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Trading of Precious Metals

Why Are Metals Important? Metals are elements, compounds or alloys that are typically hard when present in a solid-state. They are usually characterized by their shiny appearance, electrical and thermal conductivity, malleability, ductility, and fusibility. More than 75% of the elements in the periodic table are metals. Although we typically think of metals as present in the finished goods we use, their origin begins beneath the earth’s surface. Some elements such as aluminum and iron are abundant in the earth’s crust, while others such as palladium and gold are extremely rare. However, producing even the most common elements requires enormous energy and manpower. The physical properties of metals make them ideal raw materials for building and manufacturing many essential items we use in our daily lives. The construction sector uses metals to build bridges, homes, office buildings, railroads, and airports. The manufacturing sector uses metals to make automobiles, electronics, factory equipment, jewelry, cookware, dental equipment, protective shielding, cutlery, and many other items. Metals also play a role in the power and storage industries. They are important components in battery production and even play a vital role in the creation of nuclear energy. What Are the Different Types of Metals? Gold via Umicore on Wikimedia Metals are typically grouped into one of two categories: Precious metals – rare, naturally occurring metallic elements Base Metals – metals widely used in commercial and industrial applications Precious Metals are rare, naturally occurring metallic elements with high economic value. They are unusual in that they are both industrial elements and investments. Manufacturers use these metals to make electronic components, jewelry, dental equipment and catalytic converters among other things. Investors, on the other hand, collect coins and bars made out of precious metals. This second use – as investments – makes precious metals the objects of intense speculation in commodity markets. Precious metals traders see these commodities as a form of money that holds its value better than printed paper money. Skeptics, however, argue that precious metals are simply rocks with little utility beyond their limited industrial uses. Ironically, the high premium placed on precious metals by traders makes them too expensive and impractical for most industrial applications. The precious metals with active commodities markets include the following: Gold Silver Platinum Palladium Gold Gold is the main precious metal utilized by speculators as an investment vehicle. Although manufacturers use the metal in some electronics parts, the vast majority of gold demand derives from jewelry manufacturers and traders. Many consumers see gold jewelry as a form of investment. Read our Guide to Gold here. Silver Manufacturers also use silver in both electronics and jewelry, while traders collect the metal in the form of coins or bars. Silver has historically traded at a fraction of the price of gold. Some traders track and trade the spread between gold and silver prices. Read our Silver Trading Guide here. Platinum Part of a group of six metals known as platinum group metals (PGMs), platinum is used to make jewelry and catalytic converters for cars. Investors purchase platinum for many of the same reasons they buy gold and silver. See our Platinum Guide for more information. Palladium Palladium is a member of the PGMs and is used to make catalytic converters, dental equipment, and electronics parts. Palladium also receives demand from traders. Learn about trading in our Palladium Guide. The remaining PGMs – rhodium, ruthenium, osmium, and iridium – have much smaller markets.

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