For the fifth year in a row, it cost the United States Mint more than face value to produce and distribute the cent and nickel. For the fiscal year ending, September 30, 2010, the unit cost for the cent was 1.79 cents and the cost of the nickel was 9.22 cents.
For the one cent coin, this represents the highest unit cost on record. Each penny has a composition of 2.5% copper and 97.5% zinc. Although the metal value of each newly minted cent remains below face value, the process of manufacture and distribution push costs higher. For the fiscal year, production of the smallest denomination generated a loss of $27.4 million.
The cost of producing the nickel, remained slightly below the peak of 9.53 cents per coin, reached for the 2007 fiscal year. Each nickel has a composition of 75% copper and 25% nickel. The metal value of a nickel is approximately 6.5 cents. For the current year, production of the denomination resulted in a loss of $15.2 million.
Historical Cost of Producing and Distributing the Penny
| Fiscal Year | US Mint Cost | Seigniorage (millions) |
| 2010 | 0.0179 | $ (27.4) |
| 2009 | 0.0162 | $ (19.8) |
| 2008 | 0.0142 | $ (22.2) |
| 2007 | 0.0167 | $ (40.1) |
| 2006 | 0.0121 | $ (18.3) |
| 2005 | 0.0097 | $ 2.0 |
| 2004 | 0.0093 | $ 4.6 |
| 2003 | 0.0098 | $ 1.0 |
| 2002 | 0.0089 | $ 8.8 |
| 2001 | 0.0080 | $ 24.6 |
Historical Cost of Producing and Distributing the Nickel
| Fiscal Year | US Mint Cost | Seigniorage (millions) |
| 2010 | 0.0922 | $ (15.2) |
| 2009 | 0.0603 | $ (2.2) |
| 2008 | 0.0883 | $ (24.8) |
| 2007 | 0.0953 | $ (58.5) |
| 2006 | 0.0597 | $ (14.6) |
| 2005 | 0.0484 | $ 2.4 |
| 2004 | 0.0456 | $ 6.1 |
| 2003 | 0.0378 | $ 8.9 |
| 2002 | 0.0332 | $ 21.9 |
| 2001 | 0.0331 | $ 28.2 |
During the 2010 fiscal year, the costs of producing the dime, quarter, and dollar coins, each remained below their respective face values. Across all denominations issued for circulation, the US Mint generated $0.49 in seigniorage for each dollar issued. The total seigniorage for the fiscal year was $300.8 million.
Due to a server change, original comments on this post were lost. The 30 comments are reproduced below.
30 Responses to “Cost to Make Penny and Nickel Rises for US Mint”
1.
Mick
January 10, 2011 at 8:03 pm | Permalink
I suspect it is illegal to melt pre-1982 pennies and any-date nickels to get the intrinsic metals, which are valued above face value. Doing so would remove the coins from circulation. The coins are needed for commerce. I think that if the US Government ever cancels the penny and nickel, then it would probably be OK to melt them.
The fact that it costs more to make pennies and nickels these days doesn’t mean the Mint is acting wastefully. The reason is that those coins are needed for commerce. The Mint is fulfilling its duty of providing coins for commerce. Of course, the Mint and others should be considering alternative materials and methods of production.
2.
Roy
January 10, 2011 at 9:14 pm | Permalink
They could get rid of the penny and make the nickel out of nickel or zinc plated steel and this would save some money.
Get rid of the dollar bill and go to the dollar coin also.
Wow, save a billion a year with these two suggestions.
3.
Richard
January 10, 2011 at 9:17 pm | Permalink
The government’s deficit increases $3 million dollars every second, so if my math is correct, the Mint’s cost to the taxpayer to produce both the nickel and the cent for all of 2010 took a bit more than 14 seconds.
Seems miniscule in the grander scheme of things, especially since the Mint still turns a profit on its overall production activities.
4.
Blaine Anderson
January 10, 2011 at 9:28 pm | Permalink
As a tax payer for over 40 years, my thoughts are melt the pennies. Save the tax paying public some money and make new
pennies cheaper, or stop makin all together.
Thx
Blaine
5.
Mike S.
