Coin Composition Changes in 2011 Budget
A few comments as well as a thread on Coin Network have brought to my attention a section of President Obama's Proposed 2011 Budget that might have significant implications for circulating coins.
Page 100 of the Terminations, Reductions, and Savings section would provide broad authority to the Department of the Treasury to make changes to circulating coin weights and compositions. The report specifically authorizes changes for five denominations: the cent, nickel, dime, quarter, and half dollar.
The Budget justifies the proposal by citing the significant fluctuations in the prices of copper and zinc, which have contributed to volatile and negative margins on the two denominations, and costs which have exceeded face value by over $100 million in prior years.
The 2011 Budget states that the use of "alternative coinage materials" could save $150 million annually after a period of development and capital adjustments. Specific alternate compositions and weights are not mentioned. The guidance from the Budget is included below:
The Budget enables the Department of the Treasury to explore, analyze, and approve new, less expensive materials for all circulating coins based on factors that will result in the highest quality of coin production at the most cost-effective price. Such factors may include physical, chemical, metallurgical and technical characteristics; material, fabrication, minting, and distribution costs; materials availability and sources of raw materials; durability; effects on sorting, handling, packaging and vending machines; and resistance to counterfeiting.A few observations--
Even if the composition of the penny is changed to a cheaper material, the cost of producing the denomination will most likely still exceed one cent. Based on the US Mint's 2009 Annual Report, the cost of producing the penny was 1.62 cents. According to the latest data from Coinflation, the metal value of the current 97.5% zinc and 2.5% copper composition if 0.0054569 cents. This means that even if the material used to produce the cent was free, production would still cost more than one cent.
In the most recent fiscal year, the production and distribution of the cent and nickel generated a loss of $22 million for the US Mint. The losses from producing the two denominations were more than offset by the seigniorage earned from other circulating coins. In total, the US Mint shipped $777.6 million of circulating coins to the Federal Reserve Banks and earned $427.8 million in seigniorage.
If coin compositions are changed to primarily steel, a potential issue might be the fate of disposing of retired or mutilated coins struck in the new composition. In a very timely blog post, Dave Harper tells about a recent conversion with a blank supplier. The supplier stated that there is no easy way to dispose of coated steel planchets, making them little more than "trash for a landfill." The US Mint has taken numerous occasions to promote their dollar coins as 100% recyclable, so it would be a bit of an embarrassment if a newly introduced composition was 0% recyclable.
At this point, the 2011 Budget is only a proposal, and this section may very well be dropped or changed. It will be interesting to see if one reader's bold prediction comes closer to reality.
Labels: US Mint
posted by Mint News Blog @ 12:37 PM
70 Comments:
The mint shouldn't worry about making pennies/cents, or nickels...Anyone else agree?
Another reason I'm glad I didn't vote for that fool. Our currency already isn't worth anything, and osama decides to make it worth even less. For those that have gold coins, the osama administration will be coming for it soon.
There is no need to kill the penny. Look in Europe, they have " eurocent". And ,they also have 500 euro paper money which is circulated (equal to 750$).
does anyone know if the mint uses pre 1982 pennies and melt them down to help produce new copper plated zinc pennies? would this reduce their costs?
Maybe it's time to return to wampum.
wampum: beads of polished shells used by the American Indians...
At least they were organic.
February 3, 2010 3:20 PM.....Well said!!!!!
This story is amazing. All the money the government wastes and they are worried about coinage? First of all, the US Mint made money hand over fist to offset any cost associated with the treasury making coins. Secondly, lets talk about real waste. We spend massive amounts of money here to provide healthcare, education, and incarceration of illegal aliens. And lets not forget foreign aid and all the entitlement programs that exist i.e., welfare. I personally believe this is just another step to one day scrapping American coins and currency and creating the Amero just as Europe has the Euro.
I am still trying to figure out why we need pennies. Are there still penny gumball machines out there. Purchases can be rounded up or rounded down to the nearest nickel. Also that nasty germ infested $1 FRN needs to go. Get those Mickey Mouse presidential dollars into circulation. Please don't tell me these dollar coins are two heavy in your pocket. They are not much bigger than a quarter. There must be politcal reasons why we have pennies. Maybe its the various metal industries influence in congress.
Next they will want to get rid of all cash and have an implant to do purchases with (much easier to track).
I still say that a return to using a 2-cent coin would solve this. Produce it with a cheap metal. This is would enable the Mint to seriously reduce the production of pennies (thus lowering losses) and nickels (good if we cannot find a better material for it that still makes it look like a nickel). Changing the composition of our coinage *might* force them to look totally different; by re-introducing the 2-center, and allowing it to be a cheap and easy coin that may or may not resemble the original 2-center, the Mint would become very versatile in production and cost savings. Plus, it would help make a great short-term profit on the initial collectors' sales.
