Money costs Money

Everyone from BBC to The New York Times has wondered what it costs to make a penny. Both sources predict that the actual cost of creating a US penny will exceed one cent.

Q1: What does it cost to make a penny?
Q2: What happens if cost > face value?

The US Mint reports that value in its Annual Report each year. The 2004 annual report was made public via the mint website recently.

Page 47 of this report breaks out the cost of a coin by denomination:


The US Mint is funded by seigniorage. So while the organization is government sanctioned it is not government funded. The operating expenses of the Mint are obtained through the difference of actual Mint costs less the face value of the coins produced. Profits, if any, are turned over to the Treasury Department General Fund every year.

It is true that the value of a penny may be, on occasion, more than a cent based on metallic content. However, the cost of producing a new unit is not. Additionally it would cost more to buy and melt pennies for metallic content than it would to buy the pure materials.

If it became necessary the Mint would be able to change the metallic contents of coins with congressional approval. This was last done for the penny in 1982. A move to stop making the cent, or any coin, would require a congressional mandate signed by the President.

All costs in the long-term are variable, metals are no exception. The mint compares profitability of all its products by comparing average cost:profit to that of the quarter. This allows for 'apple to apple' comparison yearly.