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Investment Grade Palladium Options

There is almost always palladium where platinum is found, but not so when it comes to precious metal investing. There are actually very few palladium coins that have ever been minted, and all of those, since the 1960s. While the market for palladium is far smaller than that of the big precious metal players, gold and silver, it is increasingly being seen as an affordable and attractive option for sheltering money against unfavorable market forces. Even though it's never been used exclusively as a currency base, it is internationally recognized as a currency-type metal under the ISO commodity number 4217.

Palladium wasn't even discovered until 1803, when English chemist and physicist William Hyde Wollaston was working on a better way to refine platinum. He also discovered rhodium, a newly emerging rare Earth and very precious metal that has found its way into several different types of high-end electronics. Palladium is found in many of the same objects as platinum, including automotive catalytic converters, jewellery, dentistry, electronic components and fuel cells.

However it's use in coins, and especially those suited for precious metal investment, remains quite limited. This is partly because it is rather more difficult to work with as a metal for coinage, being even harder than platinum and therefore causing many mistakes with striking. Precious metal investing in palladium is most often done with coins, but bars are also available.

Surprisingly it was the tiny nation of Tonga that released the world's first palladium coin in 1968 to celebrate the 50th birthday of their ruler, King Topou IV. This Hau coin was only minted in tiny numbers, but led to the minting of the first investment grade palladium coins, produced by the Soviet Union in the 1980s. Palladium coins, for those who purchase precious metals for the sake of investment, are most commonly issued from either the former Soviet Mints of the Russian Bank after the early 1990s.

Other palladium coins of note include a very small run of Canadian Maple Leaf coins that were minted in 2005 as a one-ounce coin with a face value of $50. Despite having limited reserves of palladium, China has also issued two palladium coins in one-ounce and half-ounce (15.5g) weights in the 1990s and 'aughts. The US will be issuing a palladium Eagle coin for precious metals investing purposes, starting in 2010. These coins will feature the high-relief St. Gaudens Double Eagle design made popular in the early 20th century.

Because palladium is found in only a few places in the world, Russia, the United States, Ethiopia, Canada and South Africa; the price of this commodity can be quite volatile. For instance, instability in Russian production led to a steep rise in prices over $1,000 per ounce in 2000. Since that time, the spot price of Palladium has wavered as low as $159 per ounce and recovered briefly in early 2008 to nearly $600 per ounce before dropping to historically low levels again late in the same year.

Precious metal investing with palladium can be quite a wild ride, but picking coins you actually like and will be happy to keep in your collection for a long-term investment make it all the more likely that you'll be able to hang on for another palladium high.

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Joseph Morton

April 4, 2009

 

 

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