Our coinage needs a sweeping overhaul. Pennies and nickels are worthless remants of our past. They have far less buying power than the 1/2 cent had when it was discontinued. We didn't need a coin with the buying power of 1/10 of a cent in the 60s and we don't need the penny now. Get rid of the cotton industries cow, the "paper" dollar and use those dollar coins. Add 2, and 5, and 10 dollar coins. Lets use coins again---we would if they were worth using. The 1/2 dollar is a joke two.. Our coinage as is is an embarrassment.
The Abe Dollars Will be the new penny, and they'll probably need to make em outa landfill scrap as the 'proffessional people in DC are due for yet another pay raise. Heck why not get Milton Bradly to use their money presses to help get a handle on the debt.
Hey Chuckleheads, you don't need compositional equivalency for coins or paper money to have a stated value. As long as the design and "feel" are good it is a nonissue. Wake up and turn off Rush.
Sounds like a plan, the mint should save so that Pelosi can fly military jets as often and when she pleases. I'm sure our dear president would like to fly his beloved wide to more Broadway plays in NY as well.
...let's not forget the government needs to save money because Obama wants to bring the best international chef's to the White House - need to cut somewhere to pay them.
Anyways, focusing on the coin issue over politics, I don't really care much what happens to regular, everyday, coins, as long as proof coin sets and gold coins are not affected. For those worried about the metal over the coin itself, there's always the British Royal Mint, Canadian Royal Mint, Australian Royal Mint, Perth Mint, etc...
So the government is going to make our money even more worthless than it already is........imagine that.
5:49 poster, how many "clad silver eagles" are you willing to buy?
the newer pennies weigh 2.5 grams. The 95 per cent comp. comes in at 3.1. Do you give a penny or take the penny? Do you bend over to pick up a penny? Does heads up mean good luck for the day? Ever have a lucky penny that actually changed your luck? 100 pennies make a dollar and so on. If you must stop making cents. please send yours to me. More dollars than sense!!
Trillions of dollars in debt...let's make plastic money to save one hundred million. What a brilliant administration!
For those of you complaining about Moy, your president is going to take crappy coins to another level. I must admit, I do think his picture belongs on the first plastic coin. Somehow it fits.
To Feb 3, 2010, 5:49PM
who said, "Hey Chuckleheads, you don't need compositional equivalency for coins or paper money to have a stated value. As long as the design and 'feel' are good it is a nonissue."
Um...you do know that the coinage was originally compositionally equal in value, right? Inflation certainly hurt, but so did the debasement - fully unhooked from gold/silver content - when it lost even more of its significant value. Now they are thinking ANY metal, which has a value, should be excluded. Paper comes from trees, which have value, so paper currency is out, too!
In the end, a plastic card, RFID, etc. is the ultimate. Soon, "one-to-a-person currency holders" made from organic/degradable/recyclable material.
I always bend down to pick up and save a cent, face up or down. Over the years all those cents picked up off the ground have been very good for me. It has taught me how to work, to serve people, and to save. I now own a very successful technology business and intend to build up on cents and sense. If you look at the wasteful wars these past several years the humble cent will keep US humble.
what's next .....cardboard coins!!!
Forget about base metal coinage. Your coins should be gold or silver. Get 'all in' folks, while you can.
I no longer reach down to pick up the errant cent either dropped by me or lost by another. To recover that one cent may throw my back out and result in a chiropractor bill far in excess of the one cent recovered. For me it is a simple matter of risk/reward analysis. Although I must admit some folks do well at recovering lost dinero off the ground. My departed aunt had a knack for it. I suspect her haul was several hundred dollars over her lifetime. She would even bag a twenty every so often.
Maybe they should just stamp 5 cents on the copper coated zinc blanks and 25 cents on the nickel blank and 50 cents on the quarter blank and so on....talk about a quick and easy way for the government to devalue the dollar.
Here's a thought: The next cheerios pennies will BE the COA; not laminated to it.
@ February 3, 2010 2:34 PM,
he's not smart enough to come after gold coins.
Man, gold is taking a BEATING today! If it keeps up, maybe we can luck into another price decrease next week at the Mint!
I would suggest that the US Mint take a hard look at how the Royal Canadian Mint produces their coins. They use multi-ply plated steel.
So if you start collecting the America the Beautiful quarters now, your coins could have a different composition when it ends. If this is the case I would not collect them. Maybe the first few just for the metal content. The last "real" coins. But then after that, the coins are different. Seems like an incomplete set or it will need some kind of (*). Wow it just keeps getting worse for the mint, coins, and collectors.
I say:
Abolish all base-metal coins below $1.00 (prices can be rounded up to the nearest dollar: after all, how much can you buy with a dollar?) , issue new $5.00, $10.00, $25.00, $50.00 and $100.00, then debase the dollar to the point where the dollar is worth a penny, and start the whole process all over again, adding another zero to all the denominations.
