[Infowarrior] - New rules outlaw melting pennies, nickels for profit

[Richard Forno]

New rules outlaw melting pennies, nickels for profit
Posted 12/14/2006 12:01 AM ET
By Barbara Hagenbaugh, USA TODAY
WASHINGTON ‹ People who melt pennies or nickels to profit from the jump in
metals prices could face jail time and pay thousands of dollars in fines,
according to new rules out Thursday.

Soaring metals prices mean that the value of the metal in pennies and
nickels exceeds the face value of the coins. Based on current metals prices,
the value of the metal in a nickel is now 6.99 cents, while the penny's
metal is worth 1.12 cents, according to the U.S. Mint.

That has piqued concern among government officials that people will melt the
coins to sell the metal, leading to potential shortages of pennies and
nickels.

"The nation needs its coinage for commerce," U.S. Mint director Ed Moy said
in a statement. "We don't want to see our pennies and nickels melted down so
a few individuals can take advantage of the American taxpayer. Replacing
these coins would be an enormous cost to taxpayers."

STORY: Government appeals currency redesign

There have been no specific reports of people melting coins for the metal,
Mint spokeswoman Becky Bailey says. But the agency has received a number of
questions in recent months from the public about the legality of melting the
coins, and officials have heard some anecdotal reports of companies
considering selling the metal from pennies and nickels, she says.

Under the new rules, it is illegal to melt pennies and nickels. It is also
illegal to export the coins for melting. Travelers may legally carry up to
$5 in 1- and 5-cent coins out of the USA or ship $100 of the coins abroad
"for legitimate coinage and numismatic purposes."

Violators could spend up to five years in prison and pay as much as $10,000
in fines. Plus, the government will confiscate any coins or metal used in
melting schemes.

The rules are similar to those enacted in the 1960s and 1970s, when metals
prices also rose, the Mint said. Ongoing regulations make it illegal to
alter coins with an intent to commit fraud. Before today's new regulations,
it was not illegal to melt coins.

Metals prices have skyrocketed worldwide in recent years in response to
rising demand, particularly in rapidly growing China and India. Prices for
zinc, which accounts for nearly all of the metal in the penny, have risen
134% this year, according to the London Metal Exchange. Even accounting for
a recent decline, the price of copper is up 50% since the start of 2006.
Nickels are produced from 75% copper and 25% nickel.

Although the Mint's new rules are immediately going into effect, the Mint
will take comments from the public for a month.

The government has changed the composition of coins in response to rising
metal prices. The penny, which was pure copper when it was introduced in
1793, was last changed in 1982.
 
 
 
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