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More recognition of GATA supporter Frank Holmes of U.S. Global Investors
A Penny for Your Thoughts,
and 1.4 Cents for a Penny
By Floyd Norris
The New York Times
Sunday, April 23, 2006
http://www.nytimes.com/2006/04/22/business/22charts.html?
_r=1&oref=slogin
What happens if a penny is worth more than 1 cent?
That is an issue the United States Mint could soon face if the price
of metals keeps rising. Already it costs the mint well more than a
cent to make a penny.
This week the cost of the metals in a penny rose above 0.8 cents,
more than twice the value of last fall. Because the government
spends at least another six-tenths of a cent -- above and beyond the
cost of the metal -- to make each penny, it will lose nearly half a
cent on each new one it mints.
The real problem could come if metals prices rise so high that it
would be economical to melt down pennies for the metals they contain.
Appearances aside, pennies no longer contain much copper. In the
middle of 1982, after copper prices rose to record levels, the mint
starting making pennies that consist mostly of zinc, with just a
thin copper coating.
But these days, zinc is newly popular. Rising industrial demand and
speculation have sent the price rocketing. Since the end of 2003,
zinc prices have tripled. Gold, by contrast, is up only about 50
percent.
"What is really new in the commodity world is the extent to which
hard commodities have been converted to financial assets through
exchange-traded funds and hedge funds," said Ed Yardeni, the chief
investment strategist of Oak Associates.
"In the late '90s," Mr. Yardeni added, "my hedge fund friends were
all experts in technology. Now all they talk about is zinc, lead,
and oil. There is a lot of money that has poured into these areas."
That may mean that a bubble is brewing, but Mr. Yardeni thinks the
run is not yet over.
Asked if the mint had a backup plan for what it will do if zinc
prices rise far enough that it could pay to melt down pennies, a
spokesman said that such issues were for Congress to decide. Perhaps
the mint could go back to making steel pennies, as it did during
World War II when copper was needed for the war effort.
Pennies, meanwhile, are in high demand. Last year, the mint made 7.7
billion of them -- more than the number of all the other coins it
produced. In the first three months of this year, the pace of penny
production rose to an annual rate of 9 billion -- the highest since
2001.
Why so many? Perhaps there is now some hoarding in expectation that
metal prices will keep rising, but mostly it is an issue of sales
taxes, which in most states are added to the retail price and assure
that the total price of many items will require pennies to be given
in change if a customer pays with dollar bills. That helps explain
why the idea of eliminating the penny has gone nowhere.
So retailers demand pennies from their banks, the banks demand them
from the Federal Reserve, and the Fed orders them from the mint.
Many of the people who get the pennies in change throw them into a
jar, where they may sit for years, requiring the mint to make more
and more of them.
And, at these prices, lose money on every one.
----------------------------------------------------
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RECOMMENDED INTERNET SITES
FOR DAILY MONITORING OF GOLD
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NEWS AND ANALYSIS
Free sites:
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http://www.usagold.com/amk/usagoldmarketupdate.html
http://www.capitalupdates.com/
http://www.silver-investor.com
http://www.thebulliondesk.com/
http://www.goldismoney.info/index.html
http://www.minersmanual.com/minernews.html
http://www.a1-guide-to-gold-investments.com/euro-vs-dollar.html
http://www.investmentrarities.com
http://www.kereport.com
(Korelin Business Report -- audio)
http://www.plata.com.mx/plata/home.htm
(In Spanish)
http://www.plata.com.mx/plata/plata/english.htm
(In English)
http://www.resourceinvestor.com
http://www.goldpennystocks.com/
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http://www.interventionalanalysis.com
http://www.investmentindicators.com/
Eagle Ranch discussion site:
http://os2eagle.net/checksum.htm
Ted Butler silver commentary archive:
http://www.investmentrarities.com/
----------------------------------------------------
COIN AND PRECIOUS METALS DEALERS
WHO HAVE SUPPORTED GATA
AND BEEN RECOMMENDED
BY OUR MEMBERS
Blanchard & Co. Inc.
909 Poydras St., Suite 1900
New Orleans, Louisiana 70112
888-413-4653
http://www.blanchardonline.com
Centennial Precious Metals
Box 460009
Denver, Colorado 80246-0009
1-800-869-5115
http://www.USAGOLD.com
Michael Kosares, Proprietor
cpm@usagold.com
Colorado Gold
222 South 5th St.
Montrose, Colorado 81401
http://www.ColoradoGold.com
Don Stott, Proprietor
1-888-786-8822
Gold@gwe.net
El Dorado Discount Gold
Box 11296
Glendale, Arizona 85316
http://www.eldoradogold.net
Harvey Gordin, President
Office: 623-434-3322
Mobile: 602-228-8203
harvey@eldoradogold.net
Gold & Silver Investments Ltd.
Mespil House
37 Adelaide Rd
Dublin 2
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+353 1 2315260/6
Fax: +353 1 2315202
http://www.goldinvestments.org
info@gold.ie
Investment Rarities Inc.
7850 Metro Parkway
Minneapolis, Minnesota 55425
http://www.gloomdoom.com
Greg Westgaard, Sales Manager
1-800-328-1860, Ext. 8889
gwestgaard@investmentrarities.com
Kitco
178 West Service Road
Champlain, N.Y. 12919
Toll Free:1-877-775-4826
Fax: 518-298-3457
and
620 Cathcart, Suite 900
Montreal, Quebec H3B 1M1
Canada
Toll-free:1-800-363-7053
Fax: 514-875-6484
http://www.kitco.com
Lee Certified Coins
P.O. Box 1045
454 Daniel Webster Highway
Merrimack, New Hampshire 03054
http://www.certifiedcoins.com
Ed Lee, Proprietor
1-800-835-6000
leecoins@aol.com
Lone Star Silver Exchange
1702 S. Highway 121
Suite 607-111
Lewisville, Texas 75067
214-632-8869
http://www.discountsilverclub.com
MRCS Canada
12303-118 Ave. NW
Edmonton, Alberta T5L 2K2
Canada
http://www.mrcscanada.com
Michael Riedel, Proprietor
1-877-TRY-MRCS
1-877-879-6727
mrcscanada@shaw.ca
Miles Franklin Ltd.
3015 Ottawa Ave. South
St. Louis Park, Minn. 55416
1-800-822-8080 / 952-929-1129
fax: 952-925-0143
http://www.milesfranklin.com
Contacts: David Schectman,
Andy Schectman, and Bob Sichel
Missouri Coin Co.
11742 Manchester Road
St. Louis, MO 63131-4614
info@mocoin.com
314-965-9797
1-800-280-9797
http://www.mocoin.com
Resource Consultants Inc.
6139 South Rural Road
Suite 103
Tempe, Arizona 85283-2929
Pat Gorman, Proprietor
1-800-494-4149, 480-820-5877
Metalguys@aol.com
http://www.buysilvernow.com
Richard Nachbar Rare Coins
5820 Main St., Suite 601
Williamsville, N.Y. 14221-8232
877-622-4227
http://www.CoinExpert.com
nachbar@coinexpert.com
Swiss America Trading Corp.
15018 North Tatum Blvd.
Phoenix, Arizona 85032
http://www.swissamerica.com
Dr. Fred I. Goldstein, Senior Broker
1-800-BUY-COIN
FiGoldstein@swissamerica.com
The Moneychanger
Box 178
Westpoint, Tennessee 38486
http://www.the-moneychanger.com
Franklin Sanders
1-888-218-9226, 931-766-6066
----------------------------------------------------
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