December 3, 2022

Palladium Price at Nine Year High

While gold and silver have dominated the media spotlight this year, the price of palladium has outperformed both. For the year to date, palladium is up $337 per ounce or more than 85%.

By comparison, gold has risen $333.50 per ounce or 30.67% from the start of the year. Meanwhile, silver has risen by $11.56 per ounce for the year to date, or around 68%. Much of silver’s rise has come over the course of the past three months.

November 19, 2010 London PM Fix Prices
Gold $ 1,421.00
Silver $ 28.55
Platinum $ 1,786.00
Palladium $ 730.00

Palladium’s strong performance began following the sharp decline across all precious metals prices that took place at the end of 2008. Measured from palladium’s low of $164 reached in December 2008, the price is up an astonishing 345%.

From gold’s low price of $712.50 reached in October 2008, the price increase measures about 100%. For silver, from the low price of $8.88 reached in October 2008, the has returned 221.5%. Once again, palladium outshines the performance of both.

The current price of palladium represents a nine year high for the metal. The continued rise has been attributed to dwindling stockpiles in Russia amidst increased use within China for catalytic converters in gasoline powered automobiles.

Earlier this year the first palladium ETF for U.S. investors was launched by ETFS Securities, trading until the symbol PLL. More recently, a bill was introduced in the U.S. House of Representatives seeking to authorize American Palladium Eagle bullion coins.

American Palladium Eagles?

Should the United States Mint produce a palladium bullion coin? A Congressman from Montana, where most domestic palladium mining takes place, thinks so.

The bill H.R. 6166 American Eagle Palladium Bullion Coin Act of 2010 was introduced on September 22. The bill had no cosponsors, but has been passed in the House of Representatives without objection. In order for the proposal to become a reality, the bill must be passed in the Senate and then signed into law by the President.

This is not the first attempt for palladium bullion coins. Previous attempts in the House and Senate have included:

  • H.R. 5614 Original Saint-Gaudens Double Eagle Ultra High Relief Bullion Act
    • Introduced March 13, 2008 by Sen. Max Baucus of Montana
  • S. 2924 Original Saint-Gaudens Double Eagle Ultra High Relief Bullion Act
    • Introduced March 13, 2008 by Rep. Michael Castle of Delaware. Passed House May 15, 2008
  • S. 758 Original Saint Gaudens Double Eagle Ultra High Relief Bullion Act of 2009
    • Introduced April 1, 2009 by Sen. Max Buacus of Montana – April 1, 2009
  • H.R. 3405 Original Saint Gaudnes Double Eagle Ultra High Relief bullion Act of 2009
    • Introduced July 30, 2009 by Rep. Dennis Rehberg of Montana

The latest bill does include some interesting provisions. Although it directs the source of palladium for the coins to be from newly mined domestic sources, if no such palladium is available, it would also allow other available sources to be used. This is an improvement from the laws behind the American Gold and Silver Eagle program.

The Palladium Eagle bullion coins would have a weight of one ounce, fineness of .9995, and face value of $25. The size and thickness of the coins would be left to the Secretary of the Treasury to decide. This is an improvement on the law behind the America the Beautiful 5 oz. Silver Bullion coins, which require a problematic 3 inch diameter.

The Secretary of the Treasury can decide if proof and uncirculated versions of the American Palladium Eagles should be struck. Again, this is an improvement from the lack of direction provided by the law behind American Gold and Silver Eagles.

There are some quirks to the bill, such as the stipulation that the surface treatment of each year’s proof or uncirculated version should differ in some material way from the preceding year. Until now, the US Mint hasn’t done much in the way of striking coins with varying surface treatments.

The bill also states that any US Mint facility other than West Point should strike coins other than the proof version of the Palladium Eagles. In other words, Philadelphia, Denver, or San Francisco would need to strike bullion and uncirculated coins, while West Point could strike proof coins.

Finally, the bill directs the use of designs by Adolph A. Weinman. Specifically the obverse design from the Mercury Dime and the reverse design from the 1907 American Institute of Architects Medal. Both would be rendered in high relief.

Gold, Silver, Platinum, Palladium 2010 Second Quarter Performance

Although gold and silver are experiencing a sharp decline today, they recorded strong performance during the second quarter of 2010. Platinum and palladium both posted declines for second quarter, but maintain gains for the year to date.

