A penny can hide the sun if we hold it close enough to the eye, and a
transient difficulty can shut out from a fearful soul all life' s large
blessings and all the horizons of divine will. --Harry Emerson Fosdick.
An article in the Homiletics 2012 issue has stimulated this thought.
It seems that before 1982, the penny was made of copper. However, that
year, the cost of the copper required to create one penny rose above 1¢. Therefore,
since 1982, the U.S. Mint coined pennies made primarily of zinc. That was
cost-efficient until 2006 when the penny production cost rose to 1.23¢. In
2012, it costs 2.41¢ to make a penny.
At this point, we see the dilemma in making money that costs more to
make than its face value. Legislation is now considering eliminating Abe from
our coinage altogether. Australia, New Zealand and Canada have eliminated their
pennies already.
At the crossroads of metallurgy and political legislation, two cottage
financial industries have subsequently emerged. The first was penny melting.
Companies began collecting pre-1982 pennies and melting them to resell the
copper. Copper prices kept rising and scads of pennies disappeared. Business
was booming.
Copper melting proved so lucrative that illicit activities sprung up.
Thieves began stripping copper wire from construction sites and utility
connections. A 122-year-old copper bell was even stolen from Saint Mary's
Cathedral in San Francisco. The Mint had to produce enormous numbers of zinc
pennies to offset the circulation deficit created by copper penny melters. So
in 2007, laws were passed making penny melting illegal.
That is when the second penny industry emerged: penny hoarding. People
stash pre-1982 pennies away, hoping for the rumored legislation that will do
away with the 1¢ coin. At that point, penny melting would again be legal.
At worst, these stashes of pennies are worth 1¢ each – or exactly what
was paid to get them. Zero lost on the investment -- except to inflation -- if
the Mint keeps the penny or the penny hoarder loses patience and cashes out.
Joe Henry of Medford, Oregon, hits all 15 banks in his town each week,
buying up penny rolls that others turn in. Then he divides the copper and zinc
varieties using a machine that rapidly separates the pennies by weight. He re-rolls
Post-1982 zinc pennies and returns them to the bank. Pre-1982 copper pennies
get stored in buckets in the garage. It is like a redneck Fort Knox.
On a corporate scale, Adam Youngs has turned penny hoarding into a
lucrative online business -- he calls it the Portland Mint. He is a hoarder's intermediary.
Instead of tying up money waiting for legislation that would allow him to melt
pennies, he lets others do the waiting. He buys pennies by the ton, has armored
cars deliver them to his warehouse, forklifts them into an industrial sorter,
then sells them on eBay to smaller scale penny hoarders. He will sell $100
worth of pennies for $167. While that sounds ridiculous, hoarders anticipate
turning their own $53 profit off that purchase by melting. Youngs makes 67% profit
as the middleman, and his hoarding clients stand to make 32% profit.
The small-time hoarder like Joe Henry is better off doing his own
sorting to increase margin. That is why Youngs also sells pennies by the ton
and his clients include hedge fund managers! They are drooling to make 32% for
their investors. People will truly do anything to make a buck.
By the way, today,
the nickel is also worth more melted down for its metal.
By the way, it is illegal to melt
down any coin for its metal.
I learned the previous two bits of
information from an article in Market
Watch in July 22, 2007, by Chuck Jaffe, in a regular column under the
by-line, “Stupid Investment of the Week.”
In other words, please do not try
this! If you want to collect them for amusement, fine, but if you do so as an
investment, prepare for disappointment.
Maybe we need to consider the penny as an analogy to a spiritual truth.
In Pilgrim at Tinker Creek,
Annie Dillard has just finished telling her readers about a childhood game of
hers in which she would hide pennies for other people to find -- emblematic of
her later work as a writer -- when she moves on to reflect on the significance
of seeing (or failing to see) discarded pennies on the ground:
"It
is still the first week in January and I've got great plans. I've been thinking
about seeing. There are lots of things to see, unwrapped gifts and free
surprises. The world is fairly studded and strewn with pennies cast broadside
from a generous hand. But -- and this is the point -- who gets excited by a
mere penny? If you follow one arrow, if you crouch motionless on a bank to
watch a tremulous ripple thrill on the water and are rewarded with the site of
a muskrat kit paddling from its den, will you count that sight a chip of copper
only, and go your rueful way? It is dire poverty indeed when a man is so
malnourished and fatigued he won't stoop to pick up a penny. But if you
cultivate a healthy poverty and simplicity, so that finding a penny will
literally make your day, then, since the world is in fact planted in pennies,
you have with your poverty bought a lifetime of days. It is that simple. What
you see is what you get."[1]
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