No, China has not yet decided to dump its Treasury bonds… but give it time.

AsiaPundit closely tracks both the Chinese currency and the US dollar. However, we don’t pay nearly as much attention to global prices for base metals. As such, we are a bit late in bringing you details of a global currency meltdown that is so severe that the United States is passing new capital control measures.:

WASHINGTON — People who melt pennies or nickels to profit from the jump in metals prices could face jail time and pay thousands of dollars in fines, according to new rules out Thursday.
Soaring metals prices mean that the value of the metal in pennies and nickels exceeds the face value of the coins. Based on current metals prices, the value of the metal in a nickel is now 6.99 cents, while the penny’s metal is worth 1.12 cents, according to the U.S. Mint.
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Under the new rules, it is illegal to melt pennies and nickels. It is also illegal to export the coins for melting. Travelers may legally carry up to $5 in 1- and 5-cent coins out of the USA or ship $100 of the coins abroad “for legitimate coinage and numismatic purposes.”

For those who, like ourselves, are deficient in mathematics that means that a US nickel is worth almost 40 percent more melted down than it based on its denomination. Chinese demand for base metals is generally cited as a prime reason for rising prices.

And it is not just the US. This is indeed a global currency meltdown. As this 2003 article notes China has been seeking European coins for melting. Within Asia, there is massive smuggling of the Philippine peso to buyers in China.:

MANILA : With a face value of less than two US cents the humble Philippine one peso coin may be worth next to nothing at home but in metal-hungry China it spells big bucks.

So much so that smuggling of the coins has become something of a growth industry in the Philippines and a major headache for the central bank.

According to local media reports, the coins are sold in China for 1,000 pesos (US$20) per kilogramme and the metal derived from melting them down is used in the manufacture of electronics goods like mobile phones.

As we have not heard any reports of the melting of the Chinese yuan, we assume that either the nickel-plated steel material is worth more in coin rather than base-metal form or that owners of blast furnaces in China are betting on further appreciation of the local currency.

However, if anyone knows differently please comment — AP may yet consider requesting that our employer pay us in coins.

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