Remember back in April when I wrote a post called The True Value Of A Penny? No? Well, you should go read it. It has Ryan Gosling in it.
In the event that you’re opposed to clicking links that promise Ryan Gosling (do you also hate puppies and life?), then just know that the post contains the fact that it costs the US government 2.4 cents to make a penny.
The US Mint made just under 5 billion pennies in 2011. At 2.4 cents a piece, that’s a total of $120 million dollars spent making a coin that is more likely to be used as a bingo marker by your grandmother than actually be spent.
$120 million dollars. People trample strangers in line on Black Friday for less than that.
But there is good news. It seems the US Mint has finally realized that they’re losing money on this deal, and’they’ve set out to fix the problem. They’re going to change the metal composition of pennies*. (Surprise- those little copper coins are actually only about 2.5% copper. The rest is zinc.)
The US Mint estimates that changing the composition of the coins will save them $75 million per year. Subtract that from their current production expense of $120 million, and you get $45 million. Then, divide that by the 5 billion pennies the US Mint will, um, mint, and you’ll see that the government will be paying about 1 cent per coin.
Sounds like a good deal, huh? Almost makes you like the penny again.
But wait, this story doesn’t end here. You see, the US Mint is also changing the composition of the nickel, since those five-cent pieces cost 11.2 cents per coin to make. So, doing the math on that one, we get the following:
Roughly 1 billion nickels x 11.2 cents a piece = $112 million dollars spent for coins actually worth about $50 million.
$112 million for nickels plus $120 million for pennies = $232 million for one year’s production of coins with a face value of $110 million.
$232 million – the $75 million savings the US Mint estimates = $157 million.
Divide that $157 million by the 6 billion nickels and pennies the US Mint will spit out, and adjust for the fact that it costs nearly 5 times more to make a nickel than a penny, and you get the new values:
1.57 cents to make a penny, and 7.22 cents to make a nickel.
Ooh, so close to balance, and yet so far. Because even with the lowered cost, the US Mint will still be losing $56.4 million per year in production costs.
On the bright side, the US Mint makes 13.9 cents per quarter they produce, and 4.35 cents per dime. The down side is that there aren’t enough quarters and dimes made each year to balance out the deficit from pennies and nickels.
Of course, we could solve the problem entirely by eliminating pennies and nickels from the US currency. We’d save $157 million a year.
But then we’d have to find new bingo markers for Grandma… Hmm. There may be no winner here.
Oh, and one final mind-blowing revelation: nickels are actually 75% copper.