The U.S. Penny is worth 1.04¢!


[The following article is part of a larger commentary, available here.]

After monitoring this calculation for a long time, I’m happy to announce this new and unusual arbitrage.

Pennies are composed of 97.6% zinc and 2.4% copper, with a total weight of 2.5 grams. After several years of rapid appreciation, copper prices have been stagnant for about 6 months, but zinc has been rising toward $4,000 per metric ton (or about 4/10 of a cent per gram). That places the value of the zinc at 0.994¢, and the value of the copper at 0.045¢, bringing to total cost of the raw metals to 1.04¢.

So if you collect pennies, melt them down, separate and purify the metals, then sell the metal on the public exchange, you make 4%. This is a new phenomenon, and may not last. I would expect to hear an announcement that the penny will be modified, replacing zinc with aluminum. This would bring the value of the metals down to less than 7/10 of a cent, and gives the government another couple years before they are forced to drop the penny as a unit of currency.

The new aluminum pennies will still be clad in copper, but will feel much lighter. You heard it here first.

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One response to “The U.S. Penny is worth 1.04¢!

  1. >Dear Dan:Thank you for the news on the penny, very interesting.Although not connected we are brethren at LINKEDIN.I am writing to ask if you know 2 guys/gals who are adept at riding herd on deal teams in the smaller middle market $15 MIL to $25 Mil?Can we chat?Tony617-924-0074

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