Precious Metal Bullion
A precious metal is a rare metallic chemical element of high economic value.
Chemically, the precious metals are less reactive than most elements, have high
luster, and have higher melting points than other metals. Historically, precious
metals were important as currency, but are now regarded mainly as investment and
industrial commodities. Gold,
silver, platinum and palladium each have an ISO 4217 currency code.
The best-known precious metals are gold and
silver. While both have industrial uses, they are better known for their
uses in art, jewelry, and coinage. Other precious metals include the Platinum group
metals: ruthenium, rhodium, palladium, osmium, iridium, and platinum, of which
platinum is the most
The demand for precious metals is driven not only by their practical use, but also
by their role as investments and a store of value.
Palladium was, as of September 8 2006, valued ($326.00 USD per ounce) slightly
over half the price of gold ($608.70 USD/ounce), and platinum ($1,222.00 USD/ounce)
at around twice that of gold. Silver is substantially less expensive ($12.11 USD/ounce)
than these metals, presently at 1/50 the price of gold, but is often traditionally
considered a precious metal for its role in coinage and jewellery.
Precious metals in bulk form are known as bullion, and are traded on commodity markets.
Bullion metals may be cast into ingots, or minted into coins. The defining attribute
of bullion is that it is valued by its mass and purity rather than by a face value
as money. Many nations mint bullion
coins, of which the most famous is probably the
gold South African Krugerrand.
Although nominally issued as legal tender, these coins' face value as currency is
far below that of their value as bullion. For instance, the United States mints
a gold bullion coin (the Gold Eagle) at a face value of $50 containing 1 troy ounce
(31.1035 g) of gold — as of January 2006, this coin is worth about $550 as bullion.
Bullion coins' minting by national governments gives them some numismatic value
in addition to their bullion value, as well as certifying their purity. The level
of purity varies from country to country, with some bullion coins of as pure as
99.99% available, such as the
Canadian Gold Maple Leaf. Note that a 100% pure bullion is not possible,
as absolute purity in extracted and refined metals can only be asymptotically approached.
One of the largest bullion coins
in the world is the 10,000 dollar Australian Gold Nugget coin minted in Australia
which consists of a full kilogram of 99.9% pure gold; however China has produced
coins in very limited quantities (less than 20 pieces minted) that exceed 260 troy
ounces (8 kg) of gold.
Gold as an investment and silver as an investment are often seen as a hedge against
both inflation and economic downturn.
Silver coins have become popular with collectors due to their relative affordability,
and unlike most gold and platinum issues which are valued based upon the markets,
silver issues are more often valued as collectables, far higher than their actual
PRECIOUS METAL STATUS
A metal is deemed to be precious if it is rare. The discovery of new sources of
ore or improvements in mining or refining processes may cause the value of a precious
metal to diminish.
An interesting case of a once-precious metal that is now common is that of aluminum.
Although aluminium is one of the most commonly occurring elements on Earth, it was
initially found to be exceedingly difficult to extract from its various ores. This
made aluminium more valuable than
gold. Bars of aluminium were exhibited alongside the French crown jewels
at the Exposition Universelle of 1855, and Napoleon III was said to have reserved
a set of aluminium dinner plates for his most honored guests. Over time, however,
the price of the metal gradually dropped; the discovery of the Hall-Héroult process
in 1886 caused the high price of aluminium to permanently collapse.
Information taken from Wikipedia,
the free encyclopedia
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