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The Future of Jefferson Nickels

The Jefferson Nickel is an anomaly among current us coins.  It is a low denomination, but by necessity it is also large and heavy, and so consequently contains an inordinate amount of metal for its face value.  It is like the Lincoln cent, whose public opinion has swayed on whether or not to continue the penny, and reason behind spending twice the face value of a coin to produce only one.  If ever the venerable cent was removed, the current nickel in use today has a precarious position before it, as the very same reasons that make the withdrawing of the one cent denomination appealing, apply to the Jefferson Nickel as well.

The nickel as we know it, a five cent denomination of nickel and copper, has been in existence since 1866 with the introduction of the shield nickel.  The reason for the coin’s introduction was simple, as there was a lack of excess silver needed to produce the then used ‘half-disme’ and the popularity of the copper one and two cent coin also in existence proved the viability of base metal coins in common use.  As expected, the new coin was wildly popular, and successfully replaced the fractional paper currency that was discontinued in 1865.

That the Jefferson Nickel is a low denomination but large coin is the result of the nature of the U.S. Mint coining system.  The dime, its next highest denomination, is already very small in weight and diameter, making a smaller, lower denomination coin not feasible.  The nickel has to be positioned so that it’s larger and easily distinguished from the dime, but also smaller, and distinctly different from the quarter.  The resulting coin is large and fat for its face value.  That means the higher metal content of the coin, in addition to labor and production, cost the U.S. Mint approximately 11 cents to produce just one nickel.  As inflation continues to erode the purchasing power of the penny, and consequently nickel, the pressure to cease production of these coins will increase. This means that eventually, the cent, and also nickel will become relics of the past.

Even now, it is not uncommon for collectors to hoard pre-1981 pennies due to their high copper content and low face value, and the nickel is now also seeing interest in hoarding the coin as well.  In 2011 Congress made illegal the melting of nickels for their base metal content, but as metal values increase so too will the incentives for those who save them, despite the ban.  Bulk listings of pre-1981 cents on ebay commonly go for a premium above face value, solely for the worth of the metal content.

Jefferson Nickel collecting has always been strong from a numismatist perspective however, and when collecting in mint state or uncirculated condition can yield valuable collections for future generations.  Premium prices are for only coins of the best quality however, above AU-50, and because of the high mintages for current and most previous years keep prices relatively low for those coins.  Coins at lower grades cannot command even modest prices because the availability of better coins, with the possible exception of the 1950-D.  Take advantage of the waining years of low denomination mintages, and save premium strikes for future collectors to enjoy.

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