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Cent and Nickel Losses Grow
January 10, 2012



While the future of the high-cost cent and nickel is being considered, the Mint still needs to cover the losses generated by their ongoing production.

In the just released Mint annual report covering the fiscal year ending Sept. 30, 2011, the Mint notes that it made an on-budget transfer to the U.S. Treasury’s general fund of $51 million.

This is a drastic decline from the $388 million transferred the year before and even higher numbers in years before that. The first year of the Presidential dollar program in 2007, for example, saw a transfer of $825 million to the general fund.

Why the decline?

As noted in the report, “There was not an off-budget transfer to the general fund this fiscal year. Instead, the Mint held cash in reserve for future potential impacts to our circulating program from continued penny and nickel losses and a decline in demand for the $1 coin.”

By Mint accounting, it now costs 2.41 cents to produce and distribute each cent. This is a large increase from last year’s cost of 1.79 cents apiece.

This created a loss of $60.2 million when costs are subtracted from the revenue generated by the Mint selling the coins for face value. Another name for this loss is negative seigniorage where seigniorage is the profit between costs and face value.

The nickel cost has risen to 11.18 cents per coin, or a loss of 6.18 cents on each coin issued. This compares to a 9.22 cents per nickel cost in the prior fiscal year.

Negative seigniorage here is $56.5 million.

The combined losses for the two denominations is now $116.7 million.

More ominously though, if you set the dollar coin aside and just add up the costs of the cent, nickel, dime and quarter, the profits from the dime and quarter no longer offset the loss on the cent and nickel. The Mint took it on the chin for $10.7 million when the numbers are looked at this way.

No wonder the Mint needs to retain cash.

The Mint, of course, is not destitute. It still has a profitable bullion coin and numismatic business.

However, to put these in perspective, the total profit of the bullion coin program was $65.8 million on sales of $3.5 billion.

Presently, the star in the Mint’s sales constellation is the portfolio of numismatic products sold to collectors.

Here the Mint put seigniorage at $9.8 million plus additional profit of $103.4 million, for a combined total of $113.2 million, almost double the bullion program profit.

Profit margins are also far higher with numismatic programs compared to bullion coins. Total sales here was just $721.7 million, or just over 20 percent of the bullion program total.

Do collectors feel as if the Mint treats them as if they are twice as important as the bullion buyers?

You tell me.



More Coin Collecting Resources:

State Quarters Deluxe Folder By Warmans

• Subscribe to our Coin Price Guide, buy Coin Books Coin Folders and join the NumisMaster VIP Program

Strike It Rich with Pocket Change, 2nd Edition

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About the Author
David C. Harper has been a coin collector since 1963. He joined the Krause Publications editorial staff in 1978 and is currently editor of Numismatic News, Bank Note Reporter and World Coin News. He also edits two books annually, North American Coins & Prices and Coin Digest. He is the author of the Class of '63 column that runs each week in Numismatic News. His first bylined numismatic article appeared in the June 1971 issue of Coins Magazine and his various Krause Publications assignments included a stint as editor of the magazine 1980-1983. Harper received a bachelor of science degree from the University of Wisconsin-Oshkosh in 1977. He had a double major of journalism and economics.

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