For Your Amazement and Shockment - How much does it cost to make a Nickel? & the Dime?
MsMorrisine
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MsMorrisine
Posts: 32,984 ✭✭✭✭✭
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Thanks. I had low expectations, but that was worse than I thought.
The cent and the nickel are beyond being a profitable product for the Mint.
Pretty pitiful, but not shocking for our government, just look at the post office.
My guess is that not unlike his cheaper and better space program, Elon Musk could produce our coinage far cheaper and better than the US Mint. And, probably come up with some cool new ideas to interest young collectors.
some committee in congress had a brit or canadian official in a hearing, and the official was asked if they could make a cheaper cent or cent for less than a cent ... something like that...
the answer was "no"
I'm not quite sure what we're supposed to be shocked and amazed by. It's been well-known and broadly discussed for a long time now that the penny costs more than 1 cent to make, and the nickel for just as long has been either loss-making or borderline profitable depending on the price of copper and nickel on the day you're asking.
Sorry, but the X-Man can't save you from this one. Not even China can produce coins like pennies for less than a cent, no matter what they're made of. I'm sure someone will trot out that ten-year-old picture of a bag of 100 plastic made-in-China play-money pennies being sold for $2.99.
Congratulations, America, you've succeeded in creating the ultimate counterfeit-proof coin: a coin so worthless it's literally impossible for anyone to make a profit by counterfeiting them.
Most governments stop making coins as soon as inflation causes them to become unprofitable to produce. Literally any other country on Earth would have stopped making the penny a couple of decades ago, and either shrunk or switched alloy for the nickel.
Roman emperor Marcus Aurelius, "Meditations"
Apparently I have been awarded one DPOTD.
metal value is more than face value. for the cent there are no alternatives that would result in a substantially cheaper cent
i'm not sure about buying less than 5 cents of metal for the nickel. it is 5 grams and a zincoln is 2.5 grams. double up the cent's cost of goods sold and you have about 5.4 cents. i'd think the nickel would need a radical "change"
it's always the coin machine industry that is the road block there
i'll look at the semiannual report to congress the mint makes for alt metals, but will look at it another day (feel free to beat me to it)
for the nickel, the highest i had ever seen it was 8.something cents. the nickel is now worth more than a dime, but the dime, if used as a nickel, would still be a loser at over a nickel in costs
metals prices this year have gone crazy. this month, copper set an all time high. last year copper peaked at about 10% under where it's at now. shocked is now shockeder
(nickel had a 2023 peak about 50% above where it is now and a low maybe 10-15% under where it's at now)
Isn't inflation wonderful?
Paper money eventually returns to its intrinsic value. Zero. Voltaire. Ebay coinbowlllc
ok, i couldn't resist and checked the r&d report from 2022
using proposed materials, the nickel would still cost a lot more than a nickel (%ages in table are off the fy2022 number)
We wouldn't need cents if we would throw away all the spare jars around the house.
Jim
When a man who is honestly mistaken hears the truth, he will either quit being mistaken or cease to be honest....Abraham Lincoln
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Huh?
Smitten with DBLCs.
Digital currency.
That is my point. You are thinking like a bureaucrat and want to keep the same metal. What if we use steel with a minimal zinc coating, say like a particular year in the past when we needed to save copper for a certain war?
Cold rolled coil steel costs 2/3 less than zinc and would bring the material cost a bit below one cent per penny, unless we use cold rolled from China then it is half the US cost, then cost of goods would be under one half cent per penny.
If we really need a penny, we can make a cheap recyclable version much cheaper. Some allay of steel could do the same for the nickel.
Much like Shrinkflation (food companies give you less per package) perhaps a smaller coin could be made?? Thinner??
why are they making so many? do they hope to make up for losses with volume?
For cents, maybe, although there remains a production cost no matter how cheap the metal. But any size or weight change makes then useless in vending machines so changing nickels is problematic.
Eliminate the cent. People throw them on the ground anyway.
Practically the cent, nickel, and paper dollar should be eliminated, which should enable the small dollar to circulate. But bad politics keeps intact the wasteful production and nuisance of this currency. Perhaps we can relegate the cent and nickel to NCLT-land (maybe revive the Buffalo Nickel?), and get the small Dollar to circulate to make SOME circulating coinage (quarter and small dollar) relevant for another 20 years or so.
Sure, China could, but not as well as just doing it in the USA with Chinese CRS. If you traded metals futures you would know prices.
My point to Elon is that he is highly innovative, has extensive experience with cold rolled steel, if Biden gets out of the way he can buy CRS out of China currently for about $550 per ton and make the same pennies that grade as high as 68+, unlike the mostly zinc stuff today. Perhaps there is even a better coating than a tiny bit of zinc and the materials expertise in the steel flat sheets of cars has some relevance to the issue, or you use a very tiny amount of zinc just like in 43. Oh, and those weighed 2.70g, about 0.2g more than what we have now.
