Precious Metals

Mint palladium bullion coin study under way

Should the U.S. Mint get the green light to produce American Eagles in palladium, enabling legislation mandates that the obverse design be a high-relief rendition of the obverse of the Winged Liberty Head dime, left, and that the reverse be a high-relief rendering of the reverse of the American Institute of Architects gold medal, center (black and white image), introduced in 1907. Both the coin and medal were designed by sculptor Adolph A. Weinman. Note the similarity between the AIA medal reverse and the reverse of the Walking Liberty half dollar, right, also a Weinman creation.

Coin images courtesy of; medal reverse courtesy of American Institute of Architects.

Collectors and investors will soon learn whether the U.S. Mint’s production and issuance of a 1-ounce .9995 fine palladium American Eagle $25 bullion coin could be accomplished at no net cost to taxpayers.

CPM Group, based in New York City, is conducting, under contract with the Mint, a palladium market study required under provisions of the American Eagle Palladium Bullion Coin Act of 2010. The firm is scheduled to complete its research July 3.

The independent, third-party marketing study required under Public Law 111-303 is aimed at determining if there is “adequate” marketing demand for a palladium investment coin.

According to U.S. Mint spokesman Michael White June 12, CPM Group was awarded the $99,000 contract to conduct the marketing research between April 4 and July 3. The company is a commodities market research, consulting, asset management and investment-banking firm.

CPM Group received the contract under a second solicitation earlier this year seeking vendors to conduct the marketing study. A $49,000 contract awarded Sept. 30, 2011, to the British-based Thomson Reuters’ GFMS to conduct the same marketing study was rescinded by the U.S. Mint in December after Mint officials learned of a problem encountered as a result of the contract procurement process.

Thomson Reuters’ GFMS is one of the world’s leading economics consultancies in precious metals, specializing in research into the global gold, silver, platinum and palladium markets.

“The statute requires the United States Mint to obtain the study services from ‘a reputable, independent third party,’ ” according to a statement released Jan. 13 by White. “After we awarded the [original] contract, the United States Mint realized that the vendor had accepted palladium industry sponsorship for prior surveys and reports.

“This was by no means the fault of the vendor, which we nonetheless believe to meet the requirement for a reputable firm. However, we believed that the vendor’s acceptance of palladium industry sponsorship would not be viewed as meeting the requirement for an ‘independent third party.’

“Accordingly, we decided to terminate the contract for the convenience of the government and resolicit the work with an appropriate conflict of interest provision.”

Legislation for the American Eagle Palladium Bullion Coin Act of 2010 was introduced by Rep. Denny Rehberg, R-Mont. The act requires that the Treasury secretary mint and issue 1-ounce .9995 fine palladium bullion coins with a $25 face value not more than one year after the submission of the study to the Treasury secretary and to Congress.

Public Law 111-303 grants the Treasury secretary authority to issue both Proof and Uncirculated versions of the palladium coins for collector sales in addition to the bullion coins. The Proof and Uncirculated coins would both be considered numismatic products to be directly sold to the public. The bullion coins would be sold through a network of authorized distributors.

The authorizing act also permits the finish of the Proof and Uncirculated versions to be changed annually following the inaugural release.

The act mandates the American Eagle palladium coins to have an obverse that is a high-relief rendition of the obverse of the Winged Liberty Head dime (1916 to 1945), and a reverse with a high-relief rendering of the reverse of the American Institute of Architects gold medal, introduced in 1907. Both the original coin and medal designs are the work of American sculptor Adolph A. Weinman.

Under Public Law 111-303, the Proof palladium version could be struck only at the West Point Mint in New York. Proof American Eagles struck at the West Point Mint bear the production facility’s W Mint mark.

According to Public Law 111-303, “should the Secretary determine that it is appropriate to issue proof or uncirculated versions of such coin, the Secretary shall, 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.”

An Uncirculated version of a palladium American Eagle could be produced at any of the remaining three Mint production facilities — Philadelphia, San Francisco and Denver.

The metal to be procured for the contracted production of planchets for the palladium coins would be purchased from “palladium mined from natural deposits in the United States, or in a territory or possession of the United States. ...”

Currently, the United States has only one primary palladium producer, the Stillwater Mining Co., which operates two mines in southern Montana.

U.S. Mint officials met face-to-face in Philadelphia in November with the Mint’s authorized purchasers to outline the provisions for a palladium bullion coin and receive feedback about the possibility of resurrecting production of platinum American Eagles, likely beginning no earlier than 2013. Palladium and platinum are among the platinum group metals.

American Eagle platinum bullion coins were last struck and sold by the Mint to authorized purchasers in November 2008, when sales of 800 half-ounce fractional coins were recorded.

At the November meeting in Philadelphia, representatives of the authorized purchasers identified demand for the 1-ounce platinum version, but recommended the Mint not produce fractional sizes, Mint officials said. ¦

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