The table below shows the last London Fix Price of 2009 for each metal and the last price for June 30, 2010 followed by the percentage gain or loss for the 2010 Second Quarter and the Year to Date performance.

2009 Close June 30, 2010 Close 2nd Quarter YTD
Gold $ 1,087.50 $ 1,244.00 11.52% 14.39%
Silver $ 16.99 $ 18.74 7.09% 10.30%
Platinum $ 1,461.00 $ 1,532.00 -6.87% 4.86%
Palladium $ 393.00 $ 446.00 -6.89% 13.49%

Gold recorded the largest gain for the most recent quarter with an increase of 11.52%. It is also showing the strong performance out of the four metals for the year to date, up 14.39%. During 2009, the other three metals had outperformed gold by wide margins.

Silver posted a gain of 7.09% for the quarter and is up 10.30% for the year to date. Notably, silver has now posted a gain for the past six consecutive quarters. This represents the longest quarterly winning streak which took place through the beginning of 1980 when silver had eleven consecutive quarters of gains.

Platinum and palladium showed declines of 6.87% and 6.89% for the quarter. Year to date numbers remain positive at 4.86% and 13.49%.

Measuring Declines from the High- Gold, Silver, Platinum, Palladium

For the past few weeks, precious metals have undergone significant, rapid declines. This follows a year of banner performance during 2009. I wanted to take a post to briefly examine the extent of the declines for gold, silver, platinum, and palladium.

Roughly two months ago, gold had reached a new all time high and silver had reached its highest level going back about twenty months. Less than three weeks ago, platinum and palladium had reached their highest levels in about sixteen months.

The figures below show the recent high compared to the recent low and the extent of the decline. All figures are London PM Fix.

Gold

Recent High: $1,212.50 (December 2, 2009)
Recent Low: $1,058.00 (February 5, 2010)
Decline: -$154.50 (-12.74%)

Silver

Recent High: $19.18 (December 2, 2009)
Recent Low: $15.14 (February 8, 2010)
Decline: -$4.04 (-21.06%)

Platinum

Recent High: $1,627.00 (January 20, 2010)
Recent Low: $1,475.00 (February 5, 2010)
Decline: -$152.00 (-9.34%)

Palladium

Recent High: $462.00 (January 21, 2010)
Recent Low: $395.00 (February 5, 2010)
Decline: -$67.00 (-14.50%)

2009 Precious Metals Performance: Gold, Silver, Platinum, Palladium

Precious metals delivered a strong performance during 2009 with strong returns across the major categories of gold, silver, platinum, and palladium. Although gold seemed to dominate the attention of the mainstream press, the annual performance figures reveal that it was outperformed by other precious metals.

The table below displays the last price of 2008 from Kitco’s historical charts and the last price of 2009. The change and percentage change are computed below.

2009 Precious Metals Performance

Gold Silver Platinum Palladium
Last 2008 Price 869.75 10.79 898.00 183.00
Last 2009 Price 1,087.50 16.99 1,461.00 393.00
Change 217.75 6.20 563.00 210.00
Percentage Change 25.04% 57.46% 62.69% 114.75%

As seen above the surprising winner for the year was palladium, which delivered a return of 114.75%. This was followed by platinum with 62,69%, silver with a gain of 57.46%, and lastly gold with a gain of 25.04% recorded.

In some respects the out performance of palladium, platinum, and silver are simply making up for ground that was lost during 2008 (2008 Precious Metals Performance). Last year palladium had fallen by nearly 50%, platinum by about 40%, and silver by 26%. During the same period, gold recorded a small gain of 4.32%.

One of the recent characteristics of gold has been its steady upward march, defying panics in other asset classes, and general declines in commodities. This year marks gold’s ninth annual gain, which has brought the price of gold 291% higher from the end of 2000 until the end of 2009.

Platinum & Palladium Bullion from Royal Canadian Mint

The Royal Canadian Mint has revived two bullion coin programs that had been previously been suspended for a number of years. This includes the Platinum Maple Leaf, with bullion coins already available, and the Palladium Maple Leaf, which is planned for later this year.

