Limited supply and current demand may affect the value of precious metals like gold, silver, and platinum. Nevertheless, prices rise and fall and since monetary investments in these precious metals have no interest gains, the prospects for investiture are not too many.
Precious metals as investments
Precious metals such as gold, silver, among others may be used as investments. They are frequently perceived as protection or defense against situations like financial loss, inflation, deflation, or economic slump. In fact, silver coins have turned out to be very popular among collectors because of their relative reasonable rates. At the same time that the worth of gold and platinum is contingent on the market situation, silver is more frequently appreciated as a collectable and far higher compared to its bullion value.
This precious metal is highly malleable and durable since it does not corrode or rust. It is commonly used as an important component of jewelry and form of currency. It has the capacity to conduct electricity and heat; hence, it is utilized in major industries like electronics and in the dental laboratory technology industry. The market determines the value of gold on a daily basis. Gold is mostly traded as a role of sentiment. As mentioned, supply and demand has minor impact on its price. Sully from the mining industry is immensely outweighed by the immensity of available gold of which most are hoarded. Basically, when people who have the gold decide to sell, the price goes down. When they decide to purchase, newly available supply is immediately taken and the prices go high.
People hoard gold due to:
• Economic or political instability
• Political conflicts or wars
The price of silver is more volatile compared to gold. It tends to move back and forth amidst its supposed role as a recognized form of exchange and as a metal used in industries. As an investment demand, gold will trade easily compared to silver. However, the supply and demand in the industrial sector for metal have immense impacts on price. These supply and demand factors have always varied with new-fangled industrial applications such as:
• Increased use of silver-based photographic film
• Increased demand for items that require silver components like electrical gadgets, medical, and industrial products
• Use of silver in the microcircuit industry, superconductors, and batteries
This is also a precious metal traded twenty-four hours a day in the market. Because this metal is a lot scarce, the price can go higher even against gold in times of political and market stability. Other price indicators for platinum are:
• Industrial applications as an automotive catalyst, jewelry component, chemical and petroleum catalyst, and in the computer industry.
• Discovery of recycled auto catalysts