America Continues To Produce Pennies, Even When It Takes 1.6 Cents To Make One
‘Penny wise, Pound foolish’ goes the saying and that apparently rings true for the American treasury. Despite shelling out more than 1.5 times the amount to make one, America continues to mint pennies.
It now costs 1.6 cents to produce each US one cent coin. The price of the penny is high due to the rising cost of Zinc, the chief ingredient that is required to make the U.S Penny. Zinc makes up 97% of each coin, and needless to say, directly influences the final price of the currency in metal form. Interestingly, President Obama has proposed phasing out pennies and nickels (5-cent pieces) on numerous occasions, but to no avail. His latest attempt to stop minting pennies is also included in the 2015 budget, but for some reason, the Congress hasn’t approved.
Why are Americans still clinging on to something they hardly use? Attempting to rationalize the absurd association with the pennies, President Obama said,
“It’s one of those things where I think people get attached emotionally to the way things have been. We remember our piggy banks and counting out all the pennies and then taking them in and getting a dollar bill or a couple of dollars from it and maybe that’s the reason people haven’t gotten around to it.”
Fortunately, the penny actually is slightly cheaper to make this year. The U.S. Mint, reportedly lost $55 million simply producing pennies, reported The Wall Street Journal. In 2013, the standard U.S. penny cost 1.8 cents to make. Interestingly, the Mint has discovered some nifty cost cutting techniques which resulted in bringing down the production cost to 1.6 cents. However, there is still a major hurdle; the international price of Zinc.
Zinc is used in every aspect of modern life but is especially instrumental in steel-making, where its rust-proofing qualities really shine. The demand for zinc is rising as it appears we’re starting to run out of the metal, reported Global Advisors. Some of the world’s biggest zinc mines look to be winding down, and Goldman Sachs says production is expected to fall short of demand this year for the first time since 2007.
Using metal coins is actually beneficial for the treasury since these last significantly longer and can easily take a lot beating, with no change in their appearance. However, evidently they are very expensive to make. Jostling with the same dilemma, Canada eventually bowed out of making pennies earlier this year, but it looks like its American counterpart may still live for a little while longer.
[Image Credit| FactSet, Getty Images]
