While some may not understand without some education, there are a growing number of investors who see copper penny bullion as the next junk silver product. These investors are either sorting for their copper or buying it in bulk from sorters.
I'll explain what makes copper penny bullion a great little investment with little to no risk and unlimited upside.
Not All Pennies are Copper - US Pennies
Prior to and part way through 1982, the US Mint made the common penny from 95% copper plus some zinc (and other metals at times). More appropriately termed brass, the copper penny is contrasted to the zinc pennies manufactured by the US Mint until at least 2011. These new lighter pennies are made from a 95% zinc core coated in a thin copper shell that gives the penny 5% of its weight.
To see the difference between copper and zinc based pennies you can weigh the coins on a sensitive scale or cut the newer coins apart in the name of science with snips to see the white zinc core and copper shell.
Zinc is a significantly cheaper metal by weight and not nearly as durable in coinage as copper or nickel. You may notice that newer zinc pennies start to break down if left on the street or in a fountain. The zinc coins are just not as durable as the 95% copper coins.
Copper Canadian Pennies
Canada managed to continue the 98% copper penny much longer, but they did it by reducing the width and weight of the pennies several times until Canadian Mint gave up on copper in 1997. This is why some Canadian pennies have eleven sides - those little cut of sides saved the Mint a lot of copper. While Canadian copper pennies come in 5 different series (excluding the old large diameter pennies) a typical mix of Canadian copper pennies contains even more weight in copper per coin then the more uniform weight American coins do. Both American and Canadian copper pennies can be had by coin roll hunting.
The US Mint switched to zinc core pennies in 1982 because the price of copper in the penny was close to exceeding the value of the penny. Copper prices have risen / the value of money has fallen to the point that there is now close to 3 cents of copper in a copper penny.
Even the value of cheap zinc now is close to or exceeds the value of the penny the zinc is used to make. By time they factor in production costs, the US Mint loses money on every penny minted.
In 1997 the Royal Canadian Mint switched to copper plated zinc much like the American counterparts, and then they rolled out the steel plate technology in 2000. Canada makes money on the minting of steel core pennies.
Expected Changes to Composition
Congress authorized the Secretary of the Treasury to change the composition of nickels and pennies to metals or materials to be determined. Will the US switch to the plating technology developed by the Royal Canadian Mint that allows Canada to mint steel slugs that are coated in Nickel and Copper? Will the US phase out the penny completely as the governments of New Zealand, Australia and other countries have done? Would dropping the penny and maybe the nickel be an admission of defeat for the US monetary system that has been unable to control inflation?
To counter the budding business of pulling copper pennies from circulation and melting them down for scrap, the US Mint passed a regulation that prohibited the melting or export of 1 and 5 cent coins. The stated reason is to preserve coins for commerce. This is not the first time that such a restriction has been implemented, previously such rules have protected silver coins. However, in all cases these melt bans have been temporary until the Mint can get enough replacement coins into circulation.
In Canada it is generally not legal to melt currency (the Mint excluded) but there is no issue exporting it to collectors outside Canada. Anyway, when you have a government issues copper disk with a known copper content and weight, what is the point of melting your little investment?
So Why Do I Invest in Copper Cents?
Change is coming to our change sooner or later. In the mean time I'm placing spare money in 95% and 98% copper pennies that are worth at least twice face value. It just makes for an investment in a hard asset with very limited downside because they can always be spent at face value in a worst case scenario.
There is an established market for copper penny bullion and when the big change away from zinc happens and the US Mint gets enough new pennies out there, they will lift the melt ban. The industrial sorters step in and clean up most of the remaining copper for melting down as recycle. The coins in private hoards then become worth more as collectables or just as copper bullion, much like junk silver coins are traded today.
I enjoy doubling, tripling or quadrupling my money and especially with a "can't lose" investment like copper pennies. So, while others invest in stocks that can go to zero, I like value investing in a solid commodity with tons of industrial uses. I really like that the commodity does not rot or spoil and is in a government backed form.
Other Circulation Coins Worth More Then Face
Canadian CuNi nickels to 1999 are also worth a bit over face value, but it is the heavier US nickel that beats the Canadian CuNi coin for a 75% copper/25% nickel investment. Every US nickel is worth more than face in intrinsic metal value. Currently, no sorting of US nickels is required to eventually benefit from the disconnect between face value and intrinsic value, except maybe to pull out the Canadian coins and the odd 35% silver US War Nickel.