save those pennies!

This "wheat ear" was passed to me by a supermarket checker. As one who appreciates old coins I put it in my nice-penny jar to save. Naturally some folks ask me what such treasures are worth. It is worth, as of Jan 14, 2011, 2.89 cents! An instant 189% return not something to scorn. The 2.89 cents is simply the melt value of the coin: the metal it is made of is worth more than its monetary value (all US pennies minted in 1982 or earlier are pure copper and have at least this value). This is because pure copper pennies have lost their seignorage value. In a well run economy that has circulating coinage, the coins should be worth more than the bullion they contain.

There is plenty of discussion these days about the possible role of gold in healthy economies, and but I want to make two points:

1. It is important to have a circulating coinage. An economy devoid of coins (i.e. an all digital economy, or one based entirely on credit) is simply not healthy. All creditors, of sums from the smallest to the very largest, must have the possibility of demanding settlement in coin or other form of bullion.
2. Copper, while it has never been called a precious metal, has historically been a very useful monetary metal, albeit for the smallest of denominations.

As a monetary metal, copper is to silver as silver is to gold. All three have their place. Those who cannot afford gold, will transact in silver, those who cannot afford silver will transact in copper.