Precious metal

Last updated
Gold nugget GoldNuggetUSGOV.jpg
Gold nugget
Assortment of precious metals Edelmetalle.jpg
Assortment of precious metals

Precious metals are rare, naturally occurring metallic chemical elements of high economic value. Chemically, the precious metals tend to be less reactive than most elements (see noble metal). They are usually ductile and have a high lustre. 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.

Contents

The best known precious metals are the coinage metals, which are gold and silver. Although 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 widely traded. [1] 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. Historically, precious metals have commanded much higher prices than common industrial metals.

Bullion

1,000 oz silver bar 1000oz.silver.bullion.bar.top.jpg
1,000 oz silver bar

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. The status of a "precious" metal can also be determined by high demand or market value. 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.

Purity and mass

500 g silver bullion bar produced by Johnson Matthey Johnson Matthey 500 grammes silver bullion.jpg
500 g silver bullion bar produced by Johnson Matthey

The level of purity varies from issue to issue. "Three nines" (99.9%) purity is common. The purest mass-produced bullion coins are in the Canadian Gold Maple Leaf series, which go up to 99.999% purity. A 100% pure bullion is nearly impossible: as the percentage of impurities diminishes, it becomes progressively more difficult to purify the metal further. Historically, coins had a certain amount of weight of alloy, with the purity a local standard. The Krugerrand is the first modern example of measuring in "pure gold": it should contain at least 12/11 ounces of at least 11/12 pure gold. Other bullion coins (for example the British Sovereign) show neither the purity nor the fine-gold weight on the coin but are recognized and consistent in their composition.[ citation needed ] Many coins historically showed a denomination in currency (example: American double eagle: $20).

Coinage

1 oz Vienna Philharmonic gold coin Philharmoniker 99 front.jpg
1 oz Vienna Philharmonic gold coin

Many nations mint bullion coins. Although nominally issued as legal tender, these coins' face value as currency is far below that of their value as bullion. For instance, Canada mints a gold bullion coin (the Gold Maple Leaf) at a face value of $50 containing one troy ounce (31.1035 g) of gold—as of May 2011, this coin is worth about 1,500 CAD as bullion. [2] Bullion coins' minting by national governments gives them some numismatic value in addition to their bullion value, as well as certifying their purity.

American Platinum Eagle bullion coin 2005 AEPlat Proof Obv.png
American Platinum Eagle bullion coin

One of the largest bullion coins in the world was the 10,000-dollar Australian Gold Nugget coin minted in Australia which consists of a full kilogram of 99.9% pure gold. In 2012, the Perth Mint produced a 1-tonne coin of 99.99% pure gold with a face value of $1 million AUD, making it the largest minted coin in the world with a gold value of around $50 million AUD. [3] China has produced coins in very limited quantities (less than 20 pieces minted) that exceed 8 kilograms (260 ozt) of gold.[ citation needed ] Austria has minted a coin containing 31 kg of gold (the Vienna Philharmonic Coin minted in 2004 with a face value of 100,000 euro). As a stunt to publicise the 99.999% pure one-ounce Canadian Gold Maple Leaf series, in 2007 the Royal Canadian Mint made a 100 kg 99.999% gold coin, with a face value of $1 million, and now manufactures them to order, but at a substantial premium over the market value of the gold. [4] [5]

Economic use

Gold and silver, and sometimes other precious metals, are often seen as hedges 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 collectibles, far higher than their actual bullion value. [6]

Aluminium

An initially precious metal that became common is aluminium. While aluminium is the third most abundant element and most abundant metal in the Earth's crust, it was at first found to be exceedingly difficult to extract the metal from its various non-metallic ores. The great expense of refining the metal made the small available quantity of pure aluminium more valuable than gold. [7] Bars of aluminium were exhibited at the Exposition Universelle of 1855, [8] and Napoleon III's most important guests were given aluminium cutlery, while those less worthy dined with mere silver. [7] In 1884, the pyramidal capstone of the Washington Monument was cast of 100 ounces of pure aluminium. By that time, aluminium was as expensive as silver. [9] The statue of Anteros atop the Shaftesbury Memorial Fountain (18851893) in London's Piccadilly Circus is also of cast aluminium. Over time, however, the price of the metal has dropped. The dawn of commercial electric generation in 1882 and the invention of the Hall–Héroult process in 1886 caused the price of aluminium to drop substantially over a short period of time.

