Mint Fears Losses From Penny Meltdown
Nov. 13 (Bloomberg) – In Washington, a city known for multi-billion-dollar budget deficits, some members of Congress and the Bush administration are near a meltdown over a much more modest figure: the old copper penny.
The government fears that citizens will melt U.S. pennies minted before 1982 to extract the copper, which, even with recent dips, has shot up in price over the past five years. In December the U.S. Mint banned any melting of pennies and nickels (nickel prices are up too), sidetracking one Ohio metals expert’s plan to cash in.
The government explained that it could cost more than $1 million a day to replace coins withdrawn from circulation to extract the metal. The increase in metal prices means the coins are now more expensive to make than they are worth. Walter Luhrman, of Jackson, Ohio, figures he’d net $1.5 million a year.
This is real money,'' Beth Deisher, editor of Coin World, of Sydney, Ohio, the world's largest circulation coin publication, said of the businessman's idea.It’s like going for gold on the ocean floor.”
Deisher, who editorialized against Luhrman, said for the past few years, ``Rome has been burning and the Treasury hasn’t done anything about it.”
Indeed, over the past few months, the issue has been no small change in Washington, triggering two bills, a scheduled hearing, and complaints to the Treasury Department about why it has taken so long to react to the rise in metal prices.
It costs 1.67 cents to make a penny, up from .93 cents in 2004. This means the U.S. Mint lost $31 million in making 6.6 billion new pennies in fiscal 2007 and another $68 million for more than 1 billion nickels, according to Michael White, a spokesman for the U.S. Mint. Speculators, taxpayers, suppliers, and coin collectors are affected too.