After the coin shortage of the mid 60, when silver was removed from US coinage, the US government did not want a repeat situation when it transitioned from copper cents to zinc. As a result the No-Melt law was passed, prohibiting the melting of those copper cents in order to profit from the enterprise. See 31 CFR 82.1 https://www.law.cornell.edu/cfr/text/31/82.1.The idea of getting 1.8¢ for each penny in your stash is deceptive. Copper cents, being 5% tin and zinc, would be considered #2 copper for recycling purposes. Looking at today's prices, #2 copper commands a price of $1.97/pound, 74.6% of the copper spot price. Without a doubt the recycling centers would want to run your coins through a ryedale sorter before they handed over good money, further increasing their costs and decreasing what they would pay you. Small amounts, under 100 pounds, are not be of interest to a lot of these recycling centers. It costs them too much in labor to tally up the load and write a check. Aluminum cans are a fine example of small volume scrapping. Recycling yards are paying 25¢/pound, barely 28% of aluminum spot at 88¢/pound. A minimum load of 100 pounds demands 3300 cans. Yes, they'll pay you $25, but if it costs you $10 in fuel to get there and back hauling a trailer you really need a giant load to make it worthwhile. To make a profit on your cents, the price of copper would need to be terrifically high, you would need a lot of them, and you'd still have to bear the cost of transporting all those cents to the recycle center. When you hit the $600 mark, you get 1099 paperwork added to the mix because the gubmint wants a piece of the action
In the event the No-Melt were to be repealed smelting operations would pop up all over the country. Industrial sites, recycling centers, machine shops, and backyard operations would spring up like weeds after the rain. If the metal content of your cents is 1.8¢, the best you can hope for is 75% of that. Extracting pure copper from French Brass is expensive. If you could get 75% of melt value that would be a miracle. The scrapyards have to transport coins, pay for equipment, energy to melt them down, labor and administration, and still turn a profit. Using aluminum as a reference, copper spot would have to be in the $5-6/pound range for you to break even. Cents would disappear, being melted down for their copper content. The resulting flood of copper bullion on the market would see the copper spot price crash.
With each passing year billions of new cents are produced with the effect of diluting the copper cent population. In the last box I counted the copper was 12.4% of the total after 30+ years of zinc cent production. It needs to be cost prohibitive to sort the cents or a shortage of circulating coins will occur. There is a greater chance the cent will be eliminated long before copper is diluted to a point it is not worthwhile to sort. Canada has already eliminated their cent and provide the example for the US to follow: banks are required to return cents to the Canadian Mint. It will be gubmint that snatches up all the copper when cents are returned to the treasury. The No-Melt law will not be repealed. It would cost the gubmint Billions.
Copper cents are an asset that will never perform. I do not save those non-BU copper cents. I search my boxes, pick out a few dozen coins that I consider worthwhile, and deposit the rest, including all those copper cents.
Opportunity Cost
Part of making an investment is comparing options and alternatives. By choosing to hoard copper you elect not to make a different investment with those funds. Opportunity Cost is the missed return on investment from an alternative. Those same funds, invested in an alternative, can easily outperform the potential gain from hoarding copper.Example
Lets say 2 people, Joe and Jim, have $100 in copper cents.
Joe elects to keep his copper in the hopes that one day legislation will change to allow melting the copper, refining costs make it feasible, and demand rises to a point that he can receive a return on his investment.
Jim takes his $100 to his drop bank, exchanges them for $100.
He then goes to his pick up bank, exchanges the $100 for 4 fresh boxes of cents. He picks out an average of 10 wheat cents per box. He repeats this process 100 times in 100 days with the result being 1000 wheat cents, and $90 in cash.
Those 1000 wheat cents will easily fetch $40 + shipping (I get $50 for 1000 wheats). Even after 13% in seller fees for eBay and Paypal, Joe has $34.80 for those 1000 wheats, and $90 in cash, for a total of 124.80.
Jim has a 24% return on his investment in less than 6 months.
Joe still has a bucket of copper cents.
Not only is Jim going to repeat his efforts, he stands to find other cents of value, in particular, errors and die varieties, which will offer considerably more return on his investment than would staring at a bucket and relying on hope.
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15 April 2017
Here's some news.
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