Precious Metals
Precious metals are rare, naturally occurring metallic elements that have high economic value. They are often used for various industrial, investment, and decorative purposes. The most well-known precious metals include gold, silver, platinum, and palladium. Here’s a brief overview of each:
Gold
Properties: Gold is known for its distinct yellow color, malleability, and conductivity. It doesn’t tarnish or corrode.
Uses: Gold has been used for jewelry, coins, and decorative purposes for centuries. It also has industrial applications in electronics, dentistry, and aerospace.
Silver (Ag):
Properties: Silver is a white, lustrous metal with excellent electrical conductivity. It’s more reactive than gold and can tarnish over time.
Uses: Silver is widely used in jewelry, coins, and tableware. It also has various industrial applications, including in photography, electronics, and medical instruments.
Platinum (Pt):
Properties: Platinum is a dense, silvery-white metal with a high melting point. It is corrosion-resistant and has excellent catalytic properties.
Uses: Platinum is often used in jewelry, particularly for engagement and wedding rings. Its primary industrial applications include catalytic converters in automobiles, chemical processing, and electronics.
Palladium (Pd):
Properties: Palladium is a silvery-white metal with similar properties to platinum. It has good corrosion resistance and is a strong catalyst.
Uses: Palladium is primarily used in catalytic converters for automobiles, as well as in electronics, dentistry, and jewelry.
Investment: Precious metals are also popular as investment assets. Investors often buy physical forms of these metals, such as bullion bars or coins, or invest in financial instruments like exchange-traded funds (ETFs) that track the value of precious metals. These metals are considered a hedge against inflation and economic uncertainty.
It’s important to note that the prices of precious metals can be influenced by various factors, including economic conditions, geopolitical events, and supply and demand dynamics. Additionally, the market for precious metals can be volatile, making them subject to price fluctuations.
GOLD
Gold has been coveted for centuries for its unique blend of rarity, beauty, and near indestructibility. The Egyptians mined gold before 2,000 BC. The first known pure gold coin was made on the orders of King Croesus of Lydia in the sixth century BC.
Following the California gold discovery of 1848, North America became the world’s major gold supplier. From 1850 to 1875, more gold was discovered here than in the previous 350 years. By 1890, the gold fields of Alaska and the Yukon were the principal sources of supply and, shortly afterwards, discoveries in the African Transvaal indicated deposits that exceeded even these. Today, the principal gold-producing countries include South Africa, the United States, Australia, Canada, China, Indonesia, and Russia.
Gold is found in nature in quartz veins and secondary alluvial deposits as a free metal. Because it is virtually indestructible, much of the gold that has ever been mined still exists above ground in one form or another.
Gold is a vital industrial commodity. Pure gold is one of the most malleable and ductile of all the metals. It is a good conductor of heat and electricity. The prime industrial use of gold is in electronics. Another important sector is dental gold which has been used for almost 3,000 years. Other applications for gold include decorative gold leaf, reflective glass, and jewelry.
In 1792, the United States first assigned a formal monetary role for gold when Congress put the nation’s currency on a bimetallic standard, backing it with gold and silver. Under the gold standard, the U.S. government was willing to exchange its paper currency for a set amount of gold, meaning the paper currency was backed by a physical asset with real value.
However, President Nixon in 1971 severed the convertibility between the U.S. dollar and gold, which led to the breakdown of the Bretton Woods international payments system. Since then, the prices of gold and of paper currencies have floated freely. U.S. and other central banks now hold physical gold reserves primarily as a store of wealth.
SILVER
Silver has attracted people’s attention for thousands of years. Relics of ancient civilizations include jewelry, religious artifacts and food vessels formed from the durable, malleable metal. In 1792, silver assumed a key role in the United States monetary system when Congress based the currency on the silver dollar, and its fixed relationship to gold. Silver was used for the nation’s coinage until its use was discontinued in 1965.
Silver futures are hedging tools for commercial producers and users of silver. They also provide global price discovery and opportunities for portfolio diversification. The futures contract provides access to the highly liquid metal market, benefits of central clearing and price transparency.
PLATINUM
The word “platinum” is derived from the Spanish word platina meaning silver. Platinum is a relatively rare, chemically inert metallic element that is more valuable than gold. Platinum is a grayish-white metal that has a high fusing point, is malleable and ductile, and has a high electrical resistance. Chemically, platinum is relatively inert and resists attack by air, water, single acids, and ordinary reagents. Platinum is the most important of the six-metal group, which also includes ruthenium, rhodium, palladium, osmium, and iridium.
