The acting US Mint Director was in Congress today talking about the future of coins and bills. I've been following the ongoing losses the US Mint takes each year on pennies and nickels. Negative seigniorage is not a great long term plan.
As noted here, I've been hoarding nickels as one of several hedges against the purchasing power destruction of US currency via QE and inflation. The Mint was crowing about reducing production costs of pennies and nickels, but admitted that
"The cost to manufacture and distribute the penny and nickel once again exceeded their face values as it has the last six years".This is a battle they can't win. The only thing to figure out is the terms of their surrender. The raw material costs of the nickel (75% copper, 25% nickel) already exceed the face value. They can prolong the life of the penny and nickel by changing the metal composition to steel, but even so, they have effectively become useless and should be phased out of circulation as Canada has done with their penny.
In 1964, LBJ warned not to hoard silver quarters as they were replaced with a copper/nickel cladding because the US would keep silver prices low and dump Treasury silver on the market. Today, according to the BLS calculator, a 1964 quarter has the same purchasing power as $1.87. Meanwhile, a 1964 silver quarter is worth $6.04, 24 times the face value, or 320% of what the government claims from inflation alone. The hoarders of silver quarters in 1964 made a killing on government lies and currency abuse. It may not work out this time with copper/nickel, but maybe it will.