For some enterprising investors, it seems like a sure thing to melt down coins for the base metal content. However, you really shouldn’t — at least when it comes to US currency.
There has been a lot of interesting in coin hoarding recently, due in large part to the fact that metals have been seeing some solid gains in recent years. It’s not just precious metals like gold and silver that have been seeing some reasonable gains. Base metals like copper and nickel have also enjoyed gains in recent years.
As a result of concerns about fiat currency, and worries that precious metals are too expensive for some to invest in, coin hoarding has become more popular. It’s much cheaper to get involved in nickel hoarding or penny hoarding than it is to try to buy an ounce of gold.
The temptation, of course, is to melt down these coins for the metal content. After all, the metal content in a nickel is worth more than five cents. Before you decide to melt down coins, though, understand that melting down pennies and nickels is?illegal.
Melting Down Coins Can Mean Jail Time
If you melt down pennies and nickels, you could spend up to five years in prison, as well as possibly pay up to $10,000 in fines. On top of that, the melted metal will be confiscated.
Don’t think that you can simply send the coins to another country to be melted down, either. It’s illegal to export pennies and nickels to melt down the metal content. Trying to leave the country with more than $5 in nickels and pennies is also illegal. The United States is serious about using these coins for circulation.
Of course, things could change. Canada recently got rid of its penny, and there is some interest in the United States for getting rid of the penny. After all, it costs more than a cent to make a penny. Some enthusiasts hope that ending the penny as US currency could make it legal to melt pennies down for the base metal content.
However, best results would only be achieved with pre-1983 pennies, or with nickels. For the most part, many coin hoarders are simply interested in building up their supplies in case they are needed — or if the day comes when it becomes possible to melt down coins for metal content. But until then,?do not attempt to melt down coins. It’s illegal.
Cashing in on base metals of coins really has very little to do with melting though. Coins, based on their metal content, sell for a considerable premium over spot price due to the fact they are in coin form.
You have an easily recognizable, largely accepted, form of metal. The legality has very little to do with trade value. The trade value has to do with supply. While copper pennies and nickels are still in circulation, they won’t trade at spot price (or above). However, when eliminated or supply runs scarce, that’s when you’ll see a dramatic rise in price.
Either way, melting is far from a real investor goal when it comes to coins.
-Dan
If this is illegal, why do seemingly reputable companies such as eBay allow for the advertising of pennies for melt down purposes? I’ve written to eBay asking for clarification and have also attempted to contact the US Mint, but all of my notes have fallen on deaf ear. I figured I must have just misunderstood the law in regards to this, but according to your article my earlier thoughts were right. It just seems all parties would rather look the other way than be forced to deal with this activity.
Thank you!
Jeff C.