Math is hard, especially when you can’t add, subtract, multiply or divide. That eliminates about 200 million Americans from understanding what the Federal Reserve and their politician leaders have done to their lives over the last 100 years.
Cost to Make Penny and Nickel Rises, Annual Loss Reaches $116.7 Million
The cost for the United States Mint to produce and distribute the cent and nickel rose to their highest levels, and are now more than double the respective face values. For the fiscal year ending September 30, 2011, the unit cost for the cent was 2.41 cents and the cost for the nickel was 11.18 cents.
The cost for the two lowest circulating denominations increased compared to the prior year due to higher material costs and a change in the method of allocation for sales, general, and administrative expenses. In previous years, the Mint allocated SG&A expenses based on gross margins. For the 2011 fiscal year, costs were allocated based on the costs to manufacture, market, and distribute. The new approach conforms to accounting standards and leading commercial and public sector practices.
Unit Cost to Produce and Manufacture Cent
| FY 2011 | FY 2010 | |
| Cost of Goods Sold | 0.0197 | 0.0176 |
| Sales, General & Administrative | 0.0041 | - |
| Distribution to Reserve Banks | 0.0003 | 0.0003 |
| Total Unit Cost | 0.0241 | 0.0179 |
Unit Cost to Produce and Manufacture Nickel
| FY 2011 | FY 2010 | |
| Cost of Goods Sold | 0.0938 | 0.0916 |
| Sales, General & Administrative | 0.0176 | - |
| Distribution to Reserve Banks | 0.0004 | 0.0006 |
| Total Unit Cost | 0.1118 | 0.0922 |
This represents the sixth year in a row that the cost to produce and distribute the cent and nickel have exceeded their face values. For the 2011 fiscal year, the two denominations were produced at a loss of $116.7 million. This amount is nearly triple than the loss of $42.6 million generated from the two denominations during the prior year.
From 2006 to 2011, the cent and nickel have now generated losses of $359.80 million.
| Fiscal Year | Cent Unit Cost | Nickel Unit Cost | Seigniorage (millions) |
| 2011 | 0.0241 | 0.1118 | ($116.70) |
| 2010 | 0.0179 | 0.0922 | ($42.60) |
| 2009 | 0.0162 | 0.0603 | ($22.00) |
| 2008 | 0.0142 | 0.0883 | ($47.00) |
| 2007 | 0.0167 | 0.0953 | ($98.60) |
| 2006 | 0.0121 | 0.0597 | ($32.90) |
| Total | ($359.80) |
Although the cent and nickel have generated significant losses in recent years, the positive seigniorage generated by higher denomination circulating coins has offset the losses. For the 2011 fiscal year, production of the dime, quarter dollar, and $1 coin for circulation generated seigniorage of $488.8 million.
In December 2010, Congress passed the Coin Modernization, Oversight, and Continuity Act of 2010, which authorizes the Treasury Department to conduct research and development activities with regards to circulating coin compositions. Any changes in composition would still need to be accomplished by an act of Congress. The US Mint has engaged a contractor to conduct the research and development, which will serve as the basis for the report to Congress due in December 2012.
On December 15, 2011, Rep. Steve Stivers introduced two bills which would require the the composition of the cent and nickel to be produced primarily of steel within 90 days of enactment. The bills have two cosponsors and both been referred to the House Committee on Financial Services.
No Field Five says:
“On December 15, 2011, Rep. Steve Stivers introduced two bills which would require the the composition of the cent and nickel to be produced primarily of steel”
Why not just make them out of cowshit? At least the taxpayers wouldn’t be losing money on every coin stamped.
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5th August 2012 at 10:57 am
No Field Five says:
Well, maybe not. I guess that would just be government interference in the fertilizer market, and we’d all end up paying more for our produce. Still, though, it would remind us all what our money has become – bullshit.
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5th August 2012 at 11:00 am
efarmer says:
NFF,
Funny. Of course manure is great fertilizer, so what coins SHOULD be made of is dollars, the most worthless crap available.
