Clients of the United States Gold Bureau now have the opportunity to add one of the stunning 2021 Palladium American Eagle coins – graded at the highest Proof 70 level – to their personal investment portfolios.
Each year since 2018, the United States Mint has produced annual installments of this brilliant palladium coin, which, in turn, are graded and offered by the U.S. Gold Bureau to our clients as unique investment opportunities. Additionally, the U.S. Mint strikes a version of its signature American Eagle coin each year in palladium’s cousin metal, platinum, which is also offered to investors annually by the U.S. Gold Bureau in the top-quality PF70 condition.
As we look ahead to the U.S. Gold Bureau Palladium Eagle PF70 launch and, at the same time, reflect upon the release of our suite of 2021 Platinum Eagle PF70 coins earlier this year, we thought it might be a good time to revisit the age-old debate on palladium versus platinum – how they’re similar, how they’re different, and what makes them both desirable investment metals in their own rights.
While we can’t tell you that one is necessarily “better” than the other – as the right investment items and ideal asset mix always depend on the goals of each individual investor – in this post, we will walk through some of the details of both platinum and palladium as general metals, where they come from, how they are used in our world today, and what their investment performances have looked over the past several years.
Platinum and palladium are metallic chemical elements that are part of what's known as the "platinum metals group," or "PGMs," for short. These PGM metals are all relatively similar in terms of chemical properties, physical characteristics, and other defining features. There are six PGMs in total, including platinum and palladium themselves, in addition to rhodium, ruthenium, osmium, and iridium. Platinum is probably the most recognizable element of the group – not to mention the most widely used of the six PGMs.
Platinum and palladium are similar in many ways, although they do boast some significant differences.
Platinum and palladium both appear with a silvery-white or grayish-white hue, and both fall under the umbrella of so-called “heavy metals.” They are both soft, malleable, and ductile materials that can be easily worked. Pure platinum is more ductile than copper, silver, and gold, making it the most ductile of all the pure metals. On the other hand, it is less malleable than its gold counterpart.
Palladium is the least dense of the PGMs, ringing in at 12.02 grams per cubic centimeter, compared to its quite dense platinum cousin, which measures 21.45 grams per cubic centimeter. However, palladium is 12.6% harder – and therefore, more durable – than its platinum counterpart (it’s also harder and more durable than gold, which is not a PGM). Despite these durability differences, both metals are quite resistant to corrosion and tarnishing from ordinary atmospheric conditions.
Both platinum and palladium have quite high melting points (3,214.9 °F for platinum and 2,830.82 °F for palladium), although palladium has the lowest melting point of all the PGMs. Such significant heat thresholds make both metals particularly resilient and are consequently quite attractive materials for applications in which heat resistance is needed.
While platinum and palladium are both some of the most abundant of the platinum metals when compared to other metals – particularly the other two major precious metals, gold, and silver – they are quite rare, with both platinum and palladium cited as up to 30 times more scarce than gold by some sources.
Where Do Platinum and Palladium Come From?
Contributing to the rarity of platinum and palladium is the fact that native ore deposits of the metals – and for all PGMs, for that matter – are themselves exceedingly hard to come by.
Platinum and palladium, as well as the other four platinum metals, are primarily commercially obtained as by-products from the mining, refining, and industrial processing of other metals – namely, copper and nickel.
The most pervasive ore deposits of native palladium and other PGMs that have been discovered are in South Africa’s Transvaal Basin – or, more specifically, in the norite belt of the Bushveld Igneous Complex that covers the basin – the United States’ Stillwater Complex in the state of Montana, the Thunder Bay District and the Sudbury Basin in Ontario, Canada, as well as Russia’s Norilsk Complex.
Although native palladium is quite rare, it has also been found alloyed with small amounts of platinum and iridium in the department of Chocó in Colombia, the municipality of Itabira in Brazil’s Minas Gerais state, in the Ural Mountains of western Russia, and again in the Transvaal Basin in South Africa.
more than 210 metric tons of palladium were mined across the entire globe in the year 2020 alone.