January 10, 2011 at 9:42 pm | Permalink
Think “inflation” and ask yourself, “how could we continue to make proper coinage without it costing more than each coin is worth?” The answer? Make the value of each coin a function of its weight and purity of its metal base. The US Treasury (NOT the Fed) with approval of the House could then designate the value of each coin, (adjusted quarterly, semiannually or annually) with a built-in premium (say 10% above the metal base value) with the caveat that the value could not go down, even if the base metal value did. This would retain the coin’s soverign value and negate any inflationary affect. The major problem with this scenario would be that the people would actually have money that held some minimal fundamental value, unlike the fiat currencies of today.
6.
jimmy
January 10, 2011 at 10:31 pm | Permalink
the intrinsic value of nickel is $0.065 each. a roll of 40 uncirculated nickel value at $2.60. so the average buying price for a roll of uncirculated nickel should be at least $2.60 or more. so listen to me collectors. do not sell your uncirculated nickel roll to any dealer at less than $2.60. currently some dealers were buying those nickel rolls at $2.00 each. which is the face value. do sell it to them.
p.s. the mint currently produce the nickel roll at $4.00 a roll. just think of it. the cdn newsletter should change their bid and ask. their quotation were obsolete.
7.
jimmy
January 10, 2011 at 10:33 pm | Permalink
note for correction: do not sell to dealer your nickel roll at $2.00 or $2.25.
8.
Adam Nash
January 10, 2011 at 11:13 pm | Permalink
Eliminate the penny, and change the nickel to a composition worth less than five cents.
Alternatively, charge people at the bank for the coins. So, yes, they are worth $0.01 and $0.05 in commerce, but charge at the banks full fare for requesting them. That’ll move them out of circulation elegantly.
9.
Michael Steinberg
January 11, 2011 at 3:22 am | Permalink
To change the nickel to 100% nickel would cost even more!!!!
10.
Fats
January 11, 2011 at 7:15 am | Permalink
If I’m not allowed to melt the money in my possession, it’s not my money, is it? After all, ownership is the right of use and disposal. And if it’s not my money, I don’t have to declare it as income, do I?
11.
jimmy
January 11, 2011 at 7:31 am | Permalink
in short. a roll of nickel face value is $2.00. production cost is $4.00. a roll of penny face value is $0.50. production cost is near $1.00. if you have uncirculated roll from a bank. just keep them.
12.
Michael G. Koerner
January 11, 2011 at 9:14 am | Permalink
I would drop the 1¢ and bring back the old ‘half-dime’ in cupro-nickel clad form for the 5¢. According to the figures in coinflation.com, the metal cost for the dime, quarter and half-dollar are all now running just below 25% of ‘face’, so going back to using half-dimes should last for at least a couple of years.
Yes, I would also do what Canada, Australia and the Euro-zone have done and drop the banknotes below $5 and use coins for $1 and $2. Australia and a few of the Euro-zone countries do not use coins below 5¢ and Canada is about to drop their 1¢.
Remember that with inflation, to keep things in context, the quarter of today is the 1¢ of a century ago, and I don’t even use coins below 25¢ for making change at my part-time pizza delivery job. If a customer wants the ‘odd’ coins back, I’ll just round the change up to the next even quarter – with an annual ‘loss’ of well under $1.
Mike
Appleton, WI
13.
Ed
January 11, 2011 at 10:09 am | Permalink
Mike S. probably had the best idea, and it would also go back to the intent of the founders in that silver and gold would be the monetary coins of this nation. It’s not that the penny and the nickle are worth less, but rather the VALUE of the dollar is Worth(less). It’s backed by the full faith and credit of the US Government. Were we to return to Gold and silver coins with Nickel and Copper as the smaller units with a floating scale (1 Gold=15 Silver, 1 Silver = 10 Nickels, 1 Nickle = 10 Copper) it would take some getting used to, but as the value would float, we could probably see a serious reduction in “inflation”. Of course then you have the concerns over the changing value of the metals themselves….
14.
Degaz
January 11, 2011 at 11:32 am | Permalink
The euro nickel uses steel. I suspect the US isn’t far off from switching to something like that since paying double the face value to produce the coin is unsustainable.
