Two-Cent Pennies: a Window on Inflation

By Tyler A. Watts
Johnny Carson might have quipped about the economy, "Inflation is so bad these days... that pennies are now selling on the street for two cents." This joke may not be all that funny, even with the great Carnac delivering it, but it does have the underpinnings of good comedy: an absurd story based on a kernel of truth. Old pennies are routinely traded at premium prices, sometimes twice or more their face value. This is not because they are rare or precious — they were minted by the tens of billions — but simply because they are worth more as metal than as money. Because of this "bullion premium" on the older pennies, a small cadre of penny hoarders is actively searching through America's stock of pennies to pick out these undervalued coins.
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Posted by Editor at August 22, 2008 10:46 AM