Knowing my penchant for advocating the storing of junk silver coins against a future need, a friend asked me if I thought it was a good idea to start saving pennies for their copper content. The answer is yes, I do. Up to a point.
Pennies minted before the year 1982 contained 95% copper, while everything produced since then has been made of much cheaper zinc. As I write this (April 17th, 2012) the price of a pound of copper is at $3.68 a pound, which is about $1.50 in pennies at face value. So if you have three 50 cent rolls of pennies that were minted before 1982 , the value of the copper in those pennies is a lot more than a mere buck and a half. Their actual “melt value” is $3.65. If that doesn’t sound like much, consider that ten dollars worth of real copper pennies is worth almost $25.00 right now.
Except there’s this one thing: It’s currently illegal to melt down United States one cent coins. This is giving some would-be collectors pause. Why bother holding onto copper pennies if they’ll never be able to cash in?
The New Silver
But these foot-draggers are already missing the boat. Because whether or not you can melt your coins down is irrelevant. What is important is that the market has declared that the copper contained in the copper penny is of more value than one measly red cent.
Look at it this way: very few of us who purchase silver dimes, quarters, and half dollars do so with any intention of ever melting them down. We buy them because of the expectation that in the future, their intrinsic value will enable them to be traded for something that represents more value than the coins originally cost us. That is happening now with copper pennies, as smart collectors are selling them by the pound for more than twice their face value. Those who are buying these pennies do so with the expectation that they, in turn, can eventually trade them for more than they paid.
The reason the Secretary of the Treasury enacted a prohibition against melting pennies was in hopes of keeping the older copper pennies in circulation alongside the new zinc ones. That ploy isn’t working. Estimates are that already there is only a one in four chance that whatever pennies you received in change today consist of any copper ones.
When the new clad dimes, quarters, and half dollars were introduced into circulation back in 1965, it was the declared intention of the government that they would circulate alongside the millions of silver coins already in existence.
But the public isn’t as stupid as the government had hoped. After all, the very reason the U.S. mint began issuing dimes made of copper with a surface coating of nickel was precisely because the silver content of real dimes had already exceeded more than ten cents. Almost immediately we saw the effects of Gresham’s Law, which states that “bad money will always drive good money out of circulation.” People began to leave their silver coins in the drawer at home, and used only the new fake ones to buy things with. Sure enough, it wasn’t long before the only coins people were receiving in change were the new clad coins; the good, real money having been driven out of circulation by the bad money. People don’t usually give away something of value; they tend to keep it.
How Far Do You Want To Take This?
The only question you should be asking yourself is how much trouble is a penny worth to you? The picture at the top of this article shows plastic garbage bins filled with pennies some guy keeps in a shed next to his house. That’s taking the hobby a bit further than I would personally care to.
I also wouldn’t follow the example of the guy on Youtube showing off his “copper hoard” -24 boxes of pennies he had bought from the bank at $25.00 face value per box. That’s 1200 individual rolls of pennies this guy admits he has yet to go through to pick out the copper ones. Seems to me like an unnecessary climb.
If I had that kind of money to invest in coins, I’d spend it on silver. And if I had the kind of space these guys have to store all those pennies, I’d use it for storing food, not metal.
For my taste, actively buying up large stores of pennies is not the way to go. Why buy copper when silver takes up much less space and is a more secure store of value? And why even consider survival coins unless you have first ensured an adequate supply of food?
Rather than buying up pennies by the box, what I would be focusing on is simply making sure I’m not giving away any more of them by thinking of them as “only pennies.” Every copper penny you thoughtlessly put back into circulation is just going to get picked up and kept by someone who knows its value better than you do. Before long there won’t be anything left but the modern “Zincoln” pennies, the copper ones having been all snatched up by those who appreciate their value. Just like what happened with silver coins over forty years ago.
My wife and I have a couple of jars full of pennies that we’ll get around to sorting some day when we have the patience for it -or when the value of copper goes high enough to make it worth slogging through them all. In the meantime we’re not letting any additional coppers slip through our hands unnoticed.
If you’re one of those people who have been collecting pennies in a big five gallon jug for decades, you’re already ahead of the game. All you have to do is pick through them and separate the ones minted before 1982 (the one’s you’ll keep) and any minted after 1982 (the ones you’ll spend or turn back in to the bank).
If your eyesight is anything like mine, there is a slightly easier way to separate your pennies: get yourself a coin scale. Your copper pennies should weigh 3.11 grams each, while the newer zinc pennies weigh in at 2.5 grams. You’ll need this anyway, because even if you separate all the pre-1982 pennies from the post-1982 pennies by sight, you’ll still have the dilemma about what to do about the pennies dated 1982, because that year the mint produced both copper pennies and zinc pennies. The only way you’ll be able to tell them apart may be to weigh them individually.
You can get adequate coin scales for under $10.00 from a coin dealer, office supply house, or Amazon, but I would spend between $20.00 and $40.00 to get something that has more versatility. Some of these can toggle between grams, grains, ounces, and even carats, so they’ll come in handy for other uses, such as testing for counterfeit silver coins by weight, or figuring out what your jewelry is really worth. I would look for one with the capacity to weigh at least 500 grams, which is a little over a pound. That way you can verify your penny rolls by weight (remember, 3 rolls of pennies weigh close to one pound). You will also be able to use it as a postal scale or for weighing food portions if you’re on a diet.
Whether you want to actively accumulate large stores of copper coins will depend on how much space you have, how much time you’re willing to spend sorting pennies, and ultimately whether you think the price of copper will ever go high enough to make all that bother worth it. For a while last year, the price of copper put pennies above four dollars a pound, and there are certainly those who expect the value ratio to easily surpass ten times face within the next few years.