The Platinum Maple Leaf was originally launched by the Royal Canadian Mint in 1988 and offered in 1 oz, 1/2 oz, 1/4 oz, and 1/10 oz sizes. The platinum bullion coins were offered until 1999 when the price of platinum started to rise and demand for the coins started to drop. Ten years later, the RCM revived the program due to demand from distributors. So far, the 2009 Platinum Maple Leaf has only been produced in 1 ounce size. The RCM does not sell the coins directly, but they can be purchased through most bullion dealers.

For 2009, the RCM seems to be the only major world mint producing platinum bullion coins. The United States Mint typically produces the popular Platinum Eagle bullion coins. In late 2008, the US Mint announced that the launch of 2009 dated coins would be delayed. To date no coins have been available and no details have emerged about the status of the program.

The Palladium Maple Leaf was the world’s first palladium bullion coin offered. (Note: Some mints have issued commemorative or special issue coins minted in palladium.) The coins were introduced in 2005 and limited to production of only 40,000 coins, which were all sold. The novelty of palladium bullion wore off by 2007 when only 15,000 coins were sold and the program was ended.

Palladium bullion coins currently carry high premiums due to the fact that no major world mints currently produce the coins, and the brief production by the RCM was in very limited numbers. So far the RCM has stated that they intend to begin producing palladium bullion coins for 2009, but no availability date has been provided.

Palladium Bullion Coins Proposed

With the price of palladium down from the peak price reached during 2008, there seems to be increased interest in creating methods for investing in palladium. I previously wrote a post on the proposal to create a palladium ETF. Now there is a proposal for a United States palladium bullion coin.

A bill was introduced in the United States Senate on April 1, 2009 to create palladium bullion and numismatic coins for the year 2009. The coins would bear the design of the 1907 Ultra High Relief Gold Double Eagle and contain one ounce of .995 palladium. The bill was sent to committee and the prospects of becoming law are uncertain.

According to data from Johnson Matthey, palladium supply for 2008 was 7.51 million ounces while demand was 7.19 million ounces. Investment demand only accounted for 4% of overall demand.

There are no palladium bullion investment coins currently produced by any of the major world mints. The Royal Canadian Mint briefly offered the Palladium Maple Leaf. The coin was only offered from 2005 to 2007 before it was discontinued. They sold approximately 40,000 in 2005, 70,000 in 2006, and 15,000 in 2007.

Current methods of investing in physical palladium are primarily one ounce palladium bars or the Palladium Maple Leaf coins. The coins usually carry premiums of over 50% and it can be difficult to locate a bullion dealer who keeps them in stock. If a new palladium bullion coin is produced, it would likely be available for much lower premiums and much easier to locate.

Platinum ETF and Palladium ETF Coming Soon?

ETF Securities USA recently filed with the SEC to launch exchange traded funds covering platinum and palladium. There are currently no exchange traded funds covering these metals available in the United States.

The same firm already offers ETFs for platinum and palladium which trade in Europe. According to the Wall Street Journal, the platinum holdings for the ETF approach 500,000 ounces.

Rumors of a platinum ETF for the US market briefly made the rounds back in May 2007 after the launch of the European ETFs. The rumors were quickly squelched as it was viewed as unlikely that the SEC would approve such a listing. At the time, the world’s largest platinum producers were reportedly unsupportive of the idea and pressure from the US auto lobby against the ETF was viewed as likely.

With platinum more than 50% off its peak and auto manufacturers dealing with larger issues, there doesn’t seem to be as much resistance this time around.

Here you can view the SEC filings for the proposed platinum and palladium ETFs. The filings indicate that the price per share would be equal to the value of one-tenth of an ounce of each metal.Today, platinum traded at $1,175 and palladium traded at $231. The filings include world supply and demand figures for the metals for the past ten years. In 2008, reported supply exceeded reported demand for both platinum and palladium.

The ETFs would be launched at a time when obtaining physical platinum and palladium for investment continues to be difficult or at high premiums. In order to buy physical platinum in coins or bars, premiums can be $100 or more – if you can find them. The US Mint delayed the 2009 launch of their platinum bullion product the Platinum Eagle. This delay has continued without any update. Physical palladium for investment is usually obtained in bars. The Royal Canadian Mint briefly offered the Palladium Maple Leaf from 2005 to 2007, but ended the program due to low demand.