The spot price of palladium is testing the $3,000 an ounce plateau on the London market, outdistancing the price of gold by $1,000 an ounce or more.
The spot price rose to $2,911.70 per ounce, a record high, on Feb. 27 before closing at $2,755.
The palladium price is nearly $1,000 an ounce higher than it was on the same date in 2019.
The closing spot price of gold on Feb. 27, 2020, reached $1,652 an ounce, while platinum settled at $912.
Supplies of palladium are extremely limited; the metal is often a byproduct of mining other metals, such as platinum or nickel, and not directly mined.
Investment in palladium bullion and collector coins made from the metal is up as demand for the metal in automotive pollution control has sharply increased with increased pollution regulation.
Automakers prefer palladium over platinum in motor vehicle emission control devices despite the metal being more expensive and in much shorter supply.
The primary producers of palladium are in Russia and South Africa, with one contributing mine in the United States, and North American Palladium in Thunder Bay, Ontario, Canada.
The U.S. mine, in Montana, was once known as Stillwater but is now named Sibanye Stillwater, after the South African mining concern Sibanye acquired Stillwater in 2017.
Russia’s primary palladium contribution to the world supply is the output from MMC Norilsk Nickel PJSC.
Russia is responsible for roughly 44 percent of the world’s palladium output, and a little more than 40 percent is from South Africa, while the remaining production is from the two North American locations.
Pushing the envelope
Terry Hanlon, president of Dillon Gage Metals in Texas, believes palladium will break the $3,000 per ounce barrier soon.
Palladium can’t be mined fast enough to meet industrial and rising investor demand, he says.
While waiting for the palladium options to increase, investors are looking toward platinum alternatives.
“We sell a lot of platinum,” Hanlon said. “We’re happy to buy whatever we can get in platinum and palladium. The interest is there.”
Hanlon said buyers are not hedging their purchases, but instead playing the game of watching the spot price based on the premium spreads.
Investors are also pumping resources into buying gold as protection against the pressures being exerted on the world’s economy, Hanlon said.
Palladium options
Palladium bars in various sizes are made available through a variety of refiners and marketers, including PAMP Suisse and Credit Suisse.
Through distributor APMEX, 10-ounce .9995 fine palladium PAMP Suisse bullion bars were being offered March 5 at $25,755.90; and Credit Suisse bars at $25,705.
Palladium is also available in bullion and collector coins, in the form of Ballerinas from Russia, Maple Leafs from Canada, Pandas from China and American Eagles from the United States.
The U.S. Mint is a latecomer to the palladium market, offering its first palladium coin in 2017, more than three decades after Russia’s first offer of a 1-ounce bullion $25 coin.
Ballerina 1-ounce palladium bullion coins from Russia have been available since the late 1980s and can now be obtained for between $2,600 and $2,700 each.
Examples of the palladium Maple Leaf from Canada cost slightly more than the Ballerina coins.
Certified examples graded in Mint State 69 or 70 by a third-party grading service can cost several hundred dollars more.
The U.S. Mint entered the palladium market with the 2017 American Eagle 1-ounce $25 bullion coin that was limited to an output of 15,000 coins. The Mint’s authorized purchasers bought the entire mintage within a few minutes of when they were first offered. The coins were then being offered at $1,249 each.
On March 5, APMEX was offering certified MS-70 examples of the American Eagle bullion coin for $3,161 to $3,961, depending on the third-party grading service and grading label.
The U.S. Mint issued a Proof 2018-W American Eagle palladium coin, also limited to 15,000 coins, which all sold on the same day they were offered by the U.S. Mint, at $1,387.50 per coin.
Certified Proof 70 examples were being offered March 5 by APMEX for $3,061.
The U.S. Mint offers a Reverse Proof 2019-W American Eagle palladium coin, this time limited to 30,000 pieces, initially priced at $1,987.50 per coin. As of the Jan. 12, 2020, sales report, 15,711 of the coins were sold. The coin is still offered at the Mint’s website, now priced at $3,037.50.
The coins are retailing on the secondary market from APMEX for $3,361.
Palladium is a silvery-white metal discovered in 1803 by the English chemist William Hyde Wollaston. He named it after the then recently discovered asteroid Pallas, which was itself named after the epithet of the Greek goddess Athena, who slew Pallas. Palladium, platinum, rhodium, ruthenium, iridium and osmium form a group of elements referred to as the platinum group metals.