What Are Precious Metals?

what are precious metals

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Do you ever pass by a rock or mineral and wonder if it can turn a profit? Finding a precious metal can transfer into a good amount of cash.

So, what are precious metals? Precious metals are rare minerals that are hard to come across. They are an example of physical metal.

This article will teach you the basics about precious metals, the benefits, and what types of valuable metals are currently in exchange.

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What Are Precious Metals?

The rarity of precious metals gives them a high economic value for art, jewelry, and other commodities. Precious metals are not the same as base metals.

A precious metal is not a common metal. These minerals have a higher luster and valuable nature that commands a higher price in auction shows.

The most popular precious metals are gold and silver.

Why Precious Metals Are Important

Aside from being the owner of beautiful stones, there are other benefits to collecting precious metals.

Inflationary protection

A precious metal item has intrinsic value, carries no credit risk, and isn’t affected by inflation. It’s rare to copy or print precious metals because of their limited numbers.

Investment portfolio

A wide variety of precious metals can diversify any investment portfolio you may have with financial institutions and offer protection against volatile asset forms.

Assets will always change to the economic trend, but the price of rare metals remains stable.

What Are The 5 Precious Metals?

There are five well-known precious metals in the world. Throughout history, these precious stones remained at high value and represented wealth.

Gold

Gold is the granddaddy of all minerals. Everyone recognizes this yellow metal as a symbol of riches, but it can also transform into coins, ingot blocks, and bullion. 

Gold is a malleable metal that doesn’t rust or corrode and can conduct heat and electricity. The value of gold depends on the shifting market.

Silver

Silver fluctuates between being a valued bluish metal and a source with many applications. This fluctuation makes gold more valuable, but silver can compete in rarity when it wants.

Industries take advantage of the metal and exploit the demand for medical products, electric applications, batteries, circuit boards, and other items made of silver.

Platinum

Platinum has a slightly higher rarity than gold because it is hard to come by. Automotive industries frequently use platinum in their converter products to reduce carbon emissions.

Platinum group metals are produced in a handful of countries around the world and have a heavily dependent supply and demand in the market.

Palladium

Not as well-known as the other precious metals, palladium remains an essential metal for manufacturing processes.

This abundant element is mined in North America and several parts of Europe, providing use for solar energy panels and catalytic converters to speed up chemical reactions.

Rhodium

Rhodium is another precious metal often associated with a rarity similar to platinum and palladium. It is a desirable metal that can convert nitrogen oxides into harmless gases.

Not only is it good for applications across electronics, but rhodium helps as a glass strengthening alloy and protective coating for any article of jewelry made.

Examples of Precious Metals

For centuries, precious metals have carried a central role in the global economy. Their rarity shaped the concept of investors and financial assets.

Nowadays, precious metals exist for cosmetic purposes, but here are a few examples that shine on their historical importance.

The Gold Standard

Before 1973, the US currency system was dependent on The Gold Standard. Paper money was linked to large amounts of gold and several tonnes of gold ore.

Back then, people hoarded gold out of fear of the unstable bank systems and rates of returns for equity dropping.

The Silver Standard

When Great Britain came over and made gold more expensive, there was a shift in the currency system towards silver. It was an abundant metal more accessible than gold and created more bullion and coin.

Tonnes of silver ore were exchanged worldwide and offered financial security for many people.

Tips About Precious Metals

Investing in precious metals can serve you well in the long run, but the process can be challenging.  

Here are some tips you can use when beginning to invest in precious metals.

Dollar-cost average

With the dollar-cost averaging method, you have the choice of either investing the money you earn per paycheck or engaging in a year-long purchase.

The benefit is reducing the downside risk and buying at the annual market price average. Precious metal prices constantly fluctuate, so it’s better to stay on top of the game.

Exchange-Traded Funds (ETFs)

ETFs are becoming a global trend for investors and deliver promising results. Unlike stocks, ETFs give you a bundle of funds to use through the latest investment apps.

The value of an ETF measures all the assets and investments stored inside, such as commodity investments like gold, silver, or platinum bullion.

Hedging

It is never a good idea to drop all your money in one trade. The act of hedging ensures that your money is protected when investing. 

In the worst of economic times, gold and silver are known to stay at a steady price, tempting investors to buy these metals before a potential collapse.

Precious Metals IRA

Look into companies that can hold onto your precious metals in an IRA. These places are known to be secure with any amount of stones for a nominal storage fee.

Summary

Precious metals are an ideal investment choice that can provide you with an extra source of income. They are risk-free from inflation and do an amazing job building up your investment portfolio.

If you are considering investing and joining the trade, you can do yourself a favor and start scouting for precious metals.

FAQ’s

Are you still wondering about precious metals? Here are some additional questions people tend to ask.

Eight metals are considered precious. They are platinum, gold, iridium, silver, palladium, osmium, ruthenium, and rhodium.

Precious metals are considered by their scarcity level, hedge against inflation, use in industrial processes, and store of value.

Osmium is the rarest precious metal in the world. There are about 44 tonnes in existence and produce a toxic oxide when extracted.

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