No more pennies–or nickels?

According to a Yahoo news article, pennies may soon become a relic of the past. For the first time ever, the U.S. Mint says pennies are costing more than 1 cent to make this year, thanks to higher metal prices (witness the huge run-up in commodity prices). But it's not just pennies; the same problem exists with nickels. Nickels now cost more than $0.05 to make.

A few excerpts from the article…

• "The penny is going to disappear soon unless something changes in the economics of commodities," says Robert Hoge, an expert on North American coins at The American Numismatic Society.
• That very idea of spending 1.2 cents to put 1 cent into play strikes many people as "faintly ridiculous," says Jeff Gore, of Elkton, Md., founder of a little group called Citizens for Retiring the Penny.
• Gallup polls show that two-thirds of Americans want to keep the penny coin. There's even a pro-penny lobby called Americans for Common Cents.

• Those who want to keep the penny coin include small merchants who prefer cash transactions, contractors who help supply pennies, and consumer advocates who fear the rounding up of purchases (to the nearest nickel). "We think the penny is important as a hedge to inflation," says director Mark Weller of Americans for Common Cents. "Any time you have more accurate pricing, consumers benefit."

• The Mint's announcement is a milestone because coins have historically cost less to produce than the face value paid by receiving banks. Before 2006, coins were moneymakers for the government.

Read more on the debate over whether to retire the penny (and the upside-down position the government finds itself in).