As long as the mint is forced to make them, at least make them without losing money, and people hoarding them would make the mint even more money.
Strange how the cost of half dollars shot up so much more than the rest. Can anyone explain it?
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And all of those costs are UNDERSTATED.
If you look at the amount of "fixed" costs apportioned to numismatic products, there's more overhead that should realistically be apportioned to circulating coins. After all, if the mint made $0 in numismatic products, the fixed costs don't change...
ANA 50 year/Life Member (now "Emeritus")
Depends on what fixed costs you're taking about. You've got equipment and people making low volume material instead of high volume circulating coins. You can't fairly assign the cost of a proof coin press and associated costs to circulating coins. I'm not sure the same equipment and people are doing both in all cases.
Numismatic products quite likely add inefficiency by taking up space and equipment to make low volume, slow proof coinage.
Does the current nickel alloy still need to be softened before striking and then re-hardened afterwards? That might explain the higher cost of producing nickels.
What/who is the source of the data in the original post? Without a source there is no way to judge the veracity of the data to see if it is valid information.
Considering the trillions of dollars in debt, this is hardly something to get at all excited, amazed or stressed over.
2023 Annual Report from the U.S. Mint
Link: https://www.usmint.gov/wordpress/wp-content/uploads/2024/01/2023-Annual-Report.pdf
The tables in the OP can be found on pages 12 and 13.
It's actually far worse than is apparent because most of the costs of making pennies is just shifted onto the other denominations. Pennies account for a ;large percentage of the production of the mint and without these great efficiencies could be obtained at the mint. Quality could be vastly improved and the die shops that are built, operated, and maintained largely to make pennies would slow down markedly. Indeed the new coin shop would never have been needed but at the time 60% of production was worthless pennies.
Pennies probably really cost only a little less than a dime coin in the real world.
Every time the mint sneezes much of the cost is making pennies. The zinc poisons the atmosphere and water and then they crush our roads in trucks before being worn like an albatross around the neck of the economy before littering our parking lots and then finally showing up on chat boards and eBay as roadkill or rare errors.
The mint is so incompetent that they accepted shipping containers full of waffled counterfeit half dollars under the pretense of the coins having fallen out of cars recycled in China. There aren't enough exclamation marks on the cloud to put at the end of that last sentence. If ancient society really collapsed because there were too few people who understood how things worked then ours is in extreme danger for the same reason. Rather than getting people who know there are no half dollars in China (just butterflies and tea) they shut down the mechanisms to get bad coin out of circulation.
Any country that would make coins worth less than the cost of production is going to be operated by people who don't understand science, common sense, or neither. It's only natural bad coin accumulates in circulation and people start discarding them as the trash most are. Attrition on our coinage is simply horrendous and gets worse every day. Even counting pennies now is approaching a cost of one cent. Much of all our woes and debt can be laid on the toxic slug we call a penny.
this is from the2020 r&d report to congress
in previous mint reports the mint has said there aren't any alternatives that would result in a markedly cheaper cent
a number of years ago the mint quit spreading costs of production across products. they determine and report actual costs for each. they changed accounting practices.
good catch. the percentage increase is not the same as the quarter is it!
I might send a foia to the mint for that. (leaning maybe not)
the mint has considered steel for larger denominations, but one complicating factor is indeed "coin detecting machine" industries. what steel alloys have been examined have resulted in at least webbing and other scrap that can't be recycled or melted to make more strip. we ignore the outspoken industries and we could have plated steel for larger denominations
Aluminum anyone?
God bless all who believe in him. Do unto others what you expect to be done to you. Dubbed a "Committee Secret Agent" by @mr1931S on 7/23/24. Founding member of CU Anti-Troll League since 9/24/24.
End the federal reserve. Make money worth something again.
Paper money eventually returns to its intrinsic value. Zero. Voltaire. Ebay coinbowlllc
The only logical solution is to discontinue the cent and make the nickel out of aluminum (not legal tender). After a period of adjustment the nickel should be reduced in size to the point of making a profit on the coin.
There will be massive savings and profit from converting the existing cu/ ni nickel to make clad coins and then in reducing the size of the aluminum nickel.
Of course it won't happen and instead they'll spend countless millions in studies and lay the costs of the studies on quarters. The government will continue to undermine the cash system because they don't like cash. We'll keep the one dollar bill that spreads germs and the penny that spreads toxic zinc. The status quo is inviolable and sacrosanct.
I wonder how hard it would be to revalue our coinage system to the pre-1965 standards.
God bless all who believe in him. Do unto others what you expect to be done to you. Dubbed a "Committee Secret Agent" by @mr1931S on 7/23/24. Founding member of CU Anti-Troll League since 9/24/24.
