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Palladium – the Next Gold Rush?

October 1, 2018 0 Comments

The precious metal markets are fickle – but an interesting feature right now is that the continuing decline in gold and silver is being contrasted by a climb in Palladium prices. It is trading at over $1,000 an ounce, and compared to other metals, looks strong. The future is always unpredictable, but this does give rise to the idea that diversification in bullion holdings can only be a good thing. If you don’t have palladium coins in your collection, maybe this is a good time to look at some.

Palladium is a silvery-white rare metal, and most of the world’s production of about 450,000 pounds is split evenly between South Africa and Russia. Canada and the US also mine relatively small quantities of this metal. Most of it is used as a catalyst in the chemical industry, but a significant amount is used in jewelry, in an alloy with gold to make ‘white gold’. Several countries use palladium to strike bullion coins.

The African country of Sierra Leone was the first nation to issue a palladium coin – in 1966, to mark the 5th anniversary of their independence. The coin contains one troy ounce of palladium. The Pacific Island nation of Tonga followed in 1967 with their own palladium coin, to mark the Coronation of King Taufa Ahau Tupou IV. 1,500 coins were minted, and sold in sets of three, containing 3.5 troy ounces of pure palladium. Currently these coins are selling slightly below the melt value, which indicates the potential for palladium coins if the value continues to rise.

A number of other countries followed with their own palladium coins, including the Soviet Union, which minted, in 1989 shortly before the fall of the USSR, several one-ounce palladium coins with images of ballerinas from the famous Bolshoi Ballet. These are trading somewhat above the current melt value.

The Royal Canadian Mint is always an innovator, and they produce the first Government-backed bullion palladium Maple Leaf coin in 2005. The Maple Leaf coin is a popular form of gold bullion, already widely collected. The palladium Maple Leaf contains one ounce of pure palladium. Considering that in 2005 palladium was selling a little under $200 an ounce, the growth of that investment would have been outstanding. This coin was minted again in 2006, 2007, 2009, and each year since 2015. A second Canadian palladium coin is the $50 Big and Little Bear Constellations coin, with only 1,200 coins minted, in four designs, representing the four seasons.

America’s only palladium coin is a one-ounce American Eagle bullion coin, with a face value of $25, but containing one ounce of pure palladium. The coin has a unique Adolph A. Weinman ‘eagle and olive branch’ design on the reverse. This is Weinman’s 1907 American Institute of Architects (AIA) design, used here for the first time by the US Mint, and minted from the original reverse plaster of his gold medal design. The well-known winged Liberty head from the Mercury Dime, also by Weinman, makes the obverse. Although intended to be Liberty, the bust was confused with the Roman god Mercury, hence the name for the coin. The coin was first minted in 2017, although enabling legislation was passed in 2010.

Not only are there some interesting designs and historical features in the palladium coins available, but they represent an investment that just might have some potential. At the very least, adding this metal to your collection spreads the risk and widens your collection at the same time.

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