- "In 2004, the U.S. Mint will likely lose money minting pennies and nickels," observes our learned colleague, Dr. Steve Sjuggerud, editor of The Investment U E-Letter. "Starting this year, pennies and nickels may be worth more for their metal content than for their purchasing power...So it might be time to start burying pennies and nickels in your back yard," Sjuggerud suggests.
- "In 2003, it cost the U.S. Mint 0.98 cents to make a penny. This used to be an easy profit game for the government... In 2002, it cost 0.88 cents to make a penny. And in 2001, it cost 0.80 cents. But now, in 2004, it is almost assured that the government will lose money minting pennies.
- "The U.S. Mint counts September 30, 2003 as the end of its fiscal year. Since then, the price of copper has risen by 62%. Copper, you may be surprised to learn, is the main ingredient in a nickel. In 2003, it cost the government 3.78 cents to make a nickel. Easy profits right? But the government didn't count on the dollar crashing. If the price of copper, the main ingredient in a nickel, stays the same, it's possible that the cost of could rise by 62% in 2004. Then it'll cost the government over six cents to produce a nickel.
- "The situation is similar with the penny. The main ingredient in pennies is not copper, but zinc. Actually, zinc makes up 97.5% of a penny. Zinc is up nearly 40% since the end of the 2003 fiscal year. So if the cost of producing a penny rises by 40%, it'll cost the government 1.38 cents to make a penny.
- "How can the government get out of this mess?" Sjuggerud asks rhetorically. "Oh that's an easy one...change the metal content of the coins. I'm sure it's only a matter of time. Maybe next year we'll be spending poker chips instead of pennies. And just think, someday down the road, even those poker chips will have more intrinsic value than a paper dollar."
- Please be advised, however, to prevent rotting you must wrap poker chips in thick plastic bags before burying them in the backyard. |
