What makes gold not reactive?
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Precious metals are rare and therefore valuable - but are they all suitable as investments? We show which precious metals are worth investing in for investors.
What are precious metals?
Precious metals are rare and therefore valuable raw materials. They differ from other base metals in that they do not corrode or only corrode very slowly in air - even hydrochloric acid does not attack precious metals. So they are relatively insensitive and for this reason they were already used in ancient times to make coins and jewelry. Today precious metals are used worldwide for processing in many areas of industry, technology and medicine and are also traded as investments.
What precious metals are there?
In the physical sense, the precious metals only include gold, silver and copper. The electronic band structure of the metals is used to classify them as precious metals: Precious metals have completely filled d-bands, which contribute little to reactivity and not at all to conductivity. This does not apply to platinum, for example; Classically, however, the platinum metals platinum, osmium, iridium, ruthenium, rhodium and palladium are also counted among the precious metals. Even mercury is sometimes referred to as a precious metal; however, this is controversial as it is more reactive than the other precious metals in many ways.
Which precious metals are best suited for investment?
With the exception of mercury, all of the precious metals mentioned are suitable as investment metals. However, they offer different levels of development potential. Mercury is liquid at room temperature and is also toxic, which is why it is not available in the typical bar and coin forms and is not traded as an investment.
Gold as an investment
Today gold is mainly extracted in mining. The world's largest gold producers are China, Australia, Russia, the USA, Canada and South Africa. Investors can buy gold in physical form (bars, coins) or in the form of securities (ETFs). Gold jewelry, on the other hand, is less suitable as an investment, as its price usually far exceeds the value of the material itself and may not be recovered if it is resold. In the past, gold has proven to be a crisis-proof investment with a historically stable price development and is considered a “safe haven” and the investment metal par excellence. The annual gold production has increased more than fivefold in the past 100 years, but at the same time demand has increased so much that the demand for gold in 2014 exceeded the supply by more than 1,200 tons.
Silver as an investment
Similar to gold, silver is mainly extracted in mining from silver ores, lead ores and copper ores. The largest silver producer is Mexico, followed by China, Peru, Australia and Russia. Anyone who wants to invest in silver can buy physical investment silver in the form of bars or coins or acquire ETFs. Unlike gold, however, silver is not primarily used as an investment, but for use in technology, medicine and industry. For this reason, the price of silver behaves differently than the price of gold in times of economic and financial crisis: If the economy falters, silver consumption falls and the price falls. As soon as the economy recovers, the price will pick up again. Because of its comparatively low price and because the demand for silver, especially in the growing Asian markets, should continue to rise in the future, silver is an insider tip among investment experts.
Copper as an investment
Copper occurs relatively rarely in its elemental form (“solid”) in nature and is mostly extracted from copper pyrites. It is mined primarily in Chile, China, Peru, the USA and Australia. There are also large copper deposits in Russia, Zambia, Canada and Mongolia. In contrast to gold and silver, copper is mainly traded by institutional investors in the form of certificates and options on the stock exchange. However, private investors can also purchase copper bars and copper granulate from some precious metal dealers. Due to its comparatively low value, however, copper has so far rarely been bought as an investment, rather the industrial use of the precious metal predominates. So copper as an investment still has a lot of potential.
Platinum as an investment
Platinum is the most valuable precious metal in the world and is much rarer than gold. It is mined primarily in South Africa and also in Zimbabwe and Montana (USA). The high price of platinum results, on the one hand, from its rarity and, on the other hand, from the high costs of the complex refining process that the production of pure platinum requires. Platinum is used, for example, in the chemical and electronics industries and especially in catalyst technology. Although platinum is still overshadowed by the more popular precious metal gold, due to its value it is quite suitable as an investment and is therefore bought by many investors to diversify their portfolios. The price development of platinum is comparatively volatile and the price has fallen significantly over the past five years. Historically, however, the precious metal offers positive performance. Platinum is available in the form of bars and coins as well as an ETF.
Summary: Precious metals as an investment
- The precious metals platinum, gold, silver and, to a lesser extent, copper are traded as investments.
- All precious metals are available in physical form as bars and coins (copper: bars and granules) as well as securities (ETFs).
- Gold is primarily traded as an investment metal, other precious metals are required and processed in many areas of technology and industry.
- The price development of gold as an investment metal is roughly anti-cyclical to the global economy, while the price development of the remaining precious metals as industrial raw materials roughly follows the economy.
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