Hidden Zinc Stockpile

The US is sitting on a hidden stockpile of zinc worth nearly $3bn.

Every modern US penny is made from 97.5% zinc and 2.5% copper. With an estimated 300 billion pennies currently in circulation in America, that equates to:

731,000 metric tons of contained zinc
19,000 metric tons of contained copper

At today’s prices that’s roughly $2.9b worth of metal.

The US has discussed decommisioning the penny for years - following many other countries who have already eliminated their lowest denomination coins.

If the US does retire the penny, banks would collect them and remove them from circulation. The government could then melt the coins down and recover the zinc and copper.

This raises some fascinating questions about how this would/should be handled. Almost overnight, the US would be in possession of one of the largest sources of recoverable zinc in the world.

To put that into perspective, 731kmt is around 5% of annual global zinc demand.

But how would that recovered zinc actually find its way to the market? Would it be sold immediately, or released gradually to avoid disrupting zinc prices?

The discussion gets more interesting when you consider that zinc is increasingly being recognized as a strategically important metal. While it doesn’t receive the same attention as copper, lithium, or rare earths, it is essential for galvanizing steel and protecting infrastructure from corrosion. There are also a growing number of zinc-based battery technologies for energy storage.

Given that, does it make sense to monetize the metal? Or should at least part of it be held as a strategic reserve? If the latter, should the US take advantage of historically high zinc prices and hedge, or roll the dice - Howard W. Lutnick I know someone that can help on the hedging if required!

And why hasn’t anyone else done this already? Because it is illegal to melt US currency to reclaim the metal. If that restriction remained in place after the penny was retired, the US government would retain control of this huge potential stockpile.

The penny has always been viewed as currency but perhaps it’s better thought of as a dormant commodity inventory that’s been sitting in plain sight for decades.