From 1933 through all but the last day of 1974, it was somewhat illegal for you to own gold in the United States. I say "somewhat" because there were exceptions for artists, jewelers and coin collectors. You were also allowed to have $100 face value in gold coins even if you didn't call yourself a numismatist (a person who studies or collects coins).
But other than that, no gold. Swiss bank safe deposit boxes filled up quickly as people shipped off their holdings. They really needn't have bothered: although the law did theoretically allow the confiscation of gold, driving it out of sight was enough to accomplish the desired purpose and very few seizures actually happened.
I was 26 years old in 1974 when Executive Order 6102 was overridden by new rules that once again made private ownership of gold in any amount legal. I can remember thinking "Wow, I should buy gold - I bet it will go up!", but I was young and starting a family and didn't have money to invest in speculative bullion.
My instincts were partially good, though: the next six years saw the price of gold rise considerably, but then it sank again and didn't start back up until 2003. All things considered, investing in stocks was probably a much better idea unless you were smart enough to sell in 1980 or had the patience to wait until now. But still, if I had bought right then, I could have quintupled my money in just six years.
Instead, we did silly things like buying food and clothing for our children.
Just a few years later, in 1967, a new law made it illegal to melt silver coins. That particular restriction confused many people, because it was already illegal to mutilate U.S. coins. Isn't melting the most extreme mutilation possible?
I suppose a judge could have seen it that way, but really the intent of that "mutilation" law was so that you couldn't get away with cutting a tiny bit of silver off the edge of a few million coins, melt down that silver and go on to spend the coins at face value. Melting a coin didn't leave you with anything to spend, so it wasn't illegal - until that law.
The reason for the law was because we had stopped making silver coins. Prior to 1965, every dime, quarter and half dollar in your pocket was 90% silver and the price of silver was rising steadily. In 1965, we switched to the "clad" coins you'll find in your pocket now and almost immediately silver coins started disappearing from circulation.
That caused a coin shortage. Gresham's Law is often stated as ""Bad money drives out good", though as Wikipedia points out, it's more accurate to say "Bad money drives out good if their exchange rate is set by law." As you could exchange four silver quarters or four clad quarters for a dollar bill, that's exactly the situation we had and people all across the country culled silver out of their change.
Some not so brilliant people thought that a law prohibiting melting might stop that. If anything, it probably accelerated the withdrawal.
It's illegal to melt? Better put them away while we still can!
That law was phased out in 1969. It is legal to melt silver coins - not that you'll find many in your change today!
However, right now it is illegal to melt pennies and nickels. Why? It's mainly because the price of copper is rising. Nickels are 75% copper and their metal content value is edging above face value. Modern pennies have very little copper in them, but pennies before 1982 (and some from 1982) were 95% copper and are worth right around 2 cents - in theory, anyway.
I say in theory because there's just not much profit motive there. It takes energy to melt coins and of course it takes energy to move them from wherever they are now to wherever they'd be melted - if that were still legal, of course.
I suppose that, once again, someone thinks that prohibiting melting will slow the loss of coins from circulation, but my bet is that it will just speed it up. People who would never even think to look at their pennies will read an article that talks about how much copper is worth today and how you can't sell your pennies to be melted and they'll think "Wow! I better hang on to these!".
What if you could legally sell those 95% copper pennies as scrap? At $2.50 per pound (which was the price for scrap copper as I wrote this), a dollars worth of those pennies would fetch about $1.70, but realistically it would probably be less.
A truckload of copper pipe is fairly obviously a truckload of copper pipe and examining it for any copper painted plastic or steel you might have tried to slip in there isn't difficult. Examining a truckload of pennies to cull out the worthless ones isn't quite as easy.
If and when it does become legal to melt these, somebody will build a machine to sort them out. The old coppers weigh 3.11 grams and the new ones are only 2.5, so that won't be too hard, but machines cost money to build and to operate, so a ton of old copper pipe will probably always be worth more than a ton of copper pennies.