Let me try saying this another way.
This is what business and industry does now days; they simply ignore fixed and basic costs. They figure we need the mint anyway and it costs a lot of money to move so much resources so these costs are ignored while they focus on acquisition and distribution costs. Millions of dollars per day of material and handling costs can be incurred by industry as they focus on the thousands of dollars per day required to staff the facility. Instead of making the plant more streamlined and efficient they eliminate jobs which further reduces efficiency in many cases.
Just as industry has huge costs in employee benefits, pensions, and health care so too does the mint and these costs are largely the result of a history of making toxic slugs which are problematical to the overall economy. But these costs aren't considered because they come out of a different pocket. Instead they look at the cost of zinc and its fabrication. Even here though the need for massive capacity to make cent dies and time required to turn them out on expensive presses is in effect shifted onto other denominations.
Most of the real costs of cents are not even measurable. How do you computer the value of the time lost as pennies are tendered or received in change? How do you computer the reluctance of people to even touch the ugly and corroded garbage that we call "pennies"? How do you even estimate the number of 18lb or less mammals that have died from ingesting a single zinc cent? How do you compute the harm done in production and distribution? Many of these things can be estimated but we aren't even estimating the destruction of roads caused by trucks laden with water saturated chickens and other products so what ae a few billion new pennies doing? What about the damage done by the countless billions of pennies already in circulation?
How much is spent annually in time, electricity, and work in counting 50 or 60 billion pennies in nominal circulation each year?
What is the long term cost of the countless billions of pennies rotting away in landfills and in our parks?
If all the costs could be computed who knows what the real cost is? But the actual cost expressed in increased operating expenses for the mint is likely well over a nickel per coin.
It's probably just an accounting trick. My guess is that mintages for normal business strike distribution dropped about 20% so the "cost" of half dollars was spread over fewer units.
These numbers don't really mean much of anything at all except from a given perspective. The cost of making half dollars didn't really soar because of metal or fabrication costs. People need jobs crunching numbers so they crunch numbers. Then they collect juicy pensions.
Actually ancient societies mostly collapsed bc they destroyed their soils leading to low food production, and wars. We are presently doing the same thing. Combine this with overpopulation of the planet and climate change and we are for certain nearing collapse, glad I won't be around in 50 years when it happens. And now we now how things work we just ignore what we don't want to hear about the coming apocalypse. But oops, this thread is supposed to be about coin production costs. Yes I think we should get rid of the cent and nickel, first step in saving humankind from itself.
I didn't realize the losses per coin are so high, why such obvious madness? can't we agree on basic stuff like this?
Getting rid of the cent and nickel would be nothing but another tax on the working class. Literally if support ending them then you support our money being worth nothing more than colored toilet paper.
Paper money eventually returns to its intrinsic value. Zero. Voltaire. Ebay coinbowlllc
How about bringing back the half dime as a clad coin? We nearly did it for WWII.
Just lower minimum wage to one dollar per hour. Then pay the people 36 to 40 silver eagles per week. Make halves, quarters , dimes and 3 cent nickels out of silver for change . Drop the cent. Doesn't that make common sense ? At $30-$35 per ounce silver ? The mighty copper cent. My mom always said: "mind your cents and your dollars will take care of themselves." Of course she knew how to manage a buck. Our leaders, not so much.
It now costs less to maintain the $1 bill than to replace it with coins.
Other currencies have coins valued less than one cent in circulation and their countries are more cash happy.
The cent and nickel should be phased out of circulation and allow the economy and society to get used to seeing fewer and fewer of them. The nickel should ultimately be replaced with the half dime, reducing the cost of production by 80% and generating positive seigniorage again. The Mint can keep making such coins as collectors' items until they are "needed" in change again.
Someone once told me a reason to keep the cent around is to prevent society from thinking inflation was beyond control.
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Metallic value of nickels in U.S. and Canada have exceeded 5 cents for many years. Canada's nickels were made from pure nickel from 1955-1981, before they changed its metallic composition of the coin. I have a number of them squirrelled away, though I can't think of a good reason why I did this.
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The working class could pay with a CC and not pay your tax. You also could make the rounding 50/50 such that sometimes you win and sometimes you lose, so there's no net tax.
Keeping the current cent and nickel is actually a tax on everyone. And you're guaranteed to lose 5 cents for every nickel you keep to prevent, in your words, a 5 cent tax.
Canada ended the cent for this vary reason.
Do we really have to explain why this doesn't work? You can't peg your currency to a fluctuating commodity. You also would have zero economic growth unless you found new sources of silver.
If you had instituted your program last year, there would today be zero coins in circulation because everyone would have melted them when silver jumped.
True. Or they would have paid down debt twice as fast and taken a much needed, well deserved two week vacation and not come home feeling broke.