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Precious metals have been valued throughout human history for their rarity, beauty, and utility
Learn About Precious Metals
Precious Metals Education
Introduction to Precious Metals
Precious metals have been valued throughout human history for their rarity, beauty, and utility. Gold and silver in particular have served as both a store of value and a medium of exchange for thousands of years, making them some of the oldest forms of currency.
Today, precious metals continue to play an important role in investment portfolios, serving as a hedge against inflation and economic uncertainty. They also have significant industrial applications and remain popular in jewelry and decorative arts.
Gold
Properties
- Symbol: Au (from Latin 'aurum')
- Atomic number: 79
- Highly malleable and ductile
- Excellent conductor of electricity
- Resistant to corrosion and oxidation
- Distinctive yellow color
Measurements
- Measured in troy ounces (31.1035 grams)
- Purity measured in karats (24K = 99.9% pure)
- Specific gravity: 19.32 (much denser than most metals)
- Melting point: 1,064°C (1,947°F)
Gold Karats Explained
Gold purity is commonly measured in karats, with 24 karats representing pure gold (99.9%). Lower karat numbers indicate a higher percentage of other metals in the alloy:
| Karat | Gold Content | Common Uses |
|---|---|---|
| 24K | 99.9% pure | Investment bars and coins |
| 22K | 91.7% pure | High-end jewelry, some coins |
| 18K | 75.0% pure | Fine jewelry |
| 14K | 58.3% pure | Common jewelry in the US |
| 10K | 41.7% pure | Affordable jewelry |
Silver
Properties
- Symbol: Ag (from Latin 'argentum')
- Atomic number: 47
- Highest electrical conductivity of all metals
- Highest thermal conductivity of all metals
- Highly reflective
- Tarnishes when exposed to air
Measurements
- Measured in troy ounces (31.1035 grams)
- Purity typically expressed as percentage
- Specific gravity: 10.49
- Melting point: 961.8°C (1,763.2°F)
Silver Purity Standards
Silver purity is typically expressed as a percentage or in terms of "fineness":
| Type | Silver Content | Common Uses |
|---|---|---|
| Fine Silver | 99.9% pure | Investment bars and coins |
| Sterling Silver | 92.5% pure | Jewelry, silverware, high-quality items |
| Coin Silver | 90.0% pure | Historical coins, some jewelry |
| Britannia Silver | 95.8% pure | British silver standard, premium items |
Investment Considerations
Advantages
- Hedge against inflation
- Portfolio diversification
- Tangible asset with intrinsic value
- Historically maintained value over long periods
- Highly liquid markets
- No counterparty risk (for physical metals)
Considerations
- Price volatility
- Storage and security costs
- No income generation (dividends/interest)
- Potential premium over spot price when buying
- Potential tax implications
- Authentication concerns
Common Forms of Precious Metals
Bullion Coins
Government-minted coins with guaranteed weight and purity. Examples include American Gold Eagles, Canadian Maple Leafs, and South African Krugerrands.
Bars and Ingots
Produced by private mints and refineries in various sizes from 1 gram to 400 ounces. Often stamped with weight, purity, and serial numbers.
Jewelry
Decorative items with varying purity. Value includes both metal content and craftsmanship, with premiums over spot price.
ETFs and Funds
Financial products that track metal prices without physical ownership. Offer ease of trading but may have management fees.
Mining Stocks
Shares in companies that mine precious metals. Performance affected by both metal prices and company operations.
Collectible Coins
Rare or historical coins valued for both metal content and numismatic premium. Often trade significantly above spot price.
Glossary of Terms
- Spot Price
- The current market price for immediate delivery of a metal.
- Troy Ounce
- Standard unit of measurement for precious metals (31.1035 grams).
- Fineness
- Measure of metal purity, often expressed in parts per 1,000.
- Premium
- Amount charged above the spot price when buying physical metals.
- Melt Value
- The value of an item based solely on its precious metal content.
- Bullion
- Precious metals in bulk form, valued by weight rather than as currency.
- Numismatic Value
- Value of a coin beyond its metal content, based on rarity, condition, and collector demand.
- Hallmark
- Official mark indicating purity, maker, and other information about a precious metal item.