Rough world market price ($/kg)

metalsymbolmass
abundance
(ppb) [10]
Valuable metal price (US$/kg)
10 Apr 2009
[11]
22 Jul 2009
[12]
7 Jan 2010
31 Dec 2014
[13]
16 Jul 2018
[14] [ unreliable source? ]
Rhodium Rh139,68046,20088,41539,64177,804 [15]
Platinum Pt542,68137,65087,74138,90228,960
Gold Au431,10030,59024,31738,13043,764
Palladium Pd158,4308,14013,63225,55932,205
Iridium Ir114,10012,96013,11715,43246,940 [16]
Osmium Os1.513,40012,20012,21712,217
Rhenium Re0.77,4007,0006,2502,425
Ruthenium Ru12,2902,7305,5621,8658,423 [17]
Germanium Ge1,5001,050 [18] 1,038
Beryllium Be2,800850
Silver Ag75437439588441556
Indium In50 [19] 325 [18] 520
Gallium Ga19,000580425 [18] 413
Tellurium Te1158.70
Bismuth Bi8.515.4018.19
Mercury Hg8518.9015.95

See also

Related Research Articles

Bullion Gold, silver, or other precious metals in the form of bars or ingots

Bullion is non-ferrous metal that has been refined to a high degree of elemental purity. The word ordinarily refers to bulk metal used in the production of coins and especially precious metals such as gold and silver. It comes from the Anglo-Norman term for a melting-house where metal was refined, and earlier from French bouillon, "boiling." Although precious metal bullion is no longer used to make coins for general circulation, it continues to be held as an investment with a reputation for stability in periods of economic uncertainty. To assess the purity of gold bullion, the centuries-old technique of fire assay is still employed, together with modern spectroscopic instrumentation, to accurately determine its quality.

The fineness of a precious metal object represents the weight of fine metal therein, in proportion to the total weight which includes alloying base metals and any impurities. Alloy metals are added to increase hardness and durability of coins and jewelry, alter colors, decrease the cost per weight, or avoid the cost of high-purity refinement. For example, copper is added to the precious metal silver to make a more durable alloy for use in coins, housewares and jewelry. Coin silver, which was used for making silver coins in the past, contains 90% silver and 10% copper, by mass. Sterling silver contains 92.5% silver and 7.5% of other metals, usually copper, by mass.

American Gold Eagle Gold bullion coin of the United States

The American Gold Eagle is an official gold bullion coin of the United States. Authorized under the Gold Bullion Coin Act of 1985, it was first released by the United States Mint in 1986. Because the term "eagle" also is the official United States designation for pre-1933 ten dollars gold coins, the weight of the bullion coin is typically used when describing American Gold Eagles to avoid confusion. This is particularly true with the 1/4-oz American Gold Eagle, which has a marked face value of ten dollars.

The Canadian Gold Maple Leaf (GML) is a gold bullion coin that is issued annually by the Government of Canada. It is produced by the Royal Canadian Mint.

A bullion coin is a coin struck from refined precious metal (bullion) and kept as a store of value or an investment rather than used in day-to-day commerce. A bullion coin is distinguished by an explicit statement of weight and fineness on the coin; this is because the weight and composition of coins intended for legal tender is specified in the coinage laws of the issuing nation, and therefore there is no need for an explicit statement on the coins themselves. The United Kingdom defines investment coins more specifically as coins that have been minted after 1800, have a purity of not less than 900 thousandths and are, or have been, legal tender in their country of origin. Under United States law, "coins" that fail the last of these requirements are not coins at all, and must be advertised as "rounds" instead. The American Eagle and Canadian Gold Maple Leaf series are the only coins available in gold, silver, platinum, and palladium.

Noble (Manx coin)

The Manx Noble are platinum, gold or silver bullion coins distributed by the Isle of Man and minted by private companies. While platinum coins have been minted since the early 1800s, the Noble is the first platinum coin created for investors. The coins are not minted every year, but have an erratic schedule. Nobles are legal tender but they do not have a fixed face value; instead, like the Krugerrand or Mexico's Libertad, they are legal tender to the value of their precious metal content.