Russia produced nearly half of that amount, mining 91 metric tons, with South Africa coming in second place, with 70 metric tons of palladium mined. Canada nabbed the third-place spot with its 20 metric tons of mined output, with the U.S. in fourth place, contributing 14 metric tons of the white, lustrous metal. Zimbabwe was not far behind the U.S. in 2020, producing 12 metric tons of palladium.
Second-hand or regenerated palladium from recycling – mostly of scrap catalytic converters – has also been cited as a source of the metal.
Much like palladium, native ore deposits of platinum are few and far between. Many of those that do exist are located in the same regions as palladium, with the most important sources found in South Africa.
Additionally, platinum occurs naturally in the alluvial sands of some of the world’s rivers.
Outside of their primary locations in South Africa, Russia, and Canada, smaller reserves of platinum have been discovered in Montana's Absaroka Range in the United States. Other platinum deposits have been found in Madagascar, South American counties like Brazil and Peru, parts of Australia and New Zealand, the island of Borneo in Southeast Asia, as well as Finland and Ireland. Native platinum can also be found in the U.S. states of Alaska, California, and Oregon, in addition to the Canadian states of British Columbia and Alberta.
Generally speaking, the most fruitful sources of native platinum are placer deposits.
Interestingly, platinum exists in relatively higher amounts in meteorites and on the Moon. As a result, supplies of the metal have also been found in higher amounts at and around the sites of meteor crashes across the globe, which are also associated with volcanic activity that has stemmed from the impacts. Supplies of platinum found in such spots can be mined economically, with the Sudbury Basin in Canada serving as one example.
What Are Platinum and Palladium Used For?
By far, the most prevalent and well-known application of platinum and palladium today is in catalytic converters, which are pollution-control devices in cars, trucks, and other automobiles. Global use of such devices skyrocketed beginning in the 1970s when the United States and other countries began enforcing emission standards for gas and diesel-fueled vehicles.
Both platinum and palladium have excellent catalytic properties, meaning they speed up chemical reactions. When used in emissions-control features like vehicular catalytic converters, the metals react with harmful chemical outputs like hydrocarbons, carbon monoxide, and nitrogen oxide and convert those pollutants into less offensive substances like water, carbon dioxide, and nitrogen.
By some counts, nearly 85% of palladium ends up being used in catalytic converters.
Palladium also serves as a key component of fuel cells, which combine hydrogen and oxygen in a reactive environment to produce water, heat, and electricity.
Additionally, palladium is known for its use in jewelry, groundwater treatment, electronics, and dentistry, among other applications.
At one time, palladium – in the form of palladium chloride – was part of a treatment regimen for tuberculosis, although it would later turn out that this substance produced many negative side effects in humans, eventually leading to its replacement by more effective treatments.
Much like its palladium counterpart, platinum also finds many uses in today’s industrialized world. Platinum's chemical stability, resistance to corrosion, and physical characteristics have made the metal useful for a wide array of industrial and consumer goods applications, such as in technological and electrical hardware, dental equipment, and jewelry. The alloy platinum-iridium is sometimes used in surgical pins.
Additionally, much like palladium, platinum has also been used in some methods of medical treatment, such as in chemotherapy for some types of cancers – although platinum is found in these contexts more so as a part of compounds containing the metal, like carboplatin, oxaliplatin, and cisplatin, rather than the pure metal itself.
Outside of their industrial, medical, and consumer goods uses, platinum and palladium are also widely regarded as prominent investment vehicles, being part of a category of commodities known as “precious metals.”
Both platinum and palladium are processed, produced, and offered to the investing public in the forms of bullion bars and coins, as well as investment-grade proof coins.
Many refiners and independent producers around the world make bars and what are known as “rounds” – coin-shaped metal pieces – out of the bullion form of the precious metals.