The way the economy is going all we will have left are pennies and nickles.
"Trillions of dollars in debt...let's make plastic money to save one hundred million. What a brilliant administration!"
Yes, because change the composition of coins will be the only thing done to cut the budget. Do you people even read what you type? This proposal is just one common sense method of saving money that the government should examine- eliminating the dollar bill is another.
For the all the crazy Obama-haters this blog seems to have found, if a anyone else had presented these very same things you would think they were brilliant. It's only because Obama did it that you think it's a bad idea.
I hope the US Mint follows the lead set by the UK and Canada- there isn't any reason to produce coins worth more than their face value. Nickel- & copper-plated steel here we come!
ah debasing the currency... we are so economically illiterate that we think its a good money saving technique instead of theft.
I just wanted to expand a little more... the problem here isn't that it costs too much to use silver, copper, or zinc. The problem is that the metals appreciated verses our unit of measure, namely the dollar. Our "yard stick" (the dollar) was chopped in half so it now takes "two" of them to buy the same amount of metal. If the US had maintained a gold standard, it wouldn't cost too much to use silver, copper, or zinc.
The Chinese can make pennies for less than a penny, time to outsource this like all the other jobs.
Save your seashells!
To Anonymous 11:35 a.m.:
Do you read what YOU type? First off it's a proposal. Second, are you that guillible to think a $100 million supposed savings will really help when this year's deficit alone is $1.5 TRILLION?? What kind of common sense is that?I don't care who the President is, we are heading for disaster with this reckless, immoral deficit spending. You think if a Republican president proposed a metal change the reaction wouldn't be the same outrage? Why can't you make your point without cliched political b.s?
Chinese drywall and now Chinese pennies? I can drink my tainted milk while my kids suck on lead based toys and outsourced Chinese pennies.
If you read what was posted you would see that it states that even if the metal was free it would still cost more then a penny to produce a penny.
The only way to save money is to get rid of the penny.
Here's my bold prediction for 2012:
There will be so many "Obama Haters" that Hillary will win the 2012 Democrat nomination.
vaunghster...so the president shouldn't do anything to reduce governmental waste unless it solves the whole problem all at once? That's ridiculous. This is one small common sense step toward reducing waste, and it should be celebrated, not derided as too small.
And I might just be having a senior moment, but I don't remember protests in the street when the cent was "debased" and moved from brozen to zinc.
The point is there shouldn't be outrage over the idea of taking already base metal coins and making them out of a different base metal. None at all. There is absolutely no difference between nickel- and copper-plated steel coings than cupro-nickel clad and copper-plated zinc coins...other than the cost related to purchasing the metal.
This was long coming. We make ridiculously too many rootin tootin coins already. And who doesn't have a huge bell jar of pennies? Melting all these pennies we can build housing for our inner cities.
Recommendations
1) Don't stop making, but make very few pennies, nickels and dimes. Alexander Hamilton stated small change is good for commerce. We already have more than enough of these coins but some need to be replenished.
Presidential Dollars: Make only enough for collectors. No one is going to use them. We already have the traditional legendaty Wash. $1 and nothing will ever replace it!!! It's cool and the symbol of our country!!!
Make better commemoratives in half dollars. $1 coin is too big and looks stupid. For example...
Why didn't they think of these before?
MLK commem (This is long overdue)
First landing on Moon commem
Hispanic Americans commem
60th anniv rock and roll commem
Ditto Elvis Pres commem
1865-2015 Appomatox commem for BLUE and GREY united
1865-2015 freedom of slaves commem
1963-2013 Kennedy commem
Why not just put a date on the next coins like 2011-2016. Although you would be laying off gov't employees, only mint what coins you need during this year span. Making coins every year just doesn't seem feasible v cutting budgets. With the mint not producing or releasing as many coins it would be up to the people to dig what they have laying around to bolster supplies.
We have "forever" stamps, how about "forever" coins? For example, a "forever" $3 coin good for one gallon of gas or a gallon of milk, or whatever else is worth $3 today. Wait, we have that already, it's called silver and gold bullion!
I also agree with the poster who said that we should get rid of the $1 bill, just like Canada did, and just make $1 coins, along with $2, $5, $10, and $20 coins. Also, we should get rid of the penny for sure, and change the half dollar to be a half size version of the $1 coins, with the same color and composition. Also, change the coin designs for the dime and half dollar. Both Kennedy and Roosevelt have had their more than fair run. Terminate the ugly presidential dollars after Lincoln's, and go back to the original Sacegawea designs from 2001-2008, with the nice flying eagle on the reverse. That is the best circulating coin design since the walking liberty half dollar.
POP! POP! POP!
Isn't it interesting that, with the price of gold falling, falling, falling, the gold bulls are so silent?