EF
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5th August 2012 at 11:08 am
Ron says:
Just have the government take your paycheck and they well pay your bills and credit your bank account with whatevers left.All done with computers and you get a rechargable money card.Cut out the middle man.Im not saying i like it but if the cost of making money is to much.HaHaHa.
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5th August 2012 at 12:17 pm
Bman says:
How about wood?
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5th August 2012 at 12:20 pm
IndenturedServant says:
This is really a non issue. As the article states, seigniorage on the rest of the coins more than makes up for the extra cost of the cent and nickel. Efforts have been underway for the last few years to change the composition of these two coins.
A unique opportunity exists right now for those willing to save pennies and nickels. You can easily obtain them at face value even though they are worth far more than that. However, it is currently illegal to melt either coin down. If that is ever changed, you could make a killing. The downside is that inflation is constantly eroding the face value.
If I were 20-30 years old now, I’d save every one I encountered and might even buy them rolled from banks just for hoarding. At 45, I’m not sure that the laws will change soon enough for me to take advantage of the situation.
I_S
I_S
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5th August 2012 at 12:35 pm
Colma Rising says:
Are there any other “Penny Nerds” out there?
I’ve gotten into the habit of looking at the dates on any penny that crosses my palm. 1982 or earlier dat be copper and goes in a seperate change jar. Find a lot of olden days ones too…. wheaties and such.
I wonder, due to the cost of producing new coin, if they’ve not been simply re-circulating. You’d be surprised at what’s being handed to you at the coffee shack… if you’re nerdy enough to look.
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5th August 2012 at 1:48 pm
FT says:
I confess to keeping my pre-1983 pennies and all nickels. Just from change over the past two years I have over $100 in face value rolled up at home.
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5th August 2012 at 2:04 pm
Colma Rising says:
FT: I keep all change unless I know I’m going to need for parking meters and that’s all quarters and dimes (a nickel buys a minute I think).
Quarters and dimes are cool because they show their falseness on the edge. I’ve found a whopping silver quarter and two mercury dimes since I started nerding out in ’05.
Another success story on the road to bling bling riches.
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5th August 2012 at 3:18 pm
ecliptix543 says:
CR – I do that too. My forte is noticing the weight of pre-64 nickels when I get them in change. They just handle differently than the cheap shit ones. Silver dimes are far more rare, in my experience. Got about ten or twelve of those, shitloads of the silver nickles and old pennies, and a decent number of pre-64 quarters. They go nicely with my bullion collection, though I still think that brass, copper, and various lead alloys are coming into vogue these days.
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5th August 2012 at 4:24 pm
AWD says:
Coins, especially quarters, can be used like Chinese throwing stars, if you know what you’re doing. They make great weapons.
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5th August 2012 at 7:57 pm
Muck About says:
Pennys and nickels will soon be a thing of the past. Then we round up to the nearest dime, then to the nearest dollar. Then TSHTF and we barter for what we need.
It’s really sickening/funny when you consider that a pre-1964 dime (at .11 oz of silver) is now like a $3.00 bill at this evening prices..
Soon – really soon – there will be no physical money. It will all be digital, zeros and ones, easily traceable, your purchases and monetary transfers absolutely known and then it will be mandatory to have a smart chip embedded on the back of your hand where all you personal data is stored, bank balances, et al and you merely wave the back of your hand through a sensor to transact any monetary transaction you want. Or at the Doctors office – new data is put on the chip so when you get stopped for a traffic ticket, one wee scan by the cops have your whole history in one blip.
No hiding from the State then!
MA
Hot debate. What do you think?
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5th August 2012 at 8:57 pm
Novista says:
That ‘mark of the beast’ chip will have a few other features, Muck.
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5th August 2012 at 12:54 am
Novista says:
Colma
The 1913S penny is the best one.
Oh, and O/T … I was fact checking some details about the theft of Hawaii and found this trivia:
In 1894 a Hawaiian schoolboy invented the steel guitar style.
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5th August 2012 at 12:59 am
Stan says:
I think they should put Obama’s picture on the penny and Nickle. Then they would be worth a lot more
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5th August 2012 at 4:26 am
ecliptix543 says:
For what, Stan? Target practice?
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5th August 2012 at 12:44 pm