I recall this story hitting the news a year or so back. At the weekend a good, but sometimes geeky/nerdy friend, updated me on this situation in the following way and offered opinions;
1) In spite of metal prices having cooled off from their manic highs pre-bubble bursting, these coins are still worth about 50% more than face value.
2) Accumulating and melting them down, even paying a hefty cut to a crooked scrap metal dealer, would still represent a quick an easy profit - say 25% instant return on your money??
3) Melting them down is illegal TODAY, so they would have to be held as a longer term speculative 'investment' until such time as they could be either profitably be exported or melted here legally. The only loss would be the interim loss of equivalent interest - which (as the £50 note story today illustrates) given ultra low interest rates would be bearable?
and, most interestingly,
4) Being the person he is, always to check facts for himself (as well as having too much spare time on his hands!), he tells me that regular random bulk tests show that the average proportion of bronze vs steel coins is dwindling - more than would be expected due to gradually increasing annual mintage of new steel coins each year.
This leaves me with 2 questions:
Is the Mint secretly undertaking a gradual withdrawal program of bronze coins OR are suffient number of the public siphoning them off themsleves?! With a longer term view in mind.
If the latter, when would teh 1p and 2p coins be realsitically be demonetised? He surmised that, in spite of almost certain initial political/public emotional reluctance to reliquish these coins for purely symbolic reasons (i.e would be powerful symbol of decline in value of the pound, etc etc) - they would be demonetised when they serve no practical purpose due to general price rises of everything and it being impossible to find anything priced in 1/100th pound units, e.g £2.93p.
An example of this would be the removal of the 1/2p coin with little fuss. Also, he pointed out that there are several countries where the smallest monetary unit is only 1/20th of the currency unit (i.e equivalant to 5p) and that the smallest price increments seen in shops would cater for that.
Given that most (all?) retailers have now disconinued the old £1.99p type retailing behaviour, and rounded up to £2, he surmised that teh general cost of living need only rise another 2 fold from today before it started to become a realistic argument to dispense with the 1p coin at least.
Thus, hanging on to those old bronze coins need not be for so long?
Finally, and best of all, he points out that EVEN IF prices of metal collapsed - one still has the face value of the coins, and so one would always get back at least your initial 'investment'!
Thoughts anyone? time for me to buy a wheel barrow and large collection of magnets to filter the coins out? There arent any laws on eccentrically hoarding coinage are there? I mean, I might want to create some weird and large Tracy Emin style modern artwork when I retire.
This post has been edited by anonguest: 07 December 2009 - 11:37 AM