Pennies and nickels are now worth more melted down than at face value.

In an earlier post, I wrote about how the government is losing money by minting pennies and nickels. It now costs 1.73 cents to create a penny, and 8.34 cents to create a nickel (6.99 cents for the metal, plus the cost of production).

Instead of operating at a profit (or at least break-even), the U.S. Mint is now operating at a loss.

In an effort to prevent arbitrageurs and opportunists from profiting off the metals (contained within the coins), the U.S. Mint has placed a ban on melting pennies and nickels. According to Yahoo News, "U.S. Mint officials said Wednesday they were putting into place rules prohibiting the melting down of 1-cent and 5-cent coins. The rules also limit the number of coins that can be shipped out of the country." The new regulations prohibit the melting of 1-cent and 5-cent coins, with a penalty of up to five years in prison and a fine of up to $10,000 for people convicted of violating the rule.

Assuming that commodity prices continue rising, the "operating loss" for the U.S. Mint (Read: U.S. taxpayer) will continue climbing. The nickel is particularly vulnerable since there is a known shortage of nickel due to surging demand from China.

How long can the U.S. Mint continue operating at a loss—before they decide to make coins out of non-metals?