Rising Metal Prices Prompt Ban on Melting and Export of Coins (New York Times)
http://www.nytimes.com/2006/12/14/business/14pennies.html?ref=business
There hasn't been much of late I thought worth sharing or discussion, or further discussion than has already occurred here and elsewhere. This item, however, drew my interest because I've seen no other mention and there are considerations worth discussion.
Has it ever happened before that American coinage was worth more for its metal content than its claimed value as legal tender? What does this say about the supply of metals? What does this say about the value of our currency, creditworthiness, and economy?
It has taken place before with gold and silver coinage, but it has been decades since these metals were removed from circulation as coinage. If memory serves, they were removed from circulation to protect supplies of the metals, at least in part to prevent people buying them up to melt & sell for metallic contentt. They were getting to be worth more for their metal content than as legal tender.
I suspect the supply of metals is not in any danger for our continued use, though we may reach a point where it is viable to extract precious metals from electronics and other disposable items we dump in most places. Many countries and companies have flirted with such extraction but none to my knowledge have ever succeeded in creating a sustainable business model.
The value of our currency has fallen in comparative value considerably since 2001. There are a number of reasons one might give for this and I'd rather not spend the better part of the day illustrating them. Suffice it to say that I do consider it a cause for concern, especially given the poor savings rate of Americans and the amazing levels of personal, corporate, and government debt.
I am glad to hear the US Mint will seek to replace or alter metal composition in the coins affected and that they are already testing some new ones. I do wish this would provide the political momentum needed to do away with the penny. I find it unlikely though I may write relevant representatives in the US Congress asking that they consider the idea when they are considering recommended changes to the composition of coinage.