There is some debate about this between fans of gold and silver, however, most precious metals investors would agree that gold is the king when it comes to metals. It has the longest history of use as a store of value, is universally recognised, extremely robust, is used in industry and is also highly scarce. Although there are historical references to gold going back more than six thousand years, it has only been used as money since around 600 BC, where it was first made into coins in Asia Minor. We owe more to precious metals, and specifically to gold than we are aware. Our entire market economy evolved from that impulse several thousand years ago, to use gold as an efficient store of value and medium of exchange as opposed to barter. Our entire conception of relative prices began by having a standard like gold against which all other goods could be priced. Even after paper money replaced gold as a medium of exchange, that paper was only seen as a receipt redeemable in gold coin or bullion. If you think about it, even though our paper money is no-longer backed by gold, that same impulse, of something scarce and precious somehow backing our economy, is still with us. Even now, as we enter into the new digital economy, we see cryptocurrencies tapping into that same impulse of limited supply, to somehow guarantee the value of these emerging assets.
The five most precious metals in the world are rhodium, platinum, gold, ruthenium and iridium. Of these, rhodium, ruthenium and iridium are all members of the platinum family and are primarily used in industry. Of these five, only gold has a long history of use due to how malleable it is. The other four have far higher melting points, which means that they can only be worked with more modern techniques. At EverFX we offer trading facilities on gold, silver, platinum, palladium and copper.
Precious metals are regarded as a good investment for a number of reasons. They are scarce, meaning that they hold their value. For this reason they are used as a hedge against the instability of the economy or of traditional financial instruments like stocks. They are also durable, meaning that they cannot be easily damaged or destroyed. This adds to their desirability as a store of value, because their scarce, indestructible nature means that they can hold their worth over very long periods of time. They are also highly divisible, meaning they are easy to subdivide into smaller units, like bars and coins, which can be used to account for both very large and very small sums. Finally, they are difficult to counterfeit, meaning that there are certain easy ways to help you determine whether a gold coin, for instance, is real or not. All the above features, when combined together make precious metals, and gold in particular, a great investment in certain situations, particularly when traditional markets are beginning to look tentative. Gold also tends to be inversely correlated to the performance of the US dollar, making it the ideal safe haven asset because when the US dollar goes down and your other investments are underperforming, gold tends to rise, allowing investors to hedge against financial instability.
Rhodium is by far the most expensive metal in the world. It is a highly rare, silvery white metal that is very hard and incredibly resistant to corrosion. The earth’s crust contains only 0.001 grams of rhodium per ton. It is also highly valued in heavy industry for its ability to withstand corrosion as well as its high melting point. It is used in platinum and palladium alloys in order to strengthen them and improve their corrosion resistance. Owing to how difficult it is to work with it is very rarely made into solid jewelry, however it is used as a plating to gold and silver jewelry due to its highly reflective white surface. Perhaps somewhat surprisingly, it is primarily used as a catalytic converter in automobile exhausts where it turns highly damaging unignited hydrocarbons into less poisonous gasses. Rhodium reached its all-time high in price in 2007, when it sold for around $350,000 per kilogram. At the time it was valued at eight times the price of gold, four hundred and fifty times the price of silver and twenty seven thousand, two hundred and fifty times the price of copper.
Different precious metals are important for different reasons. Gold, for instance, which is possibly the most important precious metal, is universally recognised as being valuable. Unlike many of the other industrial precious metals, such as platinum and palladium, gold is used by a far wider percentage of the global population. Whether as jewelry or store of value, gold has long crossed over into possessing cultural value and significance. Silver too, which isn’t as scarce or as precious as gold nevertheless has a history of use that runs parallel to gold’s. Copper on the other hand, has an even longer history of use than gold, going back some ten thousand years. Copper has traditionally been used in industrial applications, for tools, weapons and shields during the bronze age and as an industrial metal today it is still used in roofing, piping, sheathing and plating. Gold may still be widely used in industry, but it’s importance is declining decade by decade as it gradually comes to be replaced with cheaper, less scarce alternatives. Industrial precious metals such as platinum and palladium are important due to certain unique properties they possess that make them central to the production of certain key goods, such as automobile catalytic converters.
A common measure of the relative scarcity of precious metals is in parts per billion and is taken by measuring how many kilograms of a metal can be found per billion kilograms of earth. Silver, for example, comes in at 75 parts per billion. Gold and platinum are much rarer but also much closer to one another in terms of scarcity, with platinum being 5 parts per billion and gold 4 parts per billion. Osmium, a particularly rare metal that is part of the platinum family comes in at 1.5 parts per billion and other platinum group members come in at around 1 part per billion.
One of the most profitable precious metals trades ever made wasn’t actually intended as a precious metal trade at all. Incredibly, it was actually devised as an indirect way to increase freight business and only became a massively profitable metals trade when the government caught on to the scheme. In the late 1800’s when the United States was still on the gold standard, Jay Gould, a speculator and railroad developer who became the 9th wealthiest man in American history, planned to raise the price of gold, which he believed would cause farmers to sell their wheat and lead to mass transportation of these stores across the country on his railroads. He managed to cause gold to appreciate by some 30% before the US government stepped in and proceeded to dump $4 million worth of gold onto the market. The market dropped, but Gould managed to walk away with an estimated $10 million in profit from the trade.