Here’s a guy who is against the new dollar coins 100%. I happen to disagree, but he makes some interesting arguments.

When special interests and government bureaucrats get together, it is the taxpayer who gets no respect in the morning.

Take the dollar coin. A gaggle of interests wants to replace the paper dollar with a dollar coin. It is something that no one wants but them.

Vending machine companies have lobbied for it. Metal producers stand to benefit from coin production. And then there’s the U.S. Mint itself, which makes coins, whose very existence may be threatened now that it costs more than a cent to make a penny and more than five cents to make a nickel. A dollar coin would justify its existence.

The only problem? Virtually every one likes the dollar bill and every attempt to replace it with a coin has failed since 1865. The latest failure: The U.S. Mint spent over $67 million on aggressively promoting the Sacagawea dollar coin between 1998 and 2001. How many are in your pocket right now?

The greenback’s staying power is evident, and it’s easy to see why. Coins are bulky and heavy. They end up in coffee cans or between sofa cushions. And they’re just a nuisance to carry around.

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Did you ever wonder why dimes, quarters and half dollars have reeded edges while pennies and nickels do not?

The US Mint began putting reeded edges on coins containing gold and silver to discourage holders from shaving off small quantities of the precious metals. Dimes, quarters and half dollars are reeded because they used to contain silver. Pennies and nickels aren’t reeded because the metals they contain are not valuable enough to shave (although with the price of copper going up, that may not be true for long)

1. What are the 5-cent pieces from 1866 to 1883 named?

2. What country pictured an automobile on a coin in 1928?

3. What is the lowest denomination of U.S. paper money ever printed?

4. What is a store card?

5. What stands at Fifth St. at Independence Mall, Philadelphia?

Answers

A penny saved still may be a penny earned, but the real question for investors is whether a penny purchased actually is worth a nickel when it comes time to figure their return on investment.

Plenty of small-time investors are betting that the penny someday will be valued like its larger cousin, and so they are snapping up pennies.

Taking pennies out of circulation and collecting them is one thing, but paying a premium to buy pre-1982 pennies for their copper value is another, and for most investors, it would be a Stupid Investment of the Week.

The case of the penny is compelling because everyone has pennies and can relate to the most common of coins. Moreover, the math behind the move to buy pennies looks compelling. The real question is one of practicality.

The case for buying pennies goes like this:

The rising price of copper has made it so that the metal content of pre-1982 one-cent pieces is now worth more than the one cent the coin represents, falling somewhere around 1.2 cents.

You need roughly 155 of the pre-1982 coins to make a pound of copper. And with copper trading for more than $2 a pound and as much as $4 a pound a little over a year ago there’s definitely some economic merit in hoarding the coins if every $1.55 is worth $3 or more.

But there’s a difference between taking pre-1982 pennies out of circulation and putting them in a special place the way some people, myself included, have for years saved the so-called “wheat ear pennies” from the early 1900s and plunking down investment dollars to buy pennies at a premium, in order to cash in on their value as a commodity.

This is hardly the first time coins have been worth more as a metal than for their cash value.

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I ran across a blog entry on Philly Bits about an 1852 silver three cent piece that he owns. It’s fun to hear how people got started coin collecting as kids, saving up every nickel and dime they had to spend it all at the coin shop.

He also wrote about a half eagle and a silver roosevelt dime he got in change.

Fun stuff!

He also made reference to GPAnalysis for certified coins, a site I haven’t seen or heard about before. I’ll have to take a look at it.