Understanding Precious Metals
What Are Precious Metals?
Precious metals are rare metallic elements with high economic value. Their worth is attributed to their scarcity, industrial applications, and use as a store of value, much like currency. The most well-known precious metals include:
- Gold
- Silver
- Platinum
- Palladium
What Defines a Precious Metal?
A metal is considered precious primarily because it is rare. Unlike paper currency, which can be printed in unlimited quantities by governments, precious metals are extracted from the Earth’s crust through mining. The rarity of these metals is quantified in parts per million (ppm) in the Earth's crust. For instance:
- Gold: 0.004 ppm
- Platinum: 0.005 ppm
- Silver: 0.0075 ppm
In contrast, aluminum, the most abundant metal in the Earth’s crust, comprises about 7% of its mass, which is why it isn’t classified as a precious metal. Historically, aluminum was more expensive than gold due to the difficulty of refining it until the late 19th century, when advancements in production made it more affordable.
Demand and Market Value
The value of precious metals is influenced by both their rarity and demand. Innovations in mining and refining techniques can affect their market price. For example, aluminum became cheaper after metallurgists developed more efficient production methods.
Precious metals like gold, silver, and platinum are often traded in bulk as bullion and are valued for their high purity (at least 99.5% pure) and form (bars or ingots). Historically, these metals were used as currency, and they continue to be used in coinage today. Each of these metals has an internationally recognized currency code under ISO 4217.
Chemical and Physical Characteristics
Precious metals share several key physical and chemical properties:
- Corrosion Resistance: They are highly resistant to corrosion.
- High Melting Points: They have high melting points and hardness.
- Periodic Table Proximity: Many precious metals are found close to each other on the Periodic Table.
However, there are differences within the group. For example, palladium and platinum are known for their softness and ductility. Additionally, six precious metals—palladium, platinum, rhodium, osmium, iridium, and ruthenium—are classified as Platinum Group Metals (PGMs) due to their similar chemical characteristics.
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