In Depth
Robert Sheppard
Reality Check
Copper prices through the roof. Don't throw out your penny jar
CBC News Online | April 26, 2006
They may look similar, but only those coppers from 1996 or earlier have any real copper content (98 per cent worth). The new ones are 94 per cent steel, 1.5 per cent nickel and 4.5 per cent copper, not nearly enough to melt down. (Robin Rowland/CBC)
Ok, you're a savvy investor, even if you only have a few cents to rub together.
You see the price of zinc and nickel and copper are soaring like never before. Copper, in fact, just bashed through the $7,000 a tonne mark on the London Metal Exchange, courtesy of the voracious demand in China's growing economy and, it is said, an impending strike at a Canadian-owned copper mine in Chile.
So what are you going to do with that massive jar of copper pennies that's been sitting on the bedroom dresser all these years? Can it be – dare we ask – worth its weight in gold?
In the U.S., the actual cost of a cent has become something of a public policy issue ever since the New York Times reported recently that, because of the rise in the price of metals, it is costing the U.S. mint 1.4 cents to make a penny. And because of increases in state sales taxes, the demand for pennies is growing.
An added irony here is that the American copper doesn't even contain much copper: It is mostly zinc with just a thin copper coating. But when it comes to pricey metals these days, zinc has been rising faster in value than copper – and both have been shooting up faster than gold.
Zinc is up on average 70 per cent from a year ago; copper, just over 50 per cent. Which raises the question: Is it time to get out the welding torch and melt down all that loose Canadian coinage you have kicking around?
Hold off on the backyard smelter
While well known in numismatical circles, not everyone is aware that the Canadian penny is not much of a copper, nor is the nickel a nickel. Both, indeed all Canadian coins, are at least 92 and more likely 94 per cent steel, with a relative smattering of nickel and copper thrown in for colour and authenticity.
The exception of course is the gold Maple Leaf coins, which are quite literally worth their weight in gold. The $50 dollar gold coin is purely a symbolic face value. One of the purest gold coins in the world, its current value is in excess of $500.
Steel coins have been the norm here since 2000, while for a few years before that the Canadian penny was more like its American cousin, copper-plated zinc.
The upshot is, our penny costs approximately .008 of a cent to produce, according to the Canadian Mint. (That was the average cost of producing over 800 million pennies last year; loonies and toonies cost just under 11 cents to produce and distribute.)
And because banks pay face value for all the coins and bank notes they buy from the mint, this leaves a tidy surplus, called a seigniorage, which has amounted to $1.6 billion over the past 20 years and which the mint turns over to the federal treasury to play with as it chooses.
How big is your jar?
Still, if you're determined to play the commodities market with your loose change then you are going to have to go through your stash and sort by years (and even then it probably wouldn't be worth your while in smelting and distribution costs, numismatists and commodities people say).
Canadian pennies from 1996 and earlier – and U.S. ones from 1981 and earlier – are 98 per cent copper, veritable gold mines at today's prices. But you'd have to have quite a few to make this work.
A penny weighs 2.5 g. That means you would need 408,163 pre-1997 pennies to end up with a tonne of copper. As legal tender, this stash would be worth $4,081.63 but as a potential truckload of copper destined for China this would bring in US$7,230 just now on the LME futures market.
The good news is there may be enough pennies out there to pull something like this off: The mint produced almost three billion pennies between 1990 and '96.
The bad news: You'd have to break the law to do it. It's illegal in Canada to deface our coins. You're not even supposed to put them on the railway tracks for trains to squish.
The mint does have an alloy recovery program it runs, to cull old quarters and nickels from banks and transit offices. But this is meant to get those coins from the '60s and earlier with a high silver content. And while it may expand this to nickel if the commodity boom continues, the lowly copper seems still destined for that jar on the dresser, or the cracks in the car seats.
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ABOUT ROBERT SHEPPARD
Biography
Robert Sheppard began his career at the Montreal Star (may it rest in peace), spent 22 years at the Globe and Mail and was recently senior editor at Maclean's magazine. He has co-authored a book on the Canadian Constitution and writes on a variety of subjects.