Recent coverage of House bill H.R. 1698 has focused on the absurd suggestion that the bill would increase the fineness of the silver in certain U.S. dimes, quarters, halves and commemorative dollars from 90 percent to 91 percent, quoting publicity from the bill’s backers that falsely states that the 91 percent alloy is the “more common coinage silver” in world coinage. 

Theoretically this is a problem because the U.S. Mint must acquire its silver planchets from outside manufacturers, and, allegedly, nobody else uses the 90 percent alloy. 

Nobody else uses 91 percent either. The bill actually allows for an increase in the silver content, without specifying a new fineness.

However, a close reading of the deceptively-written bill reveals that its real purpose is to mandate the U.S. Mint to manufacture and sell a 1-ounce palladium coin. 

This purpose is well hidden. You have to take the existing law and plug in the deletions and additions written into the bill to see the actual changes.

As stated in the bill’s summary at www.congress.gov, the bill merely makes “technical revisions to the requirements for palladium bullion investment coins.” 

The so-called revisions actually require that the palladium coins be struck, despite the fact that a congressionally mandated study reported in 2012 that “It is unlikely that there will be sufficient demand for a U.S. Mint palladium bullion coin and such a program would most likely not be possible to undertake profitably.” 

The study may be read at http://www.usmint.gov/about_the_mint/PDFs/PO87001_PalladiumStudy.pdf

Title 31, U.S. Code, Section 5112, currently says this about a palladium bullion coin:

(v) Palladium Bullion Investment Coins. -

(1) In general. - Subject to the submission to the Secretary and the Congress of a marketing study described in paragraph (8), beginning not more than 1 year after the submission of the study to the Secretary and the Congress, the Secretary shall mint and issue the palladium coins described in paragraph (12) of subsection (a) in such quantities as the Secretary may determine to be appropriate to meet demand.

(2) Source of bullion. -

(A) In general. - The Secretary shall acquire bullion for the palladium coins issued under this subsection by purchase of palladium mined from natural deposits in the United States …

Plugging in the changes specified in H.R. 1698, which never once actually mentions the word “palladium,” we have a revised U.S. Code that says:

(v) Palladium Bullion Investment Coins. -

(1) In general. - The Secretary shall mint and issue the palladium coins described in paragraph (12) of subsection (a) in such quantities as the Secretary may determine to be appropriate to meet demand.

(2) Source of bullion. -

(A) In general. – To the greatest extent possible, the Secretary shall acquire bullion for the palladium coins issued under this subsection by purchase of palladium mined from natural deposits in the United States …

All reference to the 2012 marketing study, which found that the palladium coin program is unfeasible, is sneakily deleted, including a subsequent mention of it in paragraph 8. 

The secretary of the Treasury would be mandated to acquire U.S.-mined palladium bullion only “to the greatest extent possible,” and to make coins from that bullion and issue them regardless of the demand for them.

Canada launched a palladium Maple Leaf program in 2005. 

After striking over 60,000 coins in each of the first two years of the program, it greatly curtailed production in 2007 and skipped it entirely in 2008. 

Another 60,000+ were made in 2009 as the metals markets were roiled by the economic collapse of 2008, but since then the 2005–2009 production has been sufficient to meet the physical demand for palladium Maple Leafs.

The study predicted that the novelty of a U.S. palladium bullion coin program would probably sell 100,000 pieces in its first year, plus numismatic strikings, but that demand would soon fall sharply as happened with the Canadian program. In the meantime the sole U.S. mine that produces palladium would be greatly enriched. 

The Morgan dollar coinage of 1878–1904 is a classic example of the nation’s coinage system being exploited for the benefit of silver miners. Shall history repeat itself for the sake of one palladium miner?

Tom DeLorey has done just about everything in numismatics. He was on the staff of Coin World, became a leading expert in error coins and die varieties, was a grader and authenticator for the American Numismatic Association, and worked as a coin dealer in Chicago before retiring to Colorado.

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