The Investment Potential of Precious Metals: Gold, Silver, and Platinums

Precious metals are rare and organically arising metallic chemical elements. Typically, precious metals are fairly malleable and they possess a marked luster. The four most popular precious metals are gold, silver, platinum and palladium. In fact, each of these four substances has an International Standards Organization (ISO) 4217 currency code.

ISO 4217 and Investment
An ISO 4217 currency code means that gold, silver and other precious metals are factored into the banking and business communities; accordingly, an ISO 4217 currency code comes with an exchange rate and constantly updated pricing information. Clearly, then, precious metals, such as gold and palladium, are taken seriously by banks and businesses; precious metals are counted upon for monetary backing and future investment opportunities.

Uses and Etymologies
The most widely revered and valued precious metals are gold and silver. Coinage metals, such as gold and silver, are by definition coins crafted from an accepted percentage of gold or silver, along with a proprietary alloy blend. Gold bullion is actually the raw material from which the coinage metal is eventually crafted.

Numismatics and coin aficionados are quick to note that many of today’s precious metals come from one section of the periodic table. Gold and silver, interestingly, are counted as group 11 elements by chemists. Although group 11 encompasses cheaper metals, like nickel and zinc, the transition and precious metals in group 11 of the periodic table are mostly considered coinage metals.

Gold, silver, and even zinc are considered coinage metals because each metal in group 11 has special constitutional and chemical properties, such as malleability, that make these metals well-suited for currency. For instance, precious metals like gold and silver have properties that make them uniquely qualified for currency and monetary backing: fungibility, accepted value, resilience to counterfeiting, and high durability. The fact that the four, main precious metals – gold, silver, platinum, and palladium – are highly esteemed and tracked as ISO 4217 coded currency makes their continued value rather indisputable.

Platinum and Palladium
The platinum group encompasses the following metals: iridium, platinum, ruthenium, rhodium, osmium, and palladium. Palladium is perhaps a less known precious metal compared to gold or silver. In fact, palladium is both prized for its rarity and luster. Palladium is a malleable, soft, and silver-like precious metal that has been valued for over two hundred years. The price per ounce of palladium bullion has increased steadily over the last few months. (1) Indeed, the price of palladium per ounce has ballooned to an astonishing $750 in the United States. When the rich heritage and staying power of palladium – as illustrated by ISO 4217 currency code – is factored in, it makes ample sense to park money in the palladium market.
Monex Live Gold Prices

Gold Bullion
What makes a metal a precious metal? Simply put, if the metal is deemed rare and desirable by society and world markets, then the metal becomes precious and esteemed. Gold is one such metal. Gold has an ISO 4217 currency code and thousands of years of historical aesthetic and monetary appreciation. Gold, in fact, soared in price from July to November of 2012 – gold transitioned from a summer low of approximately $1500 per unit to an incredible $1800 dollars per unit in November!

The rise in gold value is even more dramatic when viewed on a five-year timeline. Over the last five years, gold has more than doubled in value. In 2008, gold was priced just under $1000 per unit; more recently, gold has been valued closer to $2000 per unit! Gold, perhaps more than other precious metals, is considered a solid form of actual wealth and a great return on investment! Unlike fiat paper, which is merely a claim on wealth (i.e., tertiary wealth), gold is valuable and fungible in its own right. Fortunately for investors, gold hasn’t reached a stagnation point yet: signs point to gold retaining or increasing its value over the next few months.
bullion bars
Silver: The New Gold?
Silver has a rich history throughout modern history as being an excellent holder of wealth and valuable coinage. Gold and silver may differ, however, in their respective uses. Gold is mainly employed as monetary backing whereas silver’s purposes are more variegated. For instance, silver is used for all of the following purposes: electrical conduction; HVAC applications; health care; and, finally, dental applications. An astonishing 95% of mined silver is estimated to have already been employed industrially. In many ways, the fact that 95% of mined silver is either already exhausted or irretrievable makes circulating silver that much more valuable. (4) There’s never been a better time to invest in silver!