Platinum coin

Platinum coins are a form of currency. Platinum has an international currency symbol under ISO 4217 of XPT. The issues of legitimate platinum coins were initiated by Spain in Spanish-colonized America in the 18th century and continued by the Russian Empire in the 19th century. As a form of currency, these coins proved to be impractical: platinum resembles many less expensive metals, and, unlike the more malleable and ductile silver and gold, it is very difficult to work. Several commemorative coin sets have been issued starting from 1978 and became popular among coin collectors. The major platinum bullion coins include the American Platinum Eagle, the Canadian Platinum Maple Leaf, the Australian Platinum Koala, the Isle of Man Noble, the Chinese Platinum Panda, the Austrian Vienna Philharmonic and several series by the Soviet Union and later by the Russian Federation.

Palladium coin

Palladium coins are a form of coinage made out of the rare silver-white transition metal palladium. Palladium is assigned the code XPD by ISO 4217. The first palladium coins were produced in 1966.

Silver as an investment

Silver may be used as an investment like other precious metals. It has been regarded as a form of money and store of value for more than 4,000 years, although it lost its role as legal tender in developed countries when the use of the silver standard came to a final end in 1935. Some countries mint bullion and collector coins, however, such as the American Silver Eagle with nominal face values. In 2009, the main demand for silver was for industrial applications (40%), jewellery, bullion coins, and exchange-traded products. In 2011, the global silver reserves amounted to 530,000 tonnes.

The Canadian Silver Maple Leaf is a silver bullion coin that is issued annually by the Government of Canada. It is produced by the Royal Canadian Mint.

Junk silver Term for silver coins with no numismatic value

Junk silver is an informal term used in the United States, United Kingdom, Canada and Australia for any silver coin that is in fair or cull condition and has no numismatic or collectible value above the bullion value of the silver it contains. Such coins are popular among people seeking to invest in silver, particularly in small amounts. The word "junk" refers only to the value of the coins as collectibles and not to the actual condition of the coins; junk silver is not necessarily scrap silver.

The Canadian Platinum Maple Leaf is the official bullion platinum coin of Canada. First issued by the Royal Canadian Mint in 1988, it was available until 2002 in five different denominations, all of which are marked as containing .9995 pure platinum. The bullion coin was partly reintroduced in 2009 in the form of the 1 troy ounce denomination in .9999 purity, featuring a new portrait of Queen Elizabeth II on the obverse. The coins have legal tender status in Canada, but as is often the case with bullion coins, the face values of these coins is lower than the market price of the material they are made from.

Platinum as an investment

Platinum as an investment has a much shorter history in the financial sector than gold or silver, which were known to ancient civilizations. Experts posit that platinum is about 15–20 times scarcer than gold, on the basis of annual mine production. Since 2014, platinum rates have fallen significantly lower than gold rates. More than 75% of global platinum is mined in South Africa.

Gold coin Coin made from gold

A gold coin is a coin that is made mostly or entirely of gold. Most gold coins minted since 1800 are 90–92% gold, while most of today's gold bullion coins are pure gold, such as the Britannia, Canadian Maple Leaf, and American Buffalo. Alloyed gold coins, like the American Gold Eagle and South African Krugerrand, are typically 91.7% gold by weight, with the remainder being silver and copper.

A gold IRA or precious metals IRA is an Individual Retirement Account in which physical gold or other approved precious metals are held in custody for the benefit of the IRA account owner. It functions the same as a regular IRA, only instead of holding paper assets, it holds physical bullion coins or bars. Precious metals IRAs are usually self-directed IRAs, a type of IRA where the custodian allows more diverse investments to be held in the account.

Vienna Philharmonic (coin)

The Vienna Philharmonic, often shortened to Philharmonic, is a bullion coin of gold, silver, or platinum produced by the Austrian Mint. The coin is named for the Vienna Philharmonic orchestra, which inspired the design of both sides. It was introduced in 1989 as a one-troy ounce (ozt), gold coin with a face value of 2,000 Austrian schillings. It is generally one of the world's best selling bullion coins. In 2002, with the adoption of the euro currency, the nominal value of the one-ounce coin was changed to 100 euros. In 2008, the Mint introduced a one-ounce silver version of the coin with a nominal value of 1.50 euros. The silver coin is also one of the top selling bullion coins, ranked third in 2013. In 2016, the mint introduced a one ounce platinum coin with a face value of 100 euros.