Platinum is one of the world’s rarest metals with new mine production totaling only about 5 million troy ounces a year. All the platinum mined to date would fit in the average-sized living room. Platinum is mined all over the world with supplies concentrated in South Africa. South Africa accounts for nearly 80% of world supply, followed by Russia, and North America.
Because platinum will never tarnish, lose its rich white luster, or even wear down after many years, it is prized by the jewelry industry. The international jewelry industry is the largest consumer sector for platinum, accounting for 51% of total platinum demand. In Europe and the U.S., the normal purity of platinum is 95%. Ten tons of ore must be mined and a five-month process is needed to produce one ounce of pure platinum.
The second major consumer sector for platinum is auto catalysts, with 21% of total platinum demand. Catalysts in autos are used to convert most vehicle emissions into less harmful carbon dioxide, nitrogen, and water vapor. Platinum is also used in the production of hard disk drive coatings, fiber optic cables, infrared detectors, fertilizers, explosives, petrol additives, platinum- tipped spark plugs, glassmaking equipment, biodegradable elements for household detergents, dental restorations, and in anti-cancer drugs.
COPPER
Copper, one of the oldest and easily mined commodities. its the world’s third most widely used metal after iron and aluminum. Five thousand years ago, people learned to alloy copper with tin, producing bronze and giving rise to a new age.
Copper is one of the most widely used industrial metals because it is an excellent conductor of electricity, has strong corrosion-resistance properties, and is very ductile. It is also used to produce the alloys of brass (a copper-zinc alloy) and bronze (a
copper-tin alloy), both of which are far harder and stronger than pure copper. Electrical uses of copper account for about 75% of total copper usage, and building construction is the single largest market (the average U.S. home contains 400 pounds of copper).
Copper is biostatic, meaning that bacteria will not grow on its surface, and it is therefore used in air-conditioning systems, food processing surfaces, and doorknobs to prevent the spread of disease. Copper is unique among other metals because it can establish the state of economic growth in a given country.
For example, if the demand for copper is increasing, then the economy is expanding. In fact, the World Bureau of Metal Statistics has cited an 8% increase in copper consumption during 2010 alone—most notably in Asia—and since then, the demand has continued to climb. Because copper is so vital for construction and electric wiring, it is no wonder this precious metal maintains its significance alongside silver and gold in futures investing.
PALLADIUM
Palladium it is currently the most valuable of the four precious metals. The driving force behind this impressive price climb is a combination of the uses palladium has, and how rare it is.
Palladium is slightly more reactive than some of the other PGMs (platinum group metals), and will dissolve in nitric acid, sulfuric acid and hydrochloric acid. Palladium is the softest, least dense, and has the lowest melting point of all the PGMs. All of these properties help make palladium a unique, and highly useful, precious metal.
The biggest use of palladium by a large margin is in the automotive industry and specifically catalytic converters. Palladium acts as an excellent catalyst and helps turn some of the polluting compounds expelled as part of an internal combustion engine into less harmful components.
These compounds – such as hydrocarbons and nitrogen – are highly damaging to humans and the environment, and have been subject to strict regulations in recent years. For years platinum was the metal of choice for manufacturers but, as prices climbed, they turned to palladium as the viable alternative.
Palladium coins have been issued since 1966, and today a number of mints and refiners produce coins and bars made from this extremely valuable metal. Although yellow gold is traditional for jewelry, white gold is also a popular choice, and palladium is one of the metals that is used in white gold alloys.
Palladium is also used for jewelry in purer forms, usually at 950 fineness due to its softness. In the electronics industry, palladium is used for electrical contacts, in ceramic capacitors and soldering materials.
In dental amalgams, small amounts of palladium are used to help fight against corrosion and increase the luster of the filling. This is typically done at less than 0.5% palladium; with mercury, silver, tin and copper commonly making up the rest.
Similar to silver, palladium salts are often used as a light-sensitive material used in printing. Palladium salts produce a unique tonal quality that was used extensively in the late 19th century, and today are used in artistic appreciation of the style.
Palladium’s ability to absorb hydrogen has seen it used to purify, and safely store, the highly volatile element hydrogen. This is useful for fuel cells; hydrogen is a highly efficient fuel source and finding ways to store large amounts safely could help power technologies of the future. In particular, nano-particles of palladium have been found to be even more efficient in absorbing hydrogen, and research is ongoing into how this can be used.