The United States Mints is one of the world’s leading producers of bullion and proof precious metals coins (“coins,” as opposed to “rounds,” are legal tender metal monetary pieces that are issued by the government of a country in that country’s nationally recognized currency). Perhaps the most well-known examples of bullion and proof precious metal coins issued by the U.S. Mint fall under the umbrella of its signature American Eagle program. This series of coins began in 1986 with the issuing of gold and silver iterations (in both bullion and proof strikes) of the nation’s newly conceived “American Eagles” investment coins. In the years since the program’s launch, the Mint has folded the other two major precious metals – platinum and palladium – into the American Eagle mix. The first Platinum American Eagle was introduced (again, in both bullion and investment-grade proof strikes) in 1997, followed by the launch of the Palladium American Eagle program about two decades later (the first bullion Palladium Eagle was released in 2017, while the first proof Palladium Eagle was issued in 2018).
What Are the Investment Values and Price Histories of Platinum and Palladium?
Palladium is currently the most valuable of all the precious metals, outpacing platinum by a little more than $1,000 per ounce, as of early Friday morning in the U.S., November 5, 2021. As of the same date and time, palladium is outpacing gold by around $250 per ounce.
Investopedia’s write-up on palladium (which was updated as of late October 2021) outlined the recent trajectory of the metal's price, noting that it had “reached record highs of more than $2,894 in May 2021.” The record low, the author pointed out, was set in August 1977 at a price point of $42.20 – a far cry from today’s levels!
The Investopedia author notes that in the late 20th century, the price of palladium remained somewhat static, hanging around the $100 to $150 per ounce range for about a decade (from 1986 to 1996). In 2001, the price spiked before becoming "more volatile" for the next 15 years or so. Beginning in or around 2016, the palladium price “started to steadily rise,” passing the $1,500 per ounce point in February 2019. The author does point out that during this period of “steadily” rising prices, palladium values did dip momentarily in both 2001 and 2008.
Platinum is also quite a valuable precious metal, and, according to Investopedia’s write-up on the metal, platinum is “one of the most valuable elements in the world.”
The write-up goes on to note that “while platinum traded at a significant premium to gold for decades,” it has been a different story since 2008, when a weakened global economy, freshly bruised and battered from the Great Recession, suppressed investor demand for the metal. On the other hand, the author notes, “investor unease about central bank stimulus and other economic matters sent gold prices higher.”
Platinum has endured a period of less-than-stunning price performance since the economic downturn of the late aughts, typically not faring quite as well as its other precious metal counterparts. The Investopedia author notes that “market observers” attribute this era of dampened performance to “a crash in platinum markets in 2008,” which these observers reportedly say “scared the investment class away from the metal.” With the pool of hungry platinum investors dispersed in the wake of the 2007-2008 financial collapse, the “only source[s]” of demand left for the metal were “the automobile and jewelry industries.” The write-up’s author has also noted that since 2014, “South African mines have substantially increased production of platinum,” which has “added to global supplies” of the metal.
Fast-forward to the present day, and there are conflicting opinions on where the two PGM precious metals will go next. On the one hand, an article published in April 2021 in TheWashington Post that synopsized the recent performance patterns of palladium notes that an “acute shortage” of the metal has been “driving prices to records in recent years” – record highs, that is. The author elaborates that the price of palladium has risen “more than sixfold since early 2016,” elevating it to levels that have surpassed the gold price.
On the other hand, Reuters notes in an article published on its site at the end of October 2021 that “[a]nalysts and traders have sharply lowered their price forecasts for platinum and palladium after a chip shortage forced auto makers to cut production of vehicles containing the metals,” according to the analysis of a recent poll conducted by the media outlet.
Virtually every industry and market right now is, at best, a bit unsteady, thanks to the lasting impacts of the global COVID-19 pandemic. While the platinum and palladium markets – at least on the commodities front – are no exception to this current reality, it remains to be seen how things will shake out in the long run.
What we can say is that the PGM precious metals – platinum and palladium – have a robust history of impressive value trajectories and high levels of regard from the investor class. Regardless of blips in price here and there over time, there is arguably little doubt that the investment items struck in platinum and palladium will stand the test of time and continue to reap the rewards of historically positive investor sentiment and strong consumer affinity for the metals on the whole.
The conversation surrounding the similarities and differences between platinum and palladium is ongoing and evermore intriguing, particularly in today’s turbulent economic climate. We always enjoy diving into the nuances of these two PGM precious metals and will undoubtedly have more to report in the coming weeks, months, and years!