On Melting Coins and Negative Seignorage

data business infographics economics

We’re running out of coins!

We’re running out of coins!

Did you know that the Philippines suffers from a chronic coin shortage, despite coins in circulation being the highest among our ASEAN neighbors? Some of this can be attributed to coin hoarding or keeping coins in alkansyas and tucked under those frogs in commercial establishments, but some can also be attributed to coin smuggling, or the melting down of coins for their metal content.

Why is this so? Constant inflation, as well as rapid changes in exchange rates and metal prices, have caused some coins to be worth more as metal than as currency. What this means is that people can make money by taking coins, melting them down, and selling them for a guaranteed profit. It’s a risk-less transaction since the coin will always be worth at least its face value.

Which coins are worth more when melted down?

I performed my own coin metal value analysis using data from the Bangko Sentral ng Pilipinas, the London Metal Exchange, and PDEX, and here’s what I’ve come up with (click to enlarge):