Precious Metals
So-called noble, or precious, metals owe their special name to their exceptional levels of corrosion resistance. Under normal conditions, precious metals are very stable and hardly oxidise at all. Neither water nor exposure to air can harm precious metals. Since these metals are chemically stable, they are difficult to form chemical reactions with. Indeed, they are able to remain in a stable state which is why they are suitable for long-term storage and, therefore, a primary means of storing value. For this reason, precious metals have always been used to manufacture jewellery and coins. Which of all precious metals is considered to be the most valuable can be the subject of dispute.
Chemical Properties
The most famous precious metals around are gold and silver . Platinum metals, which can be chemically divided into two categories – light and heavy platinum metals – have also been discovered in the past few centuries. The first group includes ruthenium, rhodium and palladium while the latter includes osmium, iridium and platinum itself. From a chemical point of view, mercury is also considered a precious metal. Mercury is liquid at normal temperatures but – due to its chemical properties (corrosion and resistance to acid) – it is classified as a precious metal. Examples of semi-precious metals include copper, technetium, rhenium, antimony, bismuth and polonium. Some artificially made elements – such as Bohrium, Hassium, Copernicum or Darmstadtium – are also classified as precious metals. However, these are very short-lived in their nature. Their practical relevance is consequently not that great. They should only be mentioned in this context for the sake of completeness. Since they disintegrate faster than they can corrode, proof of their corrosion resistance is still something that is being studied by science.
Chemical Reactions
Base metals such as iron, aluminium or lead need to be clearly distinguished from the group of noble metals. By contrast to all of the precious metals, these metals can be broken down by non-oxidising acids, which is why their resistance is not as great. In the end, precious metals can also be dissolved using sufficiently aggressive chemicals such as oxidising acids. For example, gold and some platinum metals dissolve in aqua regia. In addition, silver reacts when it comes into contact with nitric acid. These types of metal are only oxidised on their surface, however. As such, an oxide of the metal then becomes visible as a thin layer on the outside. Reactions can also be forced using cyanide solutions in conjunction with atmospheric oxygen. It is for this reason that this reaction method is often to be found being taken advantage of in mining as a means of extracting gold and silver from rock.
Benefits for Industry
Precious metals are used as industrial metals, particularly in the automotive industry, for the production of catalytic converters. The electrical industry also makes much use of precious metals. Computers, smartphones and other electrical devices utilise gold in their production, for example, too. In addition, glass, fertilisers and the products made in the pharmaceutical industry also have precious metals in them. In medical technology, platinum plays a role in the manufacture of pacemakers. It also plays a role in the treatment of aneurysms in order to heal the dilation of arterial or venous blood vessels.
Value Retention and Processing Methods
Why are precious metals bought as an investment? Historically, gold and silver have proven to be particularly extremely stable valuable commodities. They are accepted as a means of exchange around the globe. The suitability of the precious metals as a method of wealth storage is due to two reasons. On the one hand, it is thanks to their durability, but on the other one, it is their low occurrence in nature. In general, these two factors mean that the extraction of precious metals usually requires very specific processing methods. Many precious metals are by-products of electrolytic refining, for example. This might include finishing or refinement processes associated with other raw materials in what is known as an anode sludge. In addition to costly and time-consuming extraction, precious metals can also be obtained from photo-chemicals, from catalytic converters, from galvanic baths or from electronic devices which have been disposed of for recycling purposes.
Buying Precious Metals
How precious metals are bought depends on personal preference. To begin with, a decision must be made as to whether to buy physical or non-physical stocks. In most cases, the latter is bought through an investment product known as an exchange-traded fund. When buying precious metals in their physical form, there are precious metal dealers such as Echtgeld AG which can be used.
Anyone who wants to invest money in precious metals will have a large number of options to choose between. From an investor’s point of view, precious metals have different clear advantages and disadvantages. With white precious metals such as silver, platinum and palladium, sales tax is normally applied (see below for tax-exempt purchases), while gold can be purchased tax-free for investment purposes. Due to their differing chemical properties and the different uses they are put to in industry, as described above, individual precious metals are also exposed to their own particular price alterations. Gold is the least likely to be affected by industrial demands.
Not to be neglected in investment considerations is the different amount of space that is required for the storage or transportation of the various types of physical precious metals available. Since the value density of gold compared is so much higher compared to silver, gold deposits worth CHF 50,000 can be stored or moved around with ease. Storing or transporting silver for the equivalent metal valuation would present a much more serious challenge because a much greater quantity of silver has to be stored or transported for the equivalent amount in terms of value.
Ultimately, every investor has to decide for him or herself which precious metal to buy and which is the best investment suited to them. Once you have chosen one of the precious metals, you should next deal with the form it will take. Do you want to buy precious metal coins, bars or even granules, for example? Both precious metal refineries and traders offer bars for a wide variety of precious metals. Mints, on the other hand, offer a range of coinage for each of the available precious metals. Here is an overview of the most important investment coins for individuals interested in investing in precious metals:
| Coin | Country | Gold (fineness) | Silver (fineness) | Platinum (fineness) | Palladium (fineness) |
|---|---|---|---|---|---|
|
American Buffalo |
US
|
999,9 |
900
|
– |
– |
|
US |
916,7 |
999,0 |
– |
– |
|
|
AU
|
999,9 |
999,9 |
– |
– |
|
|
Aus. Koala |
AU |
– |
999,9 |
– |
– |
|
GB |
999.9 (until 2012 917.0) |
999.0 (until 2012 958.0) |
– |
– |
|
|
CH
|
900 |
– |
– |
– |
|
|
CH
|
900 |
– |
– |
– |
|
|
ZA
|
916,6 |
999,0 |
– |
– |
|
|
MX
|
999,0 |
999,0 |
– |
– |
|
|
AU
|
999,9 |
999,9 |
– |
– |
|
|
CA
|
999.9 (until 1981 999.0) |
999,9 |
999,5 |
999,5 |
|
|
CN |
999,0 |
999,0 |
999,0 |
999,0 |
|
|
UK
|
916,7 |
– |
– |
– |
|
|
AT |
999,9 |
999,0 |
999,5 |
– |
Buying White Precious Metals That are Exempt from Sales Tax
So-called duty-free warehouse bonded vaults or open bonded warehouses in Switzerland enable the purchase of physical silver, platinum or palladium without the need to pay sales tax. In such facilities, the purchased precious metal does not pass through the hands of the buyer. Rather, the dealer concerned delivers the purchased inventory directly to the warehouse on the buyer’s behalf. This type of storage is equally suited to private investors as it is to business investors based in Switzerland, Liechtenstein or, indeed, other countries.
Summary:
- Precious metals are difficult to form a chemical reaction with, something that demonstrates why they are extremely stable.
- The most widely known precious metals are gold and silver. They are also made up of the platinum group of metals and sometimes semi-precious metals such as copper or bismuth should be included, as well.
- A distinction must be made between noble metals and base metals such as iron, aluminium or lead, which are all subject to degradation by non-oxidising acids.
- Because of both their scarcity and their durability, precious metals are a suitable means of storing wealth effectively.
- From an investor’s perspective, precious metals have different but clear advantages and disadvantages.
- Precious metals can be bought in bars, coins or granules.
- In industry, precious metals are mainly used for the production of catalytic converters.
