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Is the Penny Going Away?

by Norm Anderson

Canada stopped producing their penny in 2012 but the U.S. penny may not be going away any time soon. One reason Canada stopped making pennies was because of the high cost of producing them. The U.S. Mint reports it costs 1.99 cents to produce a penny. In 2011 the cost was 2.41 cents per penny. To help reduce costs, the composition of pennies has changed over time. Years ago they were made of 100% copper. Today's pennies are composed of mostly zinc and only 2.5% copper.

Some economists are saying it's time for the United States to abandon the penny. They say several countries have reported no major problems after eliminating their penny or equivalent coins, but others are saying not so fast. One study claims eliminating the penny would cost consumers between $2 billion and $4 billion every two years because prices would be rounded up. Also, nickels would be in higher demand and they cost even more to produce. The U.S. Mint reports the cost of producing a nickel is more than eleven cents. Some say small charities that rely on penny drives would suffer and the zinc industry would be hurt by eliminating the penny.

By the way, if you think it would be a good idea to melt your pennies and nickels and sell the metal for profit, keep in mind there are laws against doing that.