Death of a Coin

Trump Just Pulled the Plug on the Penny

It's official. After 232 years in circulation, the humble penny is finally meeting its maker. The Treasury has confirmed it. The penny is being discontinued.

The writing has been on the wall, with Musk’s DOGE being on the penny's case pretty much since day one of the new president's inauguration. And on February 9th, President Trump posted this on Truth Social:

Well, I'm all for that last line. Every little bit helps.

Funny enough, I had no idea how much it costs to make a penny. But I felt that, given everything I know about governmental “efficiency,” it probably costs more than just 2 cents.

So I went to the United States Mint’s website to find out.

Turns out, Trump’s numbers were indeed conservative. According to the U.S. Mint's own 2024 Annual Report, it actually costs 3.69 cents to produce a single penny. That’s almost four times what it’s worth!

Let that sink in. Every time the government mints a penny, taxpayers lose 2.69 cents. It's kind of like a reverse lottery where we're guaranteed to lose money.

In fiscal year 2024 alone, the U.S. Mint cranked out 3.22 billion pennies, torching $85.3 million of taxpayer money in the process.

And this isn't some recent development. The cost to produce a penny has exceeded its face value for 19 consecutive years. That’s nearly two decades of knowingly incinerating hundreds of millions of dollars.

But the penny isn't the only money-losing disaster in the U.S. Mint's portfolio. Each nickel costs 13.78 cents to produce. That’s nearly three times its face value. While that's a smaller absolute loss than the penny, nickels have also been bleeding taxpayer money for nearly two decades. The cost was already more than double in 2022 at 10.4 cents, then rose to 11.54 cents in 2023 (and now jumped again to 13.78 cents in 2024).

When Money Becomes Worthless

So, is the nickel in jeopardy of discontinuation as well?

Perhaps. But I wouldn’t hold my breath—unless it happens now under Trump.

There’s a reason why pennies and nickels have stuck around for as long as they have. And it’s certainly not because they are valuable in any meaningful way.

Walk through any major city today and you'll notice something that would have been unthinkable 50 years ago: coins scattered on sidewalks, completely ignored by passersby. People literally step over legal tender because it's not worth the effort to pick up.

Whenever I see that, it always gives me pause. I mean, if people won’t bend down to pick up actual money, what does that say about its worth?

In the 1970s, finding a penny was still worth your time. A nickel could buy gum. A dime got you a phone call. Children eagerly collected coins for penny candy that actually cost a penny.

Those days are long gone. And there's a very specific reason for that.

Take a look at the chart below; it shows the purchasing power of $100 all the way back to 1913—a year I chose quite deliberately. That’s when Congress passed the Federal Reserve Act and President Wilson signed it into law, setting the stage for what would become a century-long erosion of the dollar's value.

Just look at that long, painful decline. Since the Fed's establishment in 1913, the U.S. dollar has lost a staggering 97% of its purchasing power.

In other words, the purchasing power of $100 in 1913 has shrunk to just $3.20 today. Put another way, to buy what your great-grandparents could have bought for $100 back then, you’d need around $3,200 today. (That's assuming you trust the official government figures, of course.)

And what about the coins themselves?

Well, the penny of 1913 had the same purchasing power as about 30 cents today. This means that what cost a penny in 1913 now costs nearly a third of a dollar. Even the physical composition has been debased—1913 pennies were actual copper, while today's are just copper-plated zinc.

As for the nickel, it had the same buying power in 1913 as $1.50 today.

I'm translating them into today's values rather than going the other direction because these are such small denominations, but I think you see my point. These coins haven't just lost value—they've been rendered economically meaningless.

But for politicians to admit that would be to concede something much bigger. It would be a screaming admission that the dollar has lost almost all of its value since the advent of the U.S. central bank.

And that’s the only reason pennies have stuck around as long as they have.

In that sense, the penny’s death isn’t a victory for government efficiency—it’s a surrender to the inevitable consequences of more than a century of printing money to fund spending.

Regards,

Lau Vegys

P.S. In case you missed it, we just put out the latest issue of Crisis Investing. It’s a big one—not only do we feature a rare earths pick poised to benefit from the ongoing U.S.–China trade war, but we’re also taking some well-earned profits. Several of our positions have doubled, and we walk through exactly what we’re doing now.

Even if you’re not a paid subscriber, I’d still recommend checking out the lead story. It looks back at China’s rare earths embargo in 2010 and why that moment still matters today. Some eye-opening charts in there too.