charge you a premium.
Obviously there is a big roadblock with this investment idea. You’ve probably already thought of this – and yes – it is illegal to meltdown pennies and nickels. Therefore, you would have to consider this a long-term investment. It is only a matter of time before the penny becomes virtually useless in our economy. This will especially be true if inflation increases in the years to come.
Many other countries have already done away with their version of the penny. If the penny is abandoned, you can bet it will be legal to melt them down for their copper content. The nickel might be further down the road. The government might eventually change their stance on the laws of melting pennies and nickels.
Investors and collectors have already begun hoarding pennies and even nickels. You will probably see that it becomes more difficult to find pre 1982 pennies as time goes by. If the price of copper continues to trend higher in the coming years, the copper in a penny could be worth more than 3 cents. If you think on a large scale, that investment could payoff nicely several years from now.
Storing thousands and thousands of pennies is another issue to consider. A 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, you have to store them somewhere. That is a lot of weight and possibly storage space. If that isn’t the road you want to take, there is nothing wrong with sorting through your spare change every week and putting the pennies and nickels in a container to save.