Understanding Coinflation

Coinflation has gotten complicated with all the melt-value calculators and YouTube videos making it sound like every old penny is a goldmine. As someone who’s been sorting through rolls of coins and checking melt values for years, I learned everything there is to know about when coinflation matters and when it doesn’t. Today, I will share it all with you.

What Coinflation Actually Means

Coinflation is what happens when the metal in a coin is worth more than the coin’s face value. It sounds simple, and at the core it is. A pre-1982 penny is 95% copper. When copper prices are high enough, that penny contains more than one cent worth of copper. Same idea with pre-1965 silver quarters and dimes — they’re 90% silver, and silver at $25 an ounce makes each quarter worth about $4.50 in melt value.

I started paying attention to coinflation when I found out my jar of old pennies was technically worth more as scrap metal than as currency. That was a weird realization.

What Drives Coinflation

Two big factors. First, broad inflation pushes commodity prices up, and metals are commodities. When the dollar buys less, copper, nickel, and silver all tend to get more expensive. Second, industrial demand for metals fluctuates. Copper gets consumed in huge quantities for electrical wiring, construction, and electronics. When housing booms or electric vehicle production ramps up, copper demand spikes, and your old pennies get a little more valuable in theory.

Silver has its own demand drivers — solar panels, electronics, photography (yes, still), and investment demand. Pre-1965 U.S. coins ride that wave.

How Governments Respond

The U.S. Mint switched penny composition from copper to zinc-coated copper in 1982 specifically because of coinflation. Copper got too expensive to mint pennies profitably. Canada went even further and eliminated their penny entirely in 2013. Probably should have led with this section, honestly, because understanding government responses tells you a lot about where coinflation is headed.

Some countries pull high-metal-value coins from circulation when the melt value gets too far above face value. It’s also illegal in the U.S. to melt pennies and nickels for their metal content — the government passed that regulation in 2006 when copper prices were surging.

The Collecting Angle

Here’s where I live. Coin collectors who pay attention to coinflation get a floor price on certain coins. A beat-up 1945 Washington quarter with no numismatic premium is still worth its silver content. I keep a coffee can of “junk silver” — common-date pre-1965 coins in circulated condition — and its value tracks silver prices almost perfectly.

Investors buy junk silver bags (typically $1,000 face value bags of pre-1965 dimes, quarters, and halves) as a way to hold silver. The premiums are lower than on bullion coins like American Silver Eagles, which makes them efficient for pure metal exposure.

Calculating Melt Value

The math isn’t hard if you know the coin’s metal composition and weight. A pre-1965 quarter weighs 6.25 grams and is 90% silver, so it contains about 5.625 grams (0.1808 troy ounces) of silver. Multiply by the current silver spot price and you’ve got the melt value. Websites like Coinflation.com do this automatically and update throughout the day.

I check melt values maybe once a week, mostly out of curiosity. The numbers move with metal markets, so there’s no point obsessing over daily fluctuations unless you’re actively trading.

Practical Realities

A few things to keep in mind before you start hoarding old coins for their metal value:

• Melting is illegal (for pennies and nickels in the U.S.). You can sell coins for their melt value to dealers, but you can’t legally fire up a crucible in your garage.
• Storage is a hassle. Coins are heavy. A $100 face-value bag of pre-1965 quarters weighs about 50 pounds. Scale that up and you need serious storage.
• Spreads eat your margins. Dealers buy at below melt and sell at above melt. Unless you’re moving significant volume, the bid-ask spread on junk silver can cut into your returns.

Coins Worth Watching

Pre-1982 pennies: 95% copper. Melt value fluctuates between 2 and 3 cents depending on copper prices. Not worth much individually, but a $25 box of pennies (2,500 coins) sorted for pre-1982 dates adds up.

Pre-1965 silver dimes, quarters, halves: 90% silver. These are the bread and butter of the junk silver market. Common dates are plentiful and easy to find.

War nickels (1942-1945): These contain 35% silver because nickel was needed for the war effort. They’re marked with a large mint mark above Monticello on the reverse. Easy to spot once you know what to look for.

That’s what makes coinflation endearing to us numismatists — it adds another dimension to collecting. Your coins aren’t just historical artifacts; they’re tied to live commodity markets. Whether you collect for the history or the metal value, understanding coinflation makes you a more informed collector.