Revisiting American Palladium Eagle Bullion and Collector Coins

Public Law 111-303, enacted on December 14, 2010, provided authorization for the United States Mint to produce and issue palladium bullion and collector coins subject to the submission of a market study to demonstrate adequate demand. Nearly two years later, the fate of the American Palladium Eagle is still uncertain, although a determination may soon be at hand.

If issued, the Palladium Eagles would contain 1 troy ounce of .9995 fine palladium and have a legal tender face value of $25. The obverse would feature a high relief likeness of Adolph A. Weinman’s design for the Winged Liberty or “Mercury” Dime. The reverse would feature a high relief version of Weinman’s design for the 1907 American Institute of Architects medal.

The palladium used to produce the coins is to be acquired from palladium mined from natural deposits in the United States, or a territory or possession of the United States, within 1 year after the month in which the ore from which it is derived was mined. If no such palladium is available or if not economically feasible, it is allowed to obtain palladium from other available sources. Currently, the only palladium producer in the United States is Stillwater Mining Company located in Montana. The bill H.R. 6166: American Eagle Palladium Bullion Coin Act of 2010, which became Public Law 111-303, was introduced by Rep. Denny Rehberg of Montana.

As mentioned, the series is dependent upon a market study defined within the authorizing legislation. Specifically, the market study refers to:

“an analysis of the market for palladium bullion investments conducted by a reputable, independent third party that demonstrates that there would be adequate demand for palladium bullion coins produced by the United States Mint to ensure that such coins could be minted and issued at no net cost to taxpayers.”

The United States Mint first awarded a contract for the study on September 30, 2011 to Thomas Reuters’ GFMS. This contract was terminated after it was found that the vendor had accepted palladium industry sponsorship for previous surveys and reports, which might call into question their independence. A contract was later awarded to CPM Group to carry out the market study, which was to be completed on July 3, 2012.

A recent inquiry to the US Mint has confirmed that the results of the study have been received and are currently undergoing internal review and analysis. The content of the study cannot yet be made public, as the study has not been transmitted to the Secretary of the Treasury or Congress. A spokesman for the Mint indicated, “No final decision has been made on whether American Eagle Palladium Coins will be minted.”

If the market study does indicate that there is adequate demand for palladium bullion coins, by law the US Mint would have one year from the date of submission of the report to the Treasury Secretary and Congress to mint and issue the American Palladium Eagle bullion coins. Collector versions of the coin are not required but may be issued at the determination of the Treasury Secretary. The law provides an interesting suggestion for the collector versions, stating “to the greatest extent possible, ensure that the surface treatment of each year’s proof or uncirculated version differs in some material way from that of the preceding year.”

When Public Law 111-303 was enacted, the market price of palladium was $758 per troy ounce. During 2011, palladium reached a high of $858 before falling to a low of $549. The market price is currently around $600 per ounce.

2012-11-02 19:41:46

Source: http://blog.jtcoins.com/revisiting-american-palladium-eagle-bullion-and-collector-coins.html