Melt Those Pennies Down …

If you're the Federal government, you can get away with selling a product and losing money. After all -- at least in my opinion -- waste is one of the primary roles and responsibility of our government, at least as I observe the antics in DC from my vantage point. Hence, the US government can get away with minting a penny for 2 cents, and putting it into circulation at face value, at least according to the above linked article (hat-tip: Tony Poshek). A year or so back, USA Today pegged the cost to produce a penny at 1.2 cents, as I recall.

What is this inflation about? It's all because of rising base metals prices (some of which have come down to more reasonable levels in recent weeks). The primary culprit behind the double-face value penny is the rise in zinc prices. Copper prices, too, have not exactly remained stable. In my opinion, in volatile commodity pricing environments, sourcing strategies should focus on risk management and reducing overall commodity pricing exposure -- not simply cost savings. But the good news is that there are numerous ways of sourcing metals categories more effectively even in highly volatile commodity price environments. Drop me a line (jbusch (at) spendmatters (dot) com) for more details.

Jason Busch

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