Time to Sell Your Palladium Eagles?

The U.S. Mint began selling palladium Eagles in 2017. Through last year, total cumulative sales, including Mint State, proof and reverse proof versions, exceeded 50,000 coins.

The spot price of palladium peaked at almost $3,000 in May 2021 and again in March 2022. Since the most recent peak, the price has tumbled almost 60 percent. In early July, palladium’s spot price fell to near $1,200.

The largest use of palladium is in car and truck catalytic converters. This accounts for more than 50 percent of all palladium consumption worldwide. In general, it used to take 2 ounces of palladium in catalytic converters to perform the same function as 1 ounce of platinum.

In years past, when palladium’s price was much lower than platinum, vehicle manufacturers stopped using only platinum in catalytic converters to instead use lower-cost palladium. Unfortunately, the increased industrial usage of palladium led to soaring prices.

About 40 percent of global palladium mining output comes from Russia, where the mining infrastructure is outdated and in poor condition. With it taking up to 10 years to develop a newly discovered potential mine site into a producing mine, higher palladium prices simply do not lead to a quick surge in mine output.

The car and truck industry is now in the middle of a multi-year conversion to reduce or eliminate the use of palladium in catalytic converters to again use less costly platinum.

This decline in industrial demand has led the price of palladium to plummet, at the same time that increased industrial demand for platinum pushed up its price more than 50 percent from its 2020 low.

For the past two years, I urged palladium owners to liquidate their holdings of this metal. The prices of palladium bars and palladium coins struck by other world mints have largely fallen in tandem with the decline in the spot price.

Although U.S. palladium Eagle prices have fallen as well over the past 16 months, they have not fallen as much as the spot price. I see coins recently changing hands for more than $2,000 apiece.

Going forward, I would not be at all surprised to see the spot price of palladium fall below that of platinum by the end of this year. I expect the price of palladium to continue falling from current levels while platinum’s price may rise.

At some point, the limited number of people interested in owning palladium in either bar or coin form will no longer be willing to pay a high premium for palladium Eagles as they are trading today. Therefore, to minimize further potential losses, owners of palladium Eagles may wish to sell them soon.