Precious Metals

Precious metals are relatively rare chemical elements with an associated financial worth. They tend to be ductile with a nice luster, and they usually react less to other elements. In history, many precious metals were used the same way paper money is used today, which is why they have an ISO 4217 currency code. Now , however, precious metals are valued as an investment, or for industrial purposes.

Among the most popular metals are gold, platinum, silver, and palladium. Gold and silver are still made and traded in the form of coins, but these are mostly a form of investment. Their worth is calculated in terms of the amount of precious metal it contains as well as their numismatic value.  Both gold and silver have industrial uses as well, but their main use is for jewelry, art, and coins.

An interesting fact about precious metals is that its value can be affected by technology. Back in the early 1900s, aluminum was considered a precious metal. While it was not rare (in fact, it is the third most common-found element on the crust of the Earth), it was so hard and expensive to refine it that it became more valuable than gold or silver. That is the reason why important guests of Napoleon were given aluminum cutlery to dine with, and the Washington Monument’s capstone is made of pure aluminum. If you had aluminum siding in those days, you would have to be extremely wealthy.  By 1882, however, the price of aluminum started to drop because it became easier to extract. By 1886, with the advent of the Hall–Héroult process, it was no longer a precious metal. Today, aluminum is an important element with many industrial uses, but it is readily available and low cost.

Bullion and bars

In most cases, precious metals are available in bulk in the form of bullion or bars. Gold and silver bars are particularly common, and they have to at least be 99.5% pure. Precious metals are commonly measured in terms of troy ounces.  A troy ounce (oz t) is exactly 31.1034768 grams. One troy pound is equal to 12 troy ounces.

Bullion and bars are available in many weights. When you are in the market for precious metal investments, you can choose the weight that fits your budget. A silver bullion coin is exactly one troy ounce with 99.9% purity.  A standard gold bar (Good Delivery bar) is 400 oz t (about 12.4 kg) with a minimum 99.5% purity. Platinum bars are also available, and are more expensive per troy ounce than gold or silver. The value of these coins or bars will depend on the current market value of the metal, which fluctuates from day to day.  However, the value of the bar, bullion, or coin is dependent not only on its weight but also its purity.

In most cases, investment metals are in the form of near purity (99.9%). With coins, however, it can vary depending on the issue.  The purest example of this is the Canadian Gold Maple series, which is 99.999% gold. It is economically impossible to get anything 100%, because it costs a lot to purify a nearly pure metal. A standard British gold sovereign, on the other hand, has 7.322381 grams of pure gold alloyed with copper, bringing the gold purity to 91.6%. It is therefore important to know these distinctions if you are going to buy gold coins as an investment. In most cases, the value of precious metal coins exceed that of its face value. For example, the British gold sovereign has a face value of one pound sterling (£1), but its gold content (not including the numismatic value) brings that closer to £200. An American Double Eagle (90% gold, total weight of 1.0750 oz t or 33.4362 grams).has a face value of $20, but its market value (again, not including its numismatic value) is about $1,200.

Investing in precious metals

Precious metals are typically a hedge against inflation, because they usually have a stable price that increases slowly but surely. You can invest in precious metals, especially gold, silver, and platinum, in many different ways.

The most obvious, of course, is jewelry. Gold, silver, and platinum are the most common metals used for engagement rings and wedding rings, many of which are handed down from generation to generation. Other investment pieces are necklaces, bracelets, brooches, and earrings. Some of these pieces have a value over and above the value of any gemstones that may be incorporated and the market value of the metal itself. In many cases, the age, design, and issue of the piece i.e. limited edition pieces increase the value of the piece.  In most cases, however, investing in good quality jewelry made of precious metal for its actual market value is safe. Selling gold jewelry for cash is a cinch. You can sell any kind of jewelry with precious metal at any time whenever the need arises, so it is almost as good as cash.

Other forms of precious metal investments in physical form are coins, bars, and bullions. You can buy certificates so you don’t have to keep it in a safe somewhere. You can also invest in the commodities markets, where you speculate on the value of it going up or down, much like investing in stocks in a company.

For most people, however, holding actual gold, silver, or platinum assets is the way to go, especially jewelry. Aside from its investment value, they also have esthetic value.

Conclusion

Precious metals are a good investment in any form. They are stable against inflation, and if you have them in the form of jewelry or other physical form, they are really easy to convert to cash on the spot. Pawnshops are always an option if you don’t want to sell outright if you want cash for gold. All you really need to do is to find a reliable company that buys all kinds of precious metals and it is just a matter of knowing the fair price. Do your research before buying and selling precious metals, and you should have no problems with it.