15.
jmorris84
January 11, 2011 at 11:48 am | Permalink
The solution is not to eliminate the penny or nickel but to eliminate the government from having the ability to be in the coin minting/distributing business.
16.
bad_attitude
January 11, 2011 at 12:13 pm | Permalink
Idiots,
a) it’s illegal to melt them down
http://www.usatoday.com/money/2006-12-14-melting-ban-usat_x.htm
b) the metal you’d get out of them is worth less than the coins’ value — didn’t you read the article?
17.
Dan
January 11, 2011 at 2:24 pm | Permalink
bad_attitude nickles and pre-1982 pennies are worth more, the zinc penny is worth less (for now).
Ever wish you could go back to 1964 and trade all your bank notes for dimes and quarters? Well we might be living in a state of “I wish I could go back to 2011″ in the near future.
To anyone who wants to get rid of the penny of the nickle is inviting the cashless society. If you believe in Jesus, read Rev 13:17. Or to those unbelievers out there, how would you like a system were all your funds are electronically accounted for and the corporations and governments can manipulate your bottom line whenever they want through means of tax withholding and service charges, late fees and the like. Ether way you slice it, this is very dangerous territory.
I’m okay with scrapping the dollar for a coin, that’s moving in the right direction. But our government and the bank that controls (FED) them would love to scrap all coins because paper and plastic can be inflated so cheaply and as most of the awake ones know that inflation is simply a hidden tax to hit the people years down the road. Am I preaching to the choir here?
18.
face1004
January 11, 2011 at 4:03 pm | Permalink
So the nickel is almost worth a dime now and the dollar coins are being made with the dollar bill and no one uses the dollar coin. All I can say is what a waste. Solution: Farewell to the dollar bill. Make more two dollar bills with a new look. Start making more dollar coins to replace the bill. Probably take two to five years to go total in the $1 coin. Make the penny steel,period. No copper overlay. Make a new 5 cent piece probably also steel but maybe add something to it to give it a bit of color(For those who lose the copper looking penny becoming steel.) Keep the 5 cent piece the same weight and size to keep the vendors happy. The same design with the nickel could still stay but personally I would like to see a total change in coins without the Presidents. People who made a difference in this country that wasn’t a President.
19.
jmorris84
January 11, 2011 at 4:22 pm | Permalink
face1004: We are talking costs here. The government is minting coins at a loss and you are worried about what the pictures look like. It doesn’t matter if you have a president’s picture or mickey mouse’s picture on the face of money. The metal value will always fluctuate with the market and because governments do not use the same pricing calculation methods as the free market (supply & demand), it will always operate the minting business at a net loss.
20.
face1004
January 11, 2011 at 6:23 pm | Permalink
Okay then scrap money all together and go plastic then.
21.
jmorris84
January 11, 2011 at 6:39 pm | Permalink
That would allow the government to inflate much easier then they already do. The most efficient way to handle this is to allow market currencies to compete and get government out of the money business.
22.
face1004
January 11, 2011 at 7:04 pm | Permalink
Does that include all world governments or just ours? Because I really don’t know what government in the world isn’t in some form of money business. Who do you think has their controls on the “free” market? How about privatize money? Then we can trust greedy business people to do the right thing. Just like governments.
23.
Mike Hansen
January 11, 2011 at 10:35 pm | Permalink
Why not just revalue them? Make the nickel into a 20 cent piece and the penny into a 5 cent piece.
24.
BotanicusRex
January 11, 2011 at 11:15 pm | Permalink
Use aluminum for both the penny and nickel… reduce their sizes. Many countries use aluminum.
25.
gd
January 11, 2011 at 11:45 pm | Permalink
“the metal you’d get out of them is worth less than the coins’ value — didn’t you read the article?”
Ahh, you’re an idiot. The nickel’s metal worth is 6.666 cents today.
26.
jmorris84
January 12, 2011 at 12:07 am | Permalink
face1004: You are missing the point. Just because other people are making the same mistake doesn’t mean that you have to make it to. At least a “greedy business person” has to worry about making a profit in order to stay in business. If the greedy business person runs their business at a loss, the greedy business person goes out of business. When the greedy government runs at a loss, they force you to give up more of your hard earned money.
