I Love Metal

By Matthew Giguere

I’ve been doing a lot of research lately on precious metals and investing in bullion and came across some info that some of you might enjoy reading. Some people may find it hard to take the plunge to start investing in raw metals. Hopefully this info will further solidify your decisions.

Throughout history, silver bullion has served mankind as a primary monetary metal. It is durable, divisible, convenient, has utility value, and cannot be created in a lab like diamonds today.

However, unlike its fellow monetary metal—gold—silver is most commonly used today as an industrial commodity. Industrial demand for silver has grown consistently for the past three decades because of silver’s many unique properties, including its strength, malleability, and ductility…its unparalleled electrical and thermal conductivity…its sensitivity to and high reflectance of light…and its ability to endure extreme temperature ranges.

In addition to its industrial uses and qualities, silver is also used in numerous health care products because of the unique antibacterial characteristics that it possesses. The “Silver Bullet” is used by hospitals to prevent bacterial infections in burn victims, and in the military they stick it up your ass when you overheat to see if you are going to die of heat stroke… Wound dressings and other wound care products incorporate a layer of fabric containing silver for prevention of secondary infections. In a world that is showing increasing concern about the spreading of disease and potential pandemics, silver is increasingly being tapped for its qualities. Some people are even using electrolysis with silver rods to make a silver infused water drinking solution that supposedly helps with digestion and urinary tract infections.

It is estimated that more than 95% of all the silver ever mined throughout history has already been consumed by industrial use. That silver is gone forever, unrecoverable at any price. In 1900, there were approximately 12 billion ounces of silver in the world. Today, that figure has fallen to about 300 million ounces of above-ground, refined silver. This means that at current prices, it would only take about four billion dollars to purchase all of the above-ground silver in the world today.

Let’s take a look at gold….For centuries, buying gold has been recognized as one of the best ways to preserve one’s wealth and purchasing power. Gold is a unique investment, one that has served mankind well for thousands of years. From the times of ancient Egyptians, Greeks and Romans to more modern times, man has been fascinated with the beauty and magic of gold, and with its power to change men’s lives.

Gold bullion is real, honest money…and, many say, the best form of money the world has ever known. It is a store of value and a safe haven in times of crisis. Gold is rare, durable and does not wear out in the manner of lesser metals (or paper!) when passed from hand to hand. A small amount, easily carried, can purchase a significant amount of goods and services. It is universally accepted, and can be easily bought and sold around the world.

Today, the beauty of a gold bar lies in its ability to diversify investments, protect wealth and preserve one’s purchasing power.

There was a time—just a few hundred years ago, in fact—when platinum was neither an industrial metal, nor a strategic metal, nor a precious metal used for high-end jewelry. In fact, during the 17th century in South America, the Spanish Conquistadors thought the metal was a nuisance because it interfered with their gold mining operations.

What a difference a century or two can make! In the early 1800s, platinum was found in the gold fields of the Ural Mountains in Russia…and the Russian government decided to take that rare element and turn it into a monetary metal by producing platinum roubles. Over the next 18 years, the Russians minted nearly half a million ounces of platinum roubles and transformed the metal from a mere commodity into a precious metal that was and is, like gold, a store of value.

Today, platinum is a widely used although extremely rare metal, critically important to the auto industry, the jewelry trade, and the chemical, electrical and glass manufacturing industries. Far rarer than gold, it is estimated that all of the platinum ever mined throughout history would fit into a cube less than 25 feet on each side.

One of the platinum group metals, palladium is used extensively as an industrial catalyst and is a key component in the manufacturing of automotive catalytic converters. Palladium is also essential in the jewelry industry…and is one of the three most used metals (along with nickel and silver) which can be alloyed with gold to produce “white gold.” It is also used in dentistry, watch-making, and in the production of surgical instruments and electrical contacts.

In the autocatalyst industry, palladium is currently a lower-cost substitute for the more expensive alternative, platinum. As this is written, palladium sells for around one-quarter the price of platinum. But that has not always been the case. In late 2000 and early 2001, for example, due to supply disruptions and a resulting panic by auto manufacturers (most notably, Ford Motor Co.), the price of palladium reached an all-time high of nearly $1,100 an ounce, approximately the same price as platinum at the time.

Over half of the world’s annual supply of palladium comes from Russia…and the amount and status of Russian palladium supplies are state secrets. In the past, Russia has routinely withheld supplies of palladium from world markets for its own political and/or economic gain, resulting in very large and very fast fluctuations in palladium prices.

It is this historical range of prices, and the price differential between palladium and platinum at any given time, that gives palladium its attractive investment potential. The price of palladium has been, and could again be, extremely volatile, providing investors with a significant opportunity for speculative profit.

A final note… kings carry gold… men carry silver…. slaves carry paper…


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