1 US Cent Is Now Worth 3

The special cell of Delhi Police, on Friday, claimed to have busted two illegal factories involved in melting old Indian coins and converting them to metal slabs for sale in the open market for making artificial jewellery and antiques worth a couple of crores of rupees. I wonder if this is just the tip of an iceberg? Or a sign of things to come?

“US 1 cent copper coins in circulation (minted between 1909 to 1982) now have a metal value of 280% of their face value. Please do not melt coins! As collector items they could be interesting.”

Collector’s Blog


“As the price of a series of base metal (and precious metal) have gone up, so has also the theoretical melt value of many coins. Well precious metal coins typically do not sell below the melt value. However standard coins in circulation can typically be bought at face value. US 1 cent copper coins in circulation – minted between 1909 to 1982 – now have a metal value of 280% of their face value. Please do not melt coins, as collector items they could be interesting,” Dr. Espen Gaaarder Haug writes in his latest blog post.

“As the price of a series of base metal (and precious metal) have gone up, so has also the theoretical melt value of many coins. Well, precious metal coins typically do not sell below the melt value. However standard coins in circulation can typically be bought at face value,” Haug writes.

Adding: “I say theoretical melt value, because in many (most?) countries it is illegal to melt coins. But clearly some people got more than tempted to buy coins at their face value and then melt the coins to sell them for the metal value.”

In a research paper published in 2009, Dr. Espen Haug and Dr. John Stevenson shows that physical money – in this case coins – is in fact a very complex derivative with several embedded options. The value of the metal being one of them.

(Here a copy of the paper: “Options Embedded in Physical Money”)

There has not been too much focus on the subject, but with the price of most commodities, metal included, I assume it’s just a matter of time before we see a lot more cases like the one reported from India on Saturday.

Five persons; factory owner Mohd Jameel,  his acquaintances and his laborers were arrested on January 5 in connection with the case, Arun Kampani, deputy commissioner of police (special cell), says.

According to Times of India, raids were conducted in two factories at Johripur and Karawal Nagar from where nearly 1.550 kg metal slabs, huge quantity of coins, dyes, air pumps, motors, weighing machines, tools and other gadgets were recovered.

Another raid was conducted in Shahbad Dairy and Sadar Bazar and 350 kg of metal slabs were recovered from the premises owned by one Shyam Sunder, the Times of India writes on their website.

“These old coins, which had been issued by the Government in 1970s, 80s and 90s, had substantial metal weight. With the passage of time, metal value of the coins increased vis-à-vis denomination value of the coins due to the rise in metal cost. The situation led to this racket of fraudulently melting old coins of 50 paise, Re 1 and Rs 2 denominations into bricks, and further selling these to metal dealers,” Kampani says.

According to the Collector’s Blog at Wilmott.com, 1 US cent copper coins in circulation (minted between 1909 to 1982) now have a metal value of 280% of their face value.

“Please do not melt coins, as collector items they could be interesting,” The Collector urges.

Dr. Espen Gaarder Haug is a regular contributor at The Swapper and other blogs under the Econotwist’s umbrella.

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