The graphically depicted five-year trend line of silver shows a surge in value from 2008 to 2011 but then a slight dip from 2011 to the present. (4) The price per unit of silver is intended to rise as the market comes back to homeostasis. As of January 2013, the price of silver was approximately $31 per unit. Due to the many industrial uses of silver, and historical precedent of silver’s holding value, silver might be anticipated to rise more than ten dollars higher than its current value over the next 12 months.

Precious metal experts point to the recent global downturn, especially within the EU, as an illustration of silver’s slight decrease in worth of late. In fact, silver is anticipated to skyrocket in price over the next ten years as more industrial applications come to fruition, and as global markets stabilize. The investment opportunity for silver may even surpass gold due to silver’s industrial import and its limited supply. Remember, over 90% of the mined silver has already been used in industrial applications. Most of this silver is irretrievable; the investment implications from this reality are vast!

Palladium and Platinum
Palladium, like silver, is used extensively in industry. Over one half of all palladium goes into the catalytic convertors of cars. Since the 1970s, palladium has been used in cars to convert noxious gases like carbon monoxide into more inert substances, such as water vapor and nitrogen. Palladium is used in other industries as well, including: electronics, chemistry, dentistry, health care, water treatment, and jewelry.

Over one half of the world’s palladium supply stems from Russian repositories. Unfortunately, the exact amount of palladium coming out of Russia is kept clandestine, which has implications for the stability of palladium. Nonetheless, palladium has held its value relatively well over the last five years and, clearly, the volatility inherent in palladium trade has an enormous potential for investors.

For instance, palladium is today valued at around $750 dollars per unit, which is nearly $200 more than palladium’s value in August of 2012! (5) The latest figures on palladium from Monex indicate palladium is at a five-year apex right now! Although palladium’s value is difficult to estimate many years out, there’s no sign of palladium’s burgeoning potential letting up soon.

Platinum: More than Records
Platinum in Spanish speaking countries is transliterated as platina, or little silver. (6) Indeed, platinum has a similar luster and malleability to silver. Platinum is actually one of the most rare elements embedded in the earth’s crust. Platinum, perhaps unlike gold, offers an exquisite resistance to age and temperature erosion. That said, platinum is similar to palladium in its industrial uses, especially its use in catalytic convertors.

Platinum is almost as volatile as palladium, but platinum has demonstrated robust stability of late. That is, over the last two years, platinum has maintained a value of approximately $1500, which misses platinum’s five-year high of $2200 by only $700. Nonetheless, platinum has increased in value over the last few months. Overall, platinum may be a safer choice than palladium due to platinum’s wider and more transparent provenance.

That is, palladium is very volatile because it is secretly doled out by Russia; platinum, on the other hand, is less secretly distributed in Russia. Platinum was discovered in the Ural Mountains centuries ago and, since that time, platinum has made its way into Russian currency. For these reasons, platinum is a relatively abundant and stable precious metal. Over the last three months platinum has soared in value. Perhaps platinum and palladium are more monetarily volatile than gold, which has always remained very valuable, but the platinum line of precious metals presents a tremendous upside to potential investors.

Precious Metals: Tomorrow’s Wealth
Conventional forms of currency, such as fiat money and the US dollar, are tied to primary wealth. In other words, without resources like land, oil or gold, fiat money is not worth very much. Investing in precious metals, therefore, makes a lot of sense.

Gold’s value, for instance, has been steadily escalating over the last ten years. Can the same be said of the US dollar? The answer is no. In fact, the US dollar, according to some economists is depreciating. Any shrewd businessman understands that depreciation is antithetical to solid investment.

Now is the ideal time to invest in gold, silver, platinum and palladium. Each of these precious metals, however, shows different investment profiles. Palladium, due to the secrecy of its distribution, is extremely volatile in price. Silver, due to its historical usages in industrial applications, is exceedingly prized. Investors would be wise to consider all of the factors outlined above before choosing one precious metal over another, although each has its pros and cons.

Works Consulted

The Investment Potential of Precious Metals: Gold, Silver, and Platinums
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