PAMP SA is an independently operated precious metals refining and fabricating company and member of the MKS Group. It was established in 1977 in Ticino, Switzerland

The United Precious Metals Association (UPMA) is a Utah-based non-profit dedicated to offering its members gold and/or silver denominated accounts. UPMA was founded shortly after the passage of the Utah Legal Tender Act in 2011. This Act explicitly recognizes the circulation of U.S-minted legal tender gold and silver coins as a non-taxable event. Utah was the first State in the Union to formally adopt such legislation.

The Canadian Palladium Maple Leaf is the official bullion palladium coin of Canada. It is issued by the Royal Canadian Mint in .9995 purity. The coins have legal tender status in Canada, but as is often the case with bullion coins, the face values of these coins is lower than the market price of the material they are made from. Unlike the gold, silver and platinum maple leaf series, the palladium maple leaf is subject to the GST/HST tax.

Angel (Manx coin) Coin

Manx Angels are gold or silver bullion coins distributed by the Isle of Man and minted by private companies. The Isle of Man is not part of the United Kingdom. It is a Crown dependency and thus can mint its own coins. The coin depicts Archangel Michael slaying a dragon. The silver coins have not been minted every year, but has an erratic schedule. Angels are legal tender but they do not have a fixed face value; instead, like the Krugerrand or Mexico's Libertad, they are legal tender to the value of their precious metal content.

References

  1. Platinum Guild: Applications Beyond Expectation Archived 2009-05-03 at the Wayback Machine
  2. Gold prices ran around 940 USD in July 2009 according to Kitco Historical Gold Charts and Data. The USD to CAD exchange rate averaged 1.129 in July 2009 according to OANDA Historical Exchange Rates. Although the exact moment that the $1075 figure was determined is unknown, it may be considered a reasonable value for the time.
  3. "1 Tonne Gold Coin". perthmint.com.au. Retrieved 23 July 2015.
  4. "the Greatest coined gold in the world". e-allmoney.com. Archived from the original on 4 March 2016. Retrieved 23 July 2015.
  5. UKBullion (2014). "100kg Fine Gold Coin" . Retrieved 2014-03-18.
  6. Aharon DY, and Qadan M. (2018-10-04). "What drives the demand for information in the commodity market?". Resources Policy. doi:10.1016/j.resourpol.2018.09.013. ISSN   0301-4207.
  7. 1 2 Geller, Tom (2007). "Aluminum: Common Metal, Uncommon Past". Chemical Heritage Magazine. 27 (4). Retrieved 22 March 2018.
  8. Karmarsch, C. (1864). "Fernerer Beitrag zur Geschichte des Aluminiums". Polytechnisches Journal. 171 (1): 49.
  9. George J. Binczewski (1995). "The Point of a Monument: A History of the Aluminum Cap of the Washington Monument". JOM. 47 (11): 20–25. doi:10.1007/bf03221302.
  10. The abundance of the element, a measure for its rarity, is given in mass fraction as kg in the earth's crust (CRC Handbook). David R. Lide, ed. (2005). "Section 14, Geophysics, Astronomy, and Acoustics; Abundance of Elements in the Earth's Crust and in the Sea". CRC Handbook of Chemistry and Physics (85 ed.). Boca Raton, Florida: CRC Press.
  11. Mostly taken from London Metal Exchange.
  12. From the http://www.thebulliondesk.com/ Archived 2012-09-14 at the Wayback Machine
  13. From the http://www.thebulliondesk.com Archived 2012-09-14 at the Wayback Machine and http://www.taxfreegold.co.uk (mid price quoted)
  14. From the http://www.bullionexchanges.com
  15. From http://www.infomine.com/investment/metal-prices/rhodium/1-year/
  16. From http://www.infomine.com/investment/metal-prices/iridium/1-year/
  17. From http://www.infomine.com/investment/metal-prices/ruthenium/1-year/
  18. 1 2 3 The metal Price ($/kg)s of gallium, germanium, and indium are taken from MinorMetals.com Archived 2008-05-15 at the Wayback Machine as examples of modern precious metals used for investment / speculation.
  19. Tolcin A. (2012) U.S. Geological Survey Mineral Commodity Summaries 2012.