Monday, June 24, 2013

Penny Hoarding

It's interesting that the number of penny hoarders has increased so much.  More and more people are hoarding the pre-1982 pennies for their copper content.  The post-1982 pennies made with zinc are not worth the trouble yet.  But if you're a penny hoarder, you've got to buy hundreds and hundreds of dollars of pennies from local banks, then unroll them and sort through and pull out the mostly copper ones, and then re-wrap the zinc ones and turn them back into the bank.  With the price of copper making these little discs worth more than their face value in metal content, you'd think this was a good investment.  Unfortunately, the government has made it illegal to melt down any coins. So then you may think that maybe there are some coin collectors out there who'll pay a premium for them? Nope. There are very few "special" pennies worth more than a penny to a collector, and after buying thousands and thousands of dollars worth of pennies you might come across 1.  Or maybe you'll think, when pennies are discontinued their value will increase? Nope.  They'll still be worth a penny, even to collectors.  There is basically only one thing that makes a coin valuable to collectors; scarcity.  Does anybody really think that we have a scarcity of pennies?  Even pre-1982 ones?  Even if we got rid of the penny tomorrow, the pennies collected by penny hoarders will not appreciate in value during their lifetime or their children's or their grandchildren's.  And guess what else?  They'll never be able to melt them down legally for their metal content.  Just because something doesn't circulate, doesn't mean it's not legal tender.  And hopefully they're not waiting for the government to collapse, because then they get hosed from the other side.  Maybe one day they will realize and say to themselves, "Hey, as a taxpayer, I'm paying the government more than 2 pennies so they can make 1!"  Now, I have no problem with coin collectors collecting their coins.  They can do whatever they want with their time and money.  It's the hoarders that completely disrupt the natural coin circulation, or worse, the people that throw the coins away, that are costing the US taxpayers so much money.  Not only did they just throw away the more than 2 cents it cost per penny to make in tax dollars, we have to pay for the government to replace it, so that they can throw it away again.  Please, please, please...don't throw away your coins or remove them permanently from circulation by hoarding.  It's costing us all billions and billions of dollars.
I have a proposal for all.  If you don't like spending coins, then collect them in a jar and then every few months, go into your bank and deposit them into the little coin counter.  In 30 seconds, all the coins will be counted and you can take your receipt and deposit it (usually the full amount without fee) into your bank account.   If everyone will do this, then at least the mint won't keep spewing out so many pennies.  We will have reduced the negative seigniorage by a huge margin.

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