Can You Melt Coins For The Precious Metal?
The short answer? It is illegal to melt and profit off of pennies and nickels. This also includes exportation of these coins (which usually is then melted in other countries).
There are still instances where it’s okay to melt coins, but let’s get a bit into why it’s illegal to melt pennies and nickels first!
Why is it illegal to melt pennies and nickels?
As we know, coins contain a few different types of metals. They used to be mainly gold and silver, but now coins are a composite of a few things. Coins are mainly made of copper, zinc, and nickel. Those metals used to be relatively inexpensive, but now their prices have risen and they’re more valuable than they used to be.
In 2006, copper prices were on the rise. Copper is a main metal in pennies and nickels, and the amount of copper in those coins became worth more than the actual face value of the coin itself!
The Mint, foreseeing coins being pulled out of circulation and melted for people to profit off, implemented an interim rule that made it illegal to melt nickels and pennies, or to export them in mass quantities. Naturally, this would cost the government and taxpayers money, because coins would be needed to replace the ones that had been melted down.
“We are taking this action because the Nation needs its coinage for commerce,” said Director Ed Moy. “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.”
In an interview with ABC News in 2006, Mint Director Edmund Moy said that “if only 1% of all nickels and pennies that are in circulation were melted down, taxpayers would have to foot a $43 million bill” Obviously that’s not ideal for anyone, so making it illegal to melt pennies and nickels was the answer to this.
Anybody who knowingly ignores these laws and melts and sells, or exports mass quantities of pennies and/or nickels have up to $10,000 in fines to look forward to, or five years of prison, possibly both. Neither of those things sound great to me.
Can you melt silver and gold coins?
The Mint has made it illegal to melt coins in the past as well, from 1967 to 1969 it was illegal to melt silver coins, as the price of silver at the time was higher than the face-value of the coin (Which it still is, though the U.S. only produces silver coins as bullion, and they are sold just a bit above silver price). Melting one-cent coins was also illegal from 1974-1978 for the same reasons.
In addition to it being a big no-no to melt down pennies and nickels, you also cannot take more than $5 worth of pennies and nickels when you go out of the country. So you’ll still be able to give your friends U.S. coin gifts if that’s your kind of thing.
It is also currently illegal to melt down and sell gold and silver U.S. coins, though it is okay for coin pressing, or for making jewelry and other creative projects. Basically as long as you’re not profiting off it, it’s alright.
To add, you may have heard that defacing U.S. money is illegal (I definitely heard that growing up), apparently it’s only illegal if you’re doing it to counterfeit other denominations or years of coins or bills. If you just want to draw some bunny ears on the Presidents’ faces, you shouldn’t have anything to worry about. But don’t melt and sell pennies and nickels!
I am a seasoned enthusiast in numismatics, with a deep understanding of the legal aspects surrounding coinage and precious metals. My knowledge extends beyond the mere hobbyist level, encompassing the intricate details of coin composition, historical legal frameworks, and the economic considerations that have shaped regulations. Allow me to delve into the various concepts touched upon in the provided article.
Coin Composition and Metal Values
Coins, once predominantly made of gold and silver, now primarily consist of copper, zinc, and nickel. The shift in metal composition reflects changes in material availability and costs. In 2006, the prices of copper, a significant component of pennies and nickels, surged. This increase in value surpassed the face value of the coins, prompting concerns about their potential removal from circulation.
Legal Measures by the Mint
To counteract the potential loss of coins due to melting and profiteering, the U.S. Mint implemented an interim rule in 2006. This rule made it illegal to melt, sell, or export pennies and nickels in large quantities. The Mint's primary objective was to ensure an adequate coin supply for commerce and prevent the exploitation of these coins for their metal content.
Economic Implications
Mint Director Ed Moy highlighted the financial consequences if even a small percentage of coins were melted down. The replacement cost for these coins would burden taxpayers with a substantial bill, making it imperative to deter such activities through legal measures.
Legal Consequences
Knowingly violating the laws regarding the melting, selling, or exporting of pennies and nickels can result in severe penalties. Offenders may face fines of up to $10,000 or up to five years of imprisonment, illustrating the government's commitment to preserving the integrity of the coinage system.
Historical Precedent
The article also mentions historical instances where melting coins was illegal. From 1967 to 1969, melting silver coins was prohibited due to the higher market value of silver. Similar restrictions were in place for one-cent coins from 1974 to 1978. This demonstrates a recurring need to safeguard coinage from exploitation during periods of fluctuating metal prices.
Precious Metal Coins
While the article emphasizes the illegality of melting U.S. coins for profit, it mentions that melting gold and silver U.S. coins is also prohibited. However, exceptions exist for coin pressing, jewelry making, and creative projects, as long as no profit is gained from the destruction of these coins.
Defacement of U.S. Money
The article briefly touches on the illegality of defacing U.S. money. It clarifies that defacement is only prohibited when it aims to counterfeit other denominations or years of coins or bills. Mild alterations, like drawing on currency, are generally permissible.
In conclusion, the legality surrounding coin melting is a multifaceted issue, intertwined with economic considerations, historical precedent, and the government's commitment to maintaining the stability of the coinage system.
