Coins and Metal Composition

[Viscount St. Albans]

Here are some data regarding metal composition of coins vs. time vs. country.
Degradation/Devaluation of metal content is a constant.

The US Mint is scheduled to announce changes in US Coinage in early 2013.

Will the US Penny disappear entirely or will steel replace zinc ?
Will the US Nickel change from its current composition (75% copper–25%nickel) to steel?

Let’s check global trends from equivalent foreign coinage:
I think you’ll notice a pattern:
Based on global examples highlighted below, the US penny and the US 5 cent face either downgrade to Steel or outright discontinuation. The global transition to steel coinage is quite striking.

——————————————————————-
1st Example: Canada
The Canadian Penny = roughly equal to US 1 cent (US Penny)
history-1996 ~ 98% copper
1997-1999 ~ 98% zinc
2000-2012 ~ 95% steel
2012-future ~ coin discontinued

The Canadian 5 cent coin = roughly equal to US 5 cents (US nickel)
history-1919 ~ 93% silver
1920-1921 ~ 80% silver
1922-1981 ~ 100% nickel
1982-1999 ~ 75% copper and 25% nickel (identical to current US 5 cent coin)
2000-present ~ 95% steel
————————————————————-
Refs:
en.wikipedia.org/wiki/Penny_(Canadian_coin)
en.wikipedia.org/wiki/Nickel_(Canadian_coin)
————————————————————–

[Viscount St. Albans]

2nd Example: Britain

The British Penny = roughly equal to US 1 cent (US Penny)
1971-1991 ~ Bronze (Mostly Copper and small % tin)
1992-present = Steel

The British 5 Pence Coin = roughly equal to US 5 cent (US nickel)
1990-2011 = Cupro-Nickel (75% Copper and 25% Nickel) — identical to current US 5 cent (Nickel) coin
2012-future ~ Steel
—————————————-
Refs:
https://en.wikipedia.org/wiki/Penny_(British_decimal_coin)
https://en.wikipedia.org/wiki/Five_pence_(British_decimal_coin)

[Viscount St. Albans]

3rd Example: Australia

The Australian Penny = roughly equal to US 1 cent (US Penny)
1966-1990 ~ Bronze (97% copper, 2.5% zinc, 0.5% tin)
1991-present = coin discontinued

The Australian 5 cent coin = roughly equal to US 5 cent (US nickel)
1966-present = Cupro-Nickel (75% Copper, 25% Nickel) — identical to current US 5 cent (Nickel) coin
—————————–
Refs:
https://en.wikipedia.org/wiki/One_cent_coin_(Australian)
https://en.wikipedia.org/wiki/Five_cent_coin_(Australian)

[Viscount St. Albans]

4th Example: New Zealand

The New Zealand Penny = roughly equal to US 1 cent (US Penny)
1967-1990 ~ Bronze (97% copper, 2.5% zinc, 0.5% tin)
1991-present = coin discontinued

The New Zealand 5 cent coin = roughly equal to US 5 cent (US nickel)
1967-2004 = Cupro-Nickel (75% copper, 25% nickel)
2005-present = coin discontinued
——————–
Refs:
https://en.wikipedia.org/wiki/New_Zealand_1_cent_coin
https://en.wikipedia.org/wiki/New_Zealand_5_cent_coin

[Viscount St. Albans]

5th Example: Russia

The Russian 10 Kopecs coin (0.1 of Ruble) = roughly equal to US 3 cents
1961-1990 = Copper-nickel-zinc alloy
1991-1997 = Steel
1998-2006 = Brass (Copper-zinc alloy)
2007-present = Steel
—————————–
Refs:
https://en.wikipedia.org/wiki/Russian_ruble
—————————–

It’s interesting that Russia temporarily increased the metal value content of the 10 Kopecs coins after sovereign default in 1998.
Perhaps the Gov. was trying to encourage faith following the cleansing of the debt slate. Regardless, it didn’t last long, by 2007, the trend toward devaluation of metal content returned.

