March 29, 2024

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.