The humble U.S. nickel has developed an unusual valuation problem: the metal inside the five-cent coin is now worth considerably more than five cents.
Gold advocate Peter Schiff highlighted the discrepancy this week, estimating that the copper and nickel in each coin were worth 7.76 cents, around 55% above face value, and arguing that Americans should accumulate nickels before the government potentially changes course on the denomination.
The basic metal-value claim is close to current market calculations. Coinflation estimated the melt value at about 7.48 cents on Sept. 7, although the number fluctuates with commodity prices.
The reason is primarily copper. Prices have surged to record territory, with London copper recently reaching roughly $14,700 per metric ton amid supply constraints, tariff uncertainty and long-term demand from power grids, data centers and electrification.
A modern nickel weighs five grams and consists of 75% copper and 25% nickel, according to the U.S. Mint.
The Bigger Problem: A Nickel Costs 13 Cents to Produce
The metal premium is only part of the story.
The U.S. Mint reported that producing and distributing a nickel cost 13.31 cents in fiscal 2025, marking the 20th consecutive year that both pennies and nickels cost more to manufacture than their face values. Nickel production generated a $50.9 million seigniorage loss during the year.
That makes the five-cent coin arguably a more striking economic anomaly than the penny, whose circulating production officially ended in November 2025. Treasury estimated ending penny production could save about $56 million annually in material costs.
But there is currently stronger evidence for a nickel redesign than a nickel shutdown.
The Senate passed the bipartisan Common Cents Act in August. Among other provisions, the legislation would allow Treasury to test a cheaper five-cent coin using a zinc inner layer and nickel outer layer, provided the design reduces manufacturing costs without seriously disrupting coin-operated machines.
Why the Nickel Trade Is Not Free Money
Schiff also described nickels as “much better than Treasuries,” but that comparison comes with a major limitation.
Federal regulations prohibit melting or treating U.S. pennies and nickels for their metal content. The restriction was introduced precisely because rising commodity prices created incentives to destroy circulating coins for scrap.
That means the apparent premium is not a conventional arbitrage opportunity. Investors can own the coins, but they cannot simply melt them and collect the difference.
Nickels also generate no income, while Treasuries pay interest. Coinpaper’s comparison of gold and Treasuries explains why yield remains a central consideration for defensive assets, while real yields determine what investors earn after inflation.