Identifying your "rare" pennies
Given that digital imaging is easy and cheap today, I have little doubt that machines that search for rare coins will be common at coin dealers in a few years. You'll bring in your jars of old coins, dump them in a hopper and the machine will sort everything out, including finding any rare dates and die varieties. It will automatically grade them and determine their likely value and print out a full report.
For now, though, you need to do that yourself, assuming that you think that something that might someday be worth two or three cents is rare..
If the penny is dated before 1982, it is absolutely old style and worth more. These coins weigh more (3.11 grams vs. 2.50 grams), will look very different by eye and will even sound different when dropped on a hard surface. Both kinds were made in 1982 (so you'll need to weigh or bounce 1982's to tell) and a few extremely rare 95% pennies of 1983 have been found, but after that, pennies are zinc with a thin copper coating.
There are rare pennies in circulation - even rare zinc pennies. These are die varieties, doubled dates and that sort of thing. Most of us aren't going to look that closely, but some people will and it can be rewarding.
Before 1959, pennies had a different reverse design. These are 95% copper also, but have some value just because they are older and of course there are particular dates and varieties that are worth much more. If you separated those out and had a full roll or two, you could sell those because they are "wheats" alone.
Identifying Silver Coins
Although it is rare today, these do turn up in pocket change and it would be silly to just spend them. Identification is easy: before 1965 they are 90% silver and worth saving.
There are also 40% silver nickels from the 40's. These are more likely to turn up because a lot of people don't know about them.
Kennedy half dollars from 1965 to 1970 are 40% silver. Keep the 1970s separate if you find any - they are worth more than their silver value.
Identifying scrap gold and silver
I briefly worked in a place that bought this stuff from the smaller dealers and eventually hauled it off for melting. Mistakes here were very common. Just because something is marked 14K Gold or .925 Sterling doesn't mean that it is - we tested everything with acid.
When gold was $129.00 an ounce, it might not have mattered so much if a tiny bit of 14K got mixed into a pile of 18K scrap. At 15 times that price, it matters.
Selling gold and silver scrap
Nobody pays the actual metal value. Refiners have costs and even without that, you usually aren't selling to the actual refiner. In many cases, you aren't even selling to someone who actually is selling to the refiner - you'll be selling to someone who sells to someone else and maybe they eventually haul everything off to be melted.
As mentioned above, I worked in a place that did sell direct. Millions of dollars in gold and silver every week - most of it bought from the little folks you see advertising "We buy gold and silver".
The little guys often pay quite a bit less than they might because they lack facilities for accurate weighing and testing. When I worked at the place that bought from the little shops, we precisely weighed and tested every single thing they sent in and you'd be surprised how often they thought something was gold or silver but it was not. They also sometimes got the weight wrong. They'd get an "adjustment" of course, but their customer was probably long gone, so they built those losses into what they were willing to pay.
Even at that, those little guys probably will pay you more than the companies you see advertising on TV - those ads cost money and the prices paid have to reflect that.
Selling Bullion Coins
It's a bit easier with bullion coins, but mistakes still happen. For example, 1964 Kennedy half dollars are 90% silver but 1965 to 1970 were only 40% silver and after that they are just clad. I've seen people mix in those less valuable coins to coin silver lots.
Getting the best price
In volatile markets, anybody buying silver and gold has to worry about the price dropping before they sell. The big guys work on very tight margins, so the minute they buy, they sell to keep their "position" (how much they have or how much they have promised to sell) as close to zero as they can. While it would be delightful to buy a million ounces of gold and find that the price had gone up a dollar an ounce before you could sell it, the reverse would be quite a disaster.
The little guy in the corner store is worried about the same thing, but he's not as well connected and because he doesn't have as much to sell, he doesn't have the same options as the big guys. He'll therefore build more profit margin into what he offers you.
Know what you have and know its accurate weight or count. Shop around. If you have a large amount to sell, ask the little guys who they sell to. They may be willing to tell you if your lot is too much for them to handle. It can't hurt to ask, right? That bigger guy may not be advertising because he gets everything he needs from the little guys - you might never find them without asking around.