[Viscount St. Albans]

6th Example: Mexico

The Mexican 50 centavo (0.5 Mexican Peso) = roughly equal to US 4 cents
1992-2008 = 92% copper, 6% aluminum, 2% nickel
2009-present = Steel
————
Ref.
https://en.wikipedia.org/wiki/Mexican_peso#Coins

[Viscount St. Albans]

7th Example: Euro Zone

The Euro 1 cent and 5 cent coins are ~ equivalent to US 1 cent and 5 cents
1 Cent (0.01 Euro) ~ 1 US Penny
1999-Present = Steel (with thin copper coating)

5 Cent (0.05 Euro) ~ 5 US Cents
1999-Present = Steel (with thin copper coating)
——–
Refs:
https://en.wikipedia.org/wiki/1_cent_euro_coins
https://en.wikipedia.org/wiki/5_cent_euro_coins

[Viscount St. Albans]

8th Example: Switzerland

The 1 Rappen coin (0.01 Swiss Franc) was ~ equivalent to US 1 cent (penny)
history-2006 = Cupro-Nickel [500% premium to face value demanded for most users]
2007-present = currency discontinued

5 Rappen coin (0.05 Swiss Franc) ~ equivalent to US 5 cent
history-1980 = Cupro-Nickel
1981-present = Aluminum-Copper alloy
————————————-
Ref:
https://en.wikipedia.org/wiki/Swiss_franc#Coins

[Viscount St. Albans]

9th Example: Japan

The Japanese metal composition is noteworthy for its stable metal composition in recent time (past ~ 50 years)

1 Yen ~ 1 US cent
1870-1897 = silver
1898-1945 = cupro-nickel
1946-1954 = brass
1955-present = 100% aluminum

5 Yen ~ 5 US cent
1959-present = 60-70% copper, 30-40% zinc
——–
Ref:
https://en.wikipedia.org/wiki/Japanese_yen#Effect_of_the_Plaza_Accord

[Viscount St. Albans]

10th example: Brazil

The Brazilian 1 cent (0.01 Real) ~ 0.5 US cent (0.5 US penny)
1994-1997 = steel
1998-2005 = steel with brass plating
2006-present = coin discontinued

The Brazilian 10 cent (0.10 Real) ~ 5.0 US cent (US nickel)
1994-1997 = steel
1998-present = steel with brass plating
———-
Ref:
https://en.wikipedia.org/wiki/Brazilian_real#Coins

[Viscount St. Albans]

Hong Kong section removed due to errors

[Glennda]

Thanks for this info.

I’ve had a retail shop for almost 24 years and basically, I have never counted the pennies and nickels at the end of the day. While our register tape is often very close to the drawer, there is a real standard deviation of about 1 – 4 %, so the nickels and pennies just don’t make a real difference. We also keep a penny/change bowl at the check out area for people to drop the excess weight into. Often dimes and quarters show up in there too.

I have been hoping that pennies will be discontinued, and now I hope the nickels will drop out too.

Now I wonder what effect will the deflation we expect, have on small change? Will people suddenly find that the jars of pennies from pockets are their bank of the mattress?

[Viscount St. Albans]

Global Coin Hoarding: A Silent Global Bank Run

Reasons:

1) Historically high copper, zinc, nickel, aluminum prices have created opportunities for coin arbitrage all over the world. Coin Arbitrage = exploiting difference between metal value of coin and nominal (face value) of coin. For many small denomination coins around the world, the metal value premium is significant (200-300-400%). This is especially true in a world where the dollar is gaining value relative to local-national currencies (thereby amplifying the face value to metal value mismatch).

2) A History of Currency Devaluation has led consumers to hoard any source of metal as a hedge in uncertain times.

Examples:

India: Rupee coin shortages
https://india.nydailynews.com/newsarticle/50324785f7dfe0345e000002/coin-shortage-makes-everyday-life-difficult-in-west-bengal

https://www.business-standard.com/india/news/rbi-move-triggers-coin-shortage/476066/

Phillipines: Parliament considering law to outlaw coin hoarding
https://ph.news.yahoo.com/coin-collecting-soon-a-crime-.html

https://www.philstar.com/Article.aspx?articleId=584057&publicationSubCategoryId=108

Argentina: Chronic coin shortages and retail shop owners refuse to make change (the memory of the 2001 peso devaluation lingers)
https://www.csmonitor.com/World/Global-News/2010/0315/Change-needed-as-Argentina-coin-shortage-grows

https://panglott.blogspot.com/2010/09/coin-hoarding-greshams-law-and-base.html

Indonesia: Due to the low value and general shortage of small denomination coins (below 100 rupiah), it is common to receive sweets in lieu of the last few rupiah of change in supermarkets and stores
https://en.wikipedia.org/wiki/Coins_of_the_Rupiah

Belarus: Has never issued coins since independence from the Soviet Union (the only former Soviet state to rely entirely on paper currency). Rationale — chronic inflation and frequent sudden currency devaluations have rendered the issuing of metal coin currency economically impracticle. A 2009 proposal to reintroduce coins has not been pursued.
https://en.wikipedia.org/wiki/Belarusian_ruble#Coins
—————————

Government Responses:

1) Discontinuing small valuation coins
2) Changing coin composition to steel (steel price is ~ 2.5% the price of copper)
3) Cracking down on black market coin hoarding operations

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