In a recent interview on CNBC Squawk Box spoke with the President of the U.S. Reserve, Philip Diehl about the demise of the penny. What will happen if the penny is removed from circulation? Pricing all over will change. Items priced at $4.99 will then cost $5.00, and other things priced at $3.59 will round up to $3.60, and so forth.
Philip Diehl replied that he doesn’t feel there is much to that theory, it is an argument used for the past twenty-five years by the penny lobbyists that supports keeping the penny in circulation. In looking at the breakdown of payment for purchases, about 25% of transactions are all in cash, and 75% of transactions are in electronic form, and when you look at the possibility of rounding pennies, there is only a small percentage that would even be affected by the elimination of the penny. The savings in not printing the coin cost approximately $1.5 million dollars per year. For many years, the making of the penny has been outsourced, and the penny slugs are created by outside companies, Actual stamping of the penny has always been made by the U.S. Mint, bagged, and circulated. Diehl went on to say that the competition in the marketplace will discipline people not to raise their prices but lower their prices.
The penny is not made of copper anymore, and it contains 97.5% zinc. The zinc industry has been the ones working to keep the penny in circulation for many years.
The penny is used so infrequently today that people rarely bend over to pick up a penny lying on the sidewalk. The penny doesn’t attract the attention of people as much as it did years ago. Penny machines no longer exist and have been replaced with nickel, dime and quarter candy machines.
Philip Diehl, 35th Director of the United States Mint. He currently consults with precious metals companies and is a published analyst of gold markets. He serves on the board of the Standish Foundation for Children and is a member of the chambers of the Industry Council for Tangible Assets, and the Gold and Silver Political Action Committee.
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