Thieves and crooks
There is fake jewelry. There are fake coins. There is stolen jewelry and stolen coins and dishonest buyers and dishonest sellers.
There are also people who are scrupulously honest. At my 1877 Indian Cent article, I told a story about working for an honest coin dealer paying $75 for a coin he could have had for 35 cents but I have certainly known others who might have offered thirty five cents or less in the same situation.
The honest dealers have to worry about the dishonest dealers and stolen goods and honest mistakes and volatile markets and more. It can be a tough business.
How can you tell an honest dealer from the rest? You could test them with a roll of 40% Kennedy half dollars that had a 1964 sitting at the top. If they don't offer more for that coin, they are dishonest or ignorant.
You could test by phone with a "1970 half dollar". An honest dealer would immediately try to determine if that was a 1970-D or a 1970-S and whether it was in an original holder from the Mint (no 1970 half dollars were put in circulation, they were all sold by the Mint in special holders).
Just because someone is honest doesn't mean they can give you the best price. Again, shop around.
Are you going to hoard?
Are you going to start pulling those old pennies out of your pocket change?
You might think that I do because of my interest in coins. In fact, I don't. I'll pull out a wheat ear or a wartime nickel and of course any silver I happen to spot, but I don't bother with those 95% copper pennies. For one thing, my eyesight isn't that great anymore and the potential value just isn't enough to make it seem worthwhile to me.
Some people are pulling them. Here's a guy who has more than a million stored away: A Penny Hoarded Is Two Earned at Marketplace.org tells his story. That's almost four tons worth and if he could sell them for melt, he might profit $10,000 or so. Doesn't seem like much, does it?
But, as he points out, he does stand to double his money or better - someday.
Mike Willey on July 16, 2018:
I have a 2005 Wisconsin quarter without a stamp on the obverse.
Has anyone heard of or seen one?
Kari Poulsen from Ohio on February 01, 2018:
I am like you. I will pull the wheat pennies and any silver I find, but not much else. Thanks for the article.
Tony Lawrence (author) from SE MA on February 08, 2012:
Sounds like something where removing the coating is more trouble than the value of what is inside - if it is gold, which it might not be.
newdaddyo on February 07, 2012:
Anyone have any ideas if the gold you have has a layer of resin over it. No one here is interested in it and I can't figure why...Its still gold!!!! What to do with it ...no idea.
Tony Lawrence (author) from SE MA on November 22, 2011:
Buries them? Why?
Sylvia Sky from USA on November 22, 2011:
Really an excellent enlightening article. Now I know why a friend hoards and buries nickels, saying his son will be glad to inherit them.
Wesman Todd Shaw from Kaufman, Texas on November 15, 2011:
Very good article. I'm a ....scrap monster. Of course I get lots of aluminum, copper, and brass in the hvac industry. I'm not working at the moment - but once the scrap metal buzz hits you, you're forever hooked.
Stainless steel is also a very good metal to sell if and when you find it in a form that isn't already useful to you.
Tony Lawrence (author) from SE MA on November 15, 2011:
One thing to note about gold investing..
If I had bought $20,000 worth of gold in 1974, I could sell that today for about $300,000.00
Instead, I bought a $24,000 home in 1973 and sold it for $330,000 in 2005. If I had sold that $20,000 gold investment at the same time, I would have only got about $100,000.00.
I think it was better to have the house :-)
Tony Lawrence (author) from SE MA on November 15, 2011:
Yes, when my eyes were better (and when there was more chance of finding something interesting), I would look carefully at every coin.. it was fun to find things that were not necessarily all that valuable, but still interesting.
AllieRambles from Bay Area, California on November 15, 2011:
I have to admit, I do check my pennies and other coins at times if I remember. It can be fun finding that more rare coin or one from the year I was born (way before 1982, lol) or just trying to find the oldest one you possibly can.
Thanks for the information. Very helpful.