Not too many people know that US pennies minted from 1909 to 1981 are 95% copper.  The variety minted after 1981 is mostly zinc, as are this year’s pennies.  Not many people ponder the significance of this fact, but it is significant indeed.  A 95% copper penny means that, given today’s copper prices, those pennies are worth more in metal content than they are at face value.

People have always talked about melting coins down for their metal value.  The US Government did just that in the 1930’s when it confiscated all US gold currency and got off of the gold standard in a move to help lighten the burden of the Great Depression through economic strong-arm tactics.  When the gold was melted down it made US-minted gold coins very scarce, and even today people pay high premiums for coins that were once supposed to be melted down.

A few years back, right about the time that the US Government figured out that many pennies contained more copper value than face value, Congress passed new, more strict laws prohibiting the melting down of currency and punishing those who chose to melt coins down for their metal content more severely.  It has been illegal to melt down or deface US coinage since I’ve been alive, but in 2006, Congress added more teeth to this law.  But the new laws certainly won’t stop people from melting down coins.  It will happen no matter what the laws say, at least at some level.

The demand for copper as an investment metal is rising quickly.  There now exist private mints that make copper bullion bars, coins, and ingots for people to buy as investments.  As long as the price of copper is above $1.50 per pound, 95% copper pennies will be worth more in metal than they are in someone’s pocket or bank account.  There are stories of individuals going to the Former Soviet Union shortly after its collapse to buy literally truckloads of coinage in an economy that had become so inflated that a person could get thousands of coins for a few US Dollars.  People have already begun hoarding pre-1982 pennies for when copper really takes off.  At the time of publication, Copper is at a little over $2 per pound, with some experts predicting that if inflation really takes hold here in the US, copper could see the other side of $5-$6 per pound.  That would make these copper-laden cents worth about four cents each in metal value alone.

The conditions are right for inflation to occur.  Those that have been hoarding pre-1982 pennies could be in for some serious profits if inflation if the price of copper really take off.  I would expect to see EBay lots of these pennies for sale at a little over spot value as more and more people look to copper as an investment.  Personally I think that as consumers we are in for far more than just expensive pennies if the economy falls so badly that copper cents are worth four times their face value in metal.  Start hoarding those pennies today; perhaps they will be worth far more than one cent in the very near future.