Cost of making the penny pinches Mint

Penny for your thoughts?

Better make that a nickel. Or better yet, a dime.

The cost of minting a penny is now more expensive than the coin is worth, once again raising the possibility that it is headed toward extinction.

Pennies cost about 1.7 cents each to produce, while nickels cost about 8.3 cents, according to the U.S. Mint.

The problem is that the cost of metals has shot to record levels, and the price of the zinc, copper and nickel the coins contain now outstrips their face value.

Now, the Mint is preparing a report to Congress on whether American coinage should be changed.

“We intend to fully examine and thoroughly study it to evaluate and assess its findings and recommendations,” said Marvin Fast, spokesman for the Senate banking committee.

The U.S. Mint also is trying to prevent speculators from melting pennies down to sell the metal for scrap.

Last month, the government coin maker published an interim regulation to cut down on export and melting of pennies and nickels.

“We are taking this action because the nation needs its coinage for commerce,” said U.S. Mint Director Ed Moy. “We don’t want to see our pennies and nickels melted down so a few individuals can take advantage of the American taxpayer. Replacing these coins would be an enormous cost to taxpayers.”

There were 8.23 billion pennies minted last year, according to the U.S. Mint. The agency spent about $44 million to produce pennies last year, compared with about $30 million a year earlier.

Travelers can take no more than $5 of pennies out of the United States, and no more than $100 of pennies can be shipped by mail. Violators could be fined up to $10,000 and imprisoned for up to five years.

A final rule is likely later this year.

In July, the House Financial Services domestic and international monetary policy, trade and technology subcommittee held a hearing that included discussion of whether to kill off the penny.

Days before the hearing, Rep. Jim Kolbe, Arizona Republican, who has since retired, introduced a bill to do away with the penny. He called the coin “a nuisance.”

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