I said months before that we were experience a gold bubble. Speculators refused to believe it.
All I can say is POP! POP! POP!
I thought it was crazy people were advocating the purchase of gold when it was more costly than it had ever been before...of course the price was going to go down after the economy improved. Everyone should have been SELLING their gold.
Eliminated the dollar bill, change the composition of our coins to the same steel core the UK and Canada use and save hundreds of millions of dollars.
The Gold Bulls are too busy buying. The Silver Bulls are rejoicing and depleting stock worldwide. You, my Bubble Pop Head friend, may want to go buy some coins for once. When PM's rise again with the DJIA you will thankfully be silent. Goodbye Bubble Pop Head.
im buying silver eagle rolls.
Anonymous at February 5, 2010 10:05 AM
Self-denial is such a wonderful thing, isn't it?
But one thing is for sure Bubble Pop Fool -- you ain't fooling anyone that gold will continue to rise indefinitely. The money that is lost when investing in gold will be yours, not ours!!!
POP! POP! POP! Goes the fool.
Given how much the stock market has fallen in the last couple weeks, I'd say that's really where the bubble is popping. Anybody that expects stock prices to rise under the over-tax and over-regulate agenda of the current administration is a fool.
The PM's will eventually start going back up. Too much buying pressure; i.e. China, India, general population becoming less trusting in paper notes going for metal. PM's can't be supressed for much longer. Maybe another year unless the gov't starts confiscating metal. As for the DJIA I wouldn't look for whole lot there as we have an anti business gov't going full steam ahead. This is not advice. Always DYODD.
Sure, the price of gold fluctuates, but so does the dollar's value. For whatever it's worth, remember these two facts.
1. EVERY paper currency in history eventually becomes worthless.
2. Gold had monetary value 2000 years ago and it will have monetary value long after we're gone.
Maybe we should ask Canada to annex the United States...
At least they have "national health care" and a groovy mint.
We could call our new country CanAmerica.
Who knew coin collectors were teabaggers? I'd guess that taxes have already been cut on most of the people posting here...and will be cut again under the FY11 budget
Hey Anonymous 8:43 a.m.:
Is that why Newfoundland and Labrador Premier Danny Williams of CANADA is set to undergo heart surgery this week in the United States? Oh, the procedure isn't available there. When was there ANY time you heard a U.S. citizen going to Canada for health care?
Stop wanting others to pay for something you're unwilling to pay for. Nice try mentioning their mint.
vaunghnster- i'll gladly take your portion of Social Security and Medicare then. No one opposed to nationalized health care would ever willingly accept those things...would they?
There he goes again, wanting another free handout.
well, i mean, if vaunghster is opposed to free handouts, I'm sure he won't take his Social Security of Medicare. I'm certainly not opposed to free handouts, so i'll be glad to take the money for him.
Collectors won't like it, but admit it - it is time to get rid of the penny, and cease production of all coinage under $1.00. There are plenty of pennies, nickels, dimes, quarters, and half dollars in circulation. We will have to rely upon the existing supply of coinage in circulation.
If we get rid of the worthless crap that the mint is presently forced to produce, they'll be able to refocus their efforts on bullion products.
Production of the $1.00 bill should also cease. This will mean that the vast stockpile of $1.00 coins will actually circulate.
If collectors must have annual proof sets, simply make the silver proof set available to meet demand, with 'samples' of traditional circulating coinage available in that manner.
It is a shame that the $1.00 bill is printed by the Bureau of Engraving which is seperate from the US Mint. It would be impossable to convince one goverment agency to stop printing bills so that another agency can progress coinage.
If only the Congress would do the sensible thing and eliminiate the dollar bill...but common sense ways to save money are beyond Republicans and Democrats.
Sell your stocks and run.
POP, POP,POP.
The Mint could stop making the one cent pieces for circulation. They could still make them for collectors, since they sell them for $8.95 for $1 face value, and folks happily pay for them. Hell the mint could go back to 95% copper and still make a profit this way.
The one dollar coin will never be successful as long as the one dollar bill is an option, unless Obama's inflation makes the U.S. dollar worth less than a nickel.
How's that hopey, changey stuff working out for you?
Hereafter, all coins and bills should have George Bush II's laughing portrait on them. On the reverse of the coin should be a depiction of all the Afghan and Iraqi childern he helped save. All other coins should be melted and our history before 2001 forgotten.
The Euro cent is made of steel and is smaller than a dime. We would have to do that if we want to stop losing money on them. The Canadians also use a copper coated steel cent.
Also, for those blaming Obama, he isn't the one that passed the 1913 Federal Reserve act, he didn't take silver away in 1965, and he didn't close the gold window in 1971.
Who's blaming Obama? I just want him to get credit for what he's done since taking office. Jimmy Carter should be proud.
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