Moral of the story: you have a choice whether to give the greedy business person your money or not. Not so with the greedy government.
27.
David
January 12, 2011 at 12:43 am | Permalink
Mike Hanson, I think that your solution is the best so far. Matter of fact, 1 N$=10 present $, thus 1N¢=10 present ¢, 5N¢=50 present ¢, and well, you get the picture. A Big Mac will cost you about 25 cents again, but you’ll probably only make 1 -2 dollars an hour. Kinda like things usta be. “Dollar” and “cent” ain’t anything but words, and they can denote whatever we choose.
28.
face1004
January 12, 2011 at 2:38 am | Permalink
jmorris84:It is going to cost to make money no matter what unless you don’t make it at all. To let an outside persons or banks to make it would be national suicide. Why do think we have one common unit of currency? If we went back and let all the different banks print different forms of money like they did in 1800′s all the stores and hotels wouldn’t be able tell the note from Springfield national bank was real or not. Unless they were from Springfield. If you let just one bank or institution make money it’s called a monopoly. They would probably charge a fee for using the money you have supposedly earned on top of taxes.
29.
jmorris84
January 12, 2011 at 11:21 am | Permalink
face1004: The United States government is currently trillions of dollars in debt. The US also currently has one common unit of currency. Yet, for some reason, in the face of all of this, you are more concerned with allowing the free market to have competing currencies.
Your reference to the 1800s is a little strange as well. Can you provide proof that stores and hotels were unable to tell the difference between multiple forms of notes. When you have the time, read up on the Suffolk Bank of Boston, which was in operation during the 1800s. Hopefully you will have a different outlook on free market banking after reading a little about it!
30.
face1004
January 12, 2011 at 2:20 pm | Permalink
Nah, I’ll use travelers checks.
Two more comments recovered:
Author : DeeBeeA
Comment:
The US government wastes money in every single venture that it gets involved with. Why would coinage be any different?
If you can’t do WHATEVER YOU WISH with the coins in your pocket (melt, destroy, dispose of) then you don’t really own them, do you?
WAKE UP FOLKS!
Author : ps
Comment:
Dan said: “To anyone who wants to get rid of the penny of the nickle is inviting the cashless society. If you believe in Jesus, read Rev 13:17…Ether way you slice it, this is very dangerous territory.”
Exactly! There is nothing wrong with the penny or nickel. Currency debasement is the problem! If anything, coins should be more circulated, not less! Coins, even debased ones, at least require real labour and materials to produce. This means that even a zinc penny has some value. I purposely actively try to circulate coins, even pennies. If there’s no line-up behind me when shopping, I have no problem paying exact change, and even counting out 10 or so pennies.
One more:
Author : Mike Hansen
Comment:
In my opinion revaluation of the coinage is the only way to return to a lawful monetary system.
For example the 40% Kennedy’s could be revalued to $5 coins ( the non silver kennedy’s could be removed from circulation easily as they are hardly ever used.)
The government could buy in the “junk” silver at market value, melt it down, and use it to make more 40% silver $5 coins.
The penny would be revalued along with the nickel as previously suggested (5 cent and 20 cent coins respectively).
The one dollar bill would be elliminated and the $5 bill would be a silver certificate, backed up 100% by silver from the buy in of the old “junk” silver and the minting of 40% kennedy’s.
The alternative is not pretty to envision. Action needs to be taken soon while there is still time.
Like any of it makes any difference until there is an inventory of Fort Knox, anyway. I
It costs more to mint pennies and nickels than they are worth. This means it costs us, the people, money to have the coins in circulation. We would save tens of millions by ditching them.
The net downside of NOT having pennies and nickels would be that we would have to round all purchases and change at cash registers to the nearest dime. Are the American people not smart enough to do this?
I don’t have to believe in Jesus to know any Bible passage is open to unlimited interpretation. Anyone who believes we should follow some supposed interpretation of some Bible author (who is not Jesus, by the way!) is living way over the other side of ludicrous thinking.