The Nickel

A few weeks ago, we talked about how 2010 nickels in pocket change were more valuable than just a nickel. At that time, the Mint was not producing and distributing very many of the coins.

Now, they have started minting more nickels. Will they increase production significantly? It’s unclear. However, at least for now, they have already exceeded 2009 mintages for the circulating five cent coins.

Let’s look:

US Mint Nickel Mintages 2004 through June 2010

That’s a pretty chart, but what are the real numbers? (These production figures are in millions of coins.)

  2004 2005 2006 2007 2008 2009 2010
Denver 716.88 898.8 809.28 591.6 352.8 46.8 36.24
Philadelphia 728.16 842.31 693.12 523.68 287.76 39.84 76.08
  1445.04 1741.11 1502.4 1115.28 640.56 86.64 112.32


Remember, 2010 is for January through June. It remains to be seen what the US Mint produces for the remainder of the year.

Also, these values represent circulating coinage. They do not include the proof or uncirculated coins.

But why the low mintages? Is it due in part to people cashing in their pocket change? Nickels are relatively sturdy and don’t really need to be replaced in circulation that often. If sufficient nickels exist in circulation and are in good condition, then the Mint shouldn’t have to strike more of the circulating coins.

But, could it also be partially due to the cost of the nickel metal? Let’s look at the charts for the last five years.

First, this chart represents the spot value:

Five Year Nickel Spot Prices - USD per Pound

The next chart shows the tons of nickel on the London Metals Exchange, the world’s center for metals, over the last five years:

Five Year Nickel Stock - London Metals Exchange - Tons


The two metals charts correlate with each other. Low tonnage equates to high prices, or said another way, supply and demand influence the market. The higher prices also mean businesses only buy what they absolutely need. Conversely, when the tonnage increases, the prices decrease.

However, when you compare the US Mint’s production of nickel coins to the price of nickel, the correlation fails. One would think the production in 2007 when nickel was at its highest price would be dramatically lower. Though the Mint did reduce production that year, the decrease was not as significant as in 2009.

So, how much nickel is used for each coin? Every circulating coin, except for the penny, contains nickel.

  Cent Nickel Dime Quarter Half
% nickel 0.00% 25.00% 8.33% 8.33% 8.33% 2.00%
coin weight in grams 2.5 5 2.268 5.67 11.34 8.1
grams of nickel in coin   1.2500 0.1889 0.4723 0.9446 0.1620
ounces of nickel   0.0441 0.0067 0.0167 0.0333 0.0057


If we look at the number of nickel coins produced by year, we can translate those numbers into the amount of nickel metal used by the US Mint for their production of five cent coins simply by multiplying by 1.25:

Grams of Nickel (in millions)          
  2004 2005 2006 2007 2008 2009 2010
Denver 896.1 1123.5 1011.6 739.5 441.0 58.5 45.3
Philadelphia 910.2 1052.9 866.4 654.6 359.7 49.8 95.1
  1806.3 2176.4 1878.0 1394.1 800.7 108.3 140.4


Since we relate to ounces better, those figures converted to ounces are:

Ounces of Nickel (in millions)          
  2004 2005 2006 2007 2008 2009 2010
Denver 31.609 39.630 35.683 26.085 15.556 2.064 1.598
Philadelphia 32.106 37.140 30.561 23.090 12.688 1.757 3.355
  63.715 76.770 66.245 49.175 28.244 3.820 4.952


Whether it’s 2006 and they use over 66 million ounces or it’s 2010 and they’ve already used almost five million ounces, that’s a lot of nickel metal.

At roughly $10 per pound, the 2010 nickel metal content in the five cent coins produced through June equals over three million dollars – at spot prices. But, the Mint obtains the sheets of metal, already mixed to the coins’ specifications, from other entities.  Therefore, the Mint’s cost differs from nickel spot prices.

It will be interesting to see the Mint’s Annual Report later this year to see how much the five cent coin cost to produce this fiscal year.