Up until early this morning, pennies really bothered me.
Smug in their copper brownness, the tiny coins are virtually worth nothing. With the exception of a few general stores left in small-town America where you can still buy penny candy, you can't purchase anything for a single cent. Nowadays a penny'd buy you nothing, zip, zilch, nada. We're talking goose egg here.
In actual fact, the only reason that you'd use pennies when buying something anymore is to avoid getting more pennies as change. Think about it.
Let's say you went to buy a coffee that cost you $1.21. If you don't pay with exact change - say you give the clerk an easy buck twenty-five - you'd be stuck with four more of those little annoyances jingling around in your pants. Thanks - but no thanks.
I'm not alone in my penny loathing.
In 2002, Rep. Jim Kolbe (R-AZ) proposed the Legal Tender Modernization Act, which appealed to stop the continual production of pennies. Kolbe claimed that pennies have essentially no value yet cost the government billions of dollars to produce each year. Obviously, the legislation has not passed as of yet.
Now, as I mentioned before I've ostracized pennies my entire life. But now after learning the true value of a penny, I have a new found admiration and respect for the monetary low man on the totem pole.
If you're ever thinking of giving someone your two cents, you should start charging them for three. Recent prices have made the copper in some pennies worth more than one and a half times the stated value of a measly cent.
In fact, with copper prices at all-time highs of about $2.42 per pound, the copper in nearly half of the U.S. pennies in circulation today are worth 1.54 cents.
Now before you start scouring the nether regions of couches and car seats, be aware that there are a few catches to a get-rich-quick scheme based on this news.
First, and most importantly, this price applies only to pennies minted before 1982.
Pennies minted before 1982 were mostly made of copper. Post-1982 pennies are mostly zinc, comprising of 97.5% zinc and 2.5% copper.
There's a simple way that anyone with thumbs and ears can tell the difference.
Find two pennies, one minted before 1982 and one minted after. Flip both of them off your thumb. The penny minted before 1982 will make a soft ringing sound as it flips through the air. The penny minted after 1982 will not make any sound.
Ok, so maybe at this point you've dug through your pockets, extracted and examined some pennies, and maybe flipped a few in the air. How much are pennies really worth?
Well, the copper in one hundred pre-1982 pennies would be worth $1.54 - 54 cents more than the face value of a dollar. No big deal.
However, as you can image, the numbers increase further with the more pennies you accumulate. The copper in a hundred thousand pre-1982 pennies (stated value = $1,000) is worth $1,540.
The copper in a cool million pre-1982 pennies (face value = $10,000) is worth $15,400. And so on.
Now like I said earlier, before you start hoarding copper pennies for profit, there's a catch.
Even if you had the time and the patience to find enough of these pre-1982 pennies that would make it worth while to melt down the coins into a tradable metal, it's highly unlikely you'll find a smelter willing to work with you.
And even if you did find a smelter willing to do so, you would have to have an awful lot of pennies to make it worth the fees to melt them.
Regardless, I have a new appreciation for pennies. And I'd gladly call them 'friend'.
The spot price of copper topped off at a record high today at about $2.42 a pound. Yet many analysts see copper, the first metal used by man, still going much higher.
The industrial revolution and the age of electricity drove the demand for copper. Going back to 1900, the world consumption of copper was one million pounds for the year. But because of industrial progression worldwide, an average of 92 million pounds was used in 2005.
And now with China and India going through their own industrial revolution, copper will see major pressure on the demand side going forward. This gives copper a bullish platform.
Now, at times when the price of a commodity outpaces the value of its requisite coin, it's more common to simply trade the commodity in its current state.
If copper prices stay high, pre-1982 pennies could be traded for their intrinsic value, similar to old U.S. silver coins that trade back and forth for their silver content rather than their stated value.
But what about today's zinc-based pennies?
Well, on Thursday, zinc prices hit a record of about $1.31 per pound, supported by a tight global supply of zinc concentrate and strong demand for zinc-coated steel for construction, vehicles and other uses.
Zinc has already climbed over 80% in the past year. The metal's strong run has lifted it to a premium over aluminum for the first time in about 13 years. And, like copper, most analysts see the galvanizing metal climbing much higher.
As it stands today, the zinc in a post-1982 is only worth $0.007. However, with global demand on the rise for the metal, zinc prices are bound to increase further.
And so many people may ignore pennies as they lay on the sidewalk and children may throw them into wishing wells. But not me - not anymore.
Dear penny - friend - I salute you.