In line with the Royal Society of Chemistry, there are 94 metals. Of all of them, gold is probably essentially the most well-known. It could actually be found on the periodic table with the symbol “Au.” Nonetheless, unlike a lot of the metals listed on the periodic table, gold is taken into account a “precious” metal.
Gold is one among the eight precious metals. The opposite seven precious metals are silver, platinum, palladium, rhodium, iridium, osmium and ruthenium. Most metals don’t make the cut, including well-known ones like bronze, steel and iron.
So why are some metals considered precious while others aren’t? These are a number of the aspects that each one precious metals have in common.
Economic value
Every precious metal has significant economic value which makes them more desirable than other resources. The Oxford Dictionary defines precious as something that’s “of great value,” and precious metals derive intrinsic value partially as a consequence of their economic usefulness.
As an illustration, gold is utilized in services like jewelry, automobiles, smartphones and dentistry. Platinum can also be utilized in jewelry and automobiles. You may as well find that precious metal in jet engine fuel nozzles and medical devices. Silver has business applications starting from solar photovoltaic cells and EVs to aerospace and electronics
Many industries depend on precious metals to offer goods and services. Nonetheless, some metals like steel and copper also provide economic value despite not being considered precious. Economic value is barely one among the components that each one precious metals have in common.
While each precious metal holds intrinsic value, gold is the Most worthy. That’s because gold — along with its manifold industrial application — is an efficient hedge against inflation, providing it with economic value beyond business demand. The price of gold increases as fiat currencies lose their purchasing power. In consequence, some investors use gold and other precious metals to guard their wealth as a substitute of counting on paper money.
Rarity
Precious metals aren’t only precious due to their economic impact. These metals are quite rare, and that scarcity makes them more worthwhile. Prices can reach astonishing levels for rare items, equivalent to a limited Honus Wagner T206 baseball card that sold for $7.25 million in 2022.
Gold’s not going to succeed in $7.25 million per troy ounce. Nonetheless, this instance underscores how some assets gain value based on their rarity. Rarity — or the shortage of it — is one among the explanations that copper isn’t a precious metal. Copper makes up roughly 50 parts per million (ppm) within the Earth’s crust. Meanwhile, gold only makes up 0.004 ppm within the Earth’s crust.
Rarity creates a meaningful gap between the 2 metals. Gold is 12,500 times rarer than copper, which explains why it’s more worthwhile. Copper may change into more rare in the long run because it’s a very important component of EVs and has a wide-range of commercial applications. Nonetheless, it could possibly take a few years before copper becomes a rare metal.
Naturally occurring
Gold is gold — you’ll be able to’t make it in a lab. This distinction applies to all precious metals, and it’s one other separator between precious metals and the remainder. That’s why steel, despite its many uses, is just not a precious metal.
Steel is just not a naturally occurring metal. It requires iron and carbon so as to be produced. Steel is subsequently an alloy between two naturally occurring elements: iron and carbon.
It’s very difficult and expensive to create naturally occurring metals in labs. Typically, people should wait for brand spanking new discoveries or metals to be produced naturally to extend supply.
Civilizations can proactively increase their steel reserves, but they have to find gold naturally to extend gold reserves. Returning to copper, the commercial metal is of course occurring. Nonetheless, as a consequence of its abundance, it isn’t considered precious.
Chemically inert
All precious metals are chemically inert, which suggests they can’t be modified by the environment. As an illustration, zinc is just not a precious metal since it reacts with hydrochloric acid. That response creates zinc chloride and hydrogen gas.
Precious metals like gold and silver cannot react and bond with other metals. Once gold is gold, it should at all times remain as such. And while some gases like hydrogen and nitrogen are chemically inert, they will not be metals and subsequently not considered precious.
Why precious metals present a possibility for investors
Investors search for assets that appreciate over time. While stocks and real estate have gained value over time, gold has delivered positive returns for millennia. The stocks of huge tech firms, for instance, can eventually lose momentum and generate less enticing returns for investors. Real estate’s value may also fluctuate based on a property’s location, macroeconomic indicators and other aspects.
Alternatively, precious metals like gold can gain value even when stocks and real estate enter corrections. The most important catalysts for gold are rising inflation, lower rates of interest and geopolitical uncertainty. Due to that, precious metals are capable of rally during a shaky economy — something few asset classes are able to doing. Moreover, stocks and gold don’t have correlated returns, meaning the dear metal can perform well during bull and bear markets for stocks.
Moreover, precious metals might be more alluring to those nearing or entering retirement because they supply a method of portfolio stability. While every investment has its own set of risks, precious metals are essentially the most time-tested assets available.