Precious metals are naturally occurring metals that are relatively rare and more difficult to find than other types of metals. The rarity of precious metals has traditionally given them a high economic value throughout history. Today, precious metals are still valued for their use as investments, art, jewelry, and commodities.
Precious metals are not as reactive as base metals. They have a higher luster than base metals and are very ductile. Their rarity, luster, and ductile nature are what set them apart from regular base metals and allows them to command higher prices than base metals. The most well-known precious metals include gold, silver, platinum, and palladium.
Types of Precious Metals
Here is a list of precious metals:
Gold—Gold is probably the best known of the precious metals, and has been revered as a metal of high value and a standard form of currency throughout human history. It has also been used in decoration. Gold exists mostly underground, and is being mined at a rate faster than it can be replaced, making it a metal in high demand. The shiny yellow metal is used in a variety of industries today, from jewelry to electronics to medicine, to engineering.
Silver—While gold has traditionally been valued much higher than silver due to its high luster and malleability, silver is a valued metal because of its use in various industries and its similar beautiful properties. Like gold, silver has been used throughout human history as currency and as decoration, and is used in some of the same industries today that use gold, such as electronics and technology.
Palladium—Palladium is a very rare metal, indeed. It was only discovered in 1803, so it doesn’t have a use going back through human history as do gold and silver. It main uses are industrial, particularly in the automotive industry, where it is used in building catalytic converters. It is also used in medicine and electronics.
Platinum—Platinum is one of the most valuable of metals because it is so rare. So difficult is it to find that only a few hundred tons of it are mined annually. Its first known use was among pre-Columbian South Americans in the 16th century, when they used it for making jewelry. Today, platinum is used in the automotive, electronic, medical, and jewelry industries. It is highly resistant to corrosion, which makes it not only a precious metal, but a noble metal, as well.
Precious Metals Investing
Precious metals have such value in so many different industries that they are traded regularly on the world’s commodities markets. People in every country have a need for precious metals, and precious metals prices are constantly changing due to supply and demand.
Precious metals can be purchased by individuals as investments. This is usually done using a broker or a mint. Precious metals can be purchased in a wide array of forms, such as ETF funds, mutual funds, stocks, and in physical form. Those who choose to buy precious metals in physical form may buy them as coins, bullion, or bars in many different shapes and sizes, depending on the amount purchased.
When it comes to precious metals, inflation is a common watchword among investors. Buying them now, at their current prices, protects their value against future precious metals inflation, which makes them ideal investment vehicles. This is particularly true of gold, which is currently the most popular investment vehicle for precious metals due to its high value and ready availability.
How Are Precious Metals Priced?
As previously mentioned, supply and demand play a large part in how precious metals prices are determined. Precious metals prices are always changing because of this. Spot price is key to their pricing. The spot price is the price at which a precious metal can be purchased at a given time and place. It varies throughout the day and from place to place. It is the precious metal’s absolute value at that place and time.
This is different from its expected future value, which is part of buying and selling on the futures market. Money can be made by buying precious metals at a low spot price and then selling them again, sometimes on the same day of purchase, at a higher spot price.
How to Buy Precious Metals
Precious metals investing can be a good way to make fast profits or increase your savings for the future. Which one you want to pursue will depend on your investment goals; are you buying to sell again immediately, or to hold for the long-term?
You can buy and sell small or large amounts of precious metals regularly to make daily money. You can also buy small to medium amounts on a regular basis to hold as part of a retirement account or as a separate retirement account used just for precious metals investing.
The best precious metals to buy are gold and silver, because they are the ones used as currency. Depending on what you are buying, you will either need to talk to a stockbroker (for example, if you are buying stocks, bonds ETFs, or other non-physical versions of the metals), or a precious metals dealer (if you are buying physical precious metals). Proper research of the different methods of precious metals investing will help you discover all the ways you can earn a profit with gold, silver, platinum, and palladium.