I get emailed this question at least once a week, sometimes more. It's a reasonable question, many governments (including our neighbour to the north) have laws that make coin melting illegal, but the U.S. government is not one of them... at least not yet.

Where does it say that you can melt coins? Well, that's part of the problem. It doesn't say anywhere that the U.S. government is ok with this. But, go to the U.S. Mint web site and search for "illegal". You'll get this result:

1. Is it illegal to damage or deface coins?

Section 331 of Title 18 of the United States code provides criminal penalties for anyone who fraudulently alters, defaces, mutilates impairs, diminishes, falsifies, scales, or lightens any of the coins coined at the Mints of the United States. This statute means that you may be violating the law if you change the appearance of the coin and fraudulently represent it to be other than the altered coin that it is. As a matter of policy, the Mint does not promote coloring, plating or altering U.S. coinage: however, there are no sanctions against such activity absent fraudulent intent.

The keyword is fraudulent. When you take a 25 cent piece and try to pass it off as a Sacajawea Dollar, that's fraud. When you take a Buffalo Nickel, and scratch out one of its legs and try to sell it as a rare collectible, that's also fraud. But when you melt a pre-1982 cent, and sell it for its copper value, that's genuine and legal (EDITOR'S NOTE: Please see update at bottom of this page regarding U.S. cents and nickels).

Also, silver refiners have been melting coins for decades. Precedent is on your side.

Does this mean you should stoke the backyard barbeque and smelt your loose change to make an extra buck? Someone will inevitably begin melting U.S. coins in a large enough operation with an acceptable profit margin. But, I'm not sure it will happen before the switch to a new metal composition for all U.S. coins. Most countries with weak currencies move to a steel/aluminum based coinage and it looks like we're on the same path. If someone decided to melt coins on a large scale before the switch, they could potentially induce a coin shortage. I'm speculating here, but you might get a few frowns from the U.S Treasury for mass melting despite the law.

Regardless, many people think it's a fruitless exercise. "Not enough reward for my time," is the common complaint. Spending time sorting through coins may not be too exciting for most folks and there's nothing wrong with that. I've read several articles recently where the writer practically ridicules anyone who saves common circulating U.S. coins and I certainly see their point of view.

However, this isn't difficult to understand if you lead a life of thrift and frugality. If a pre-1982 cent has a copper value of two cents, some people may not want to give it up until they receive full value. They might have to wait a while, but impatience and short-sightedness are generally not virtues of a thrifty person. Receiving full value carries equal importance whether it's selling your house at the highest price possible or redeeming a 30 cent coupon for milk.

Elbert Hubbard famously said:

Thrift is a habit. A habit is a thing you do unconsciously or automatically, without thought. We are ruled by our habits. When habits are young they are like lion-cubs, soft, fluffy, funny, frolicsome little animals. They grow day by day. Eventually they rule you.

Some people don't have a choice, they have to save their coins until they can be redeemed for full value (or much higher, depending where you think base metal prices are headed). A lifestyle of thrift demands it.

To find out the intrinsic value of U.S. coins (including pre-1965 silver), visit coinflation.com.

*** UPDATE ***

PLEASE READ: Dec. 14 update regarding the law change on melting nickels and cents for profit can be found here. Melting cents and nickels is fine as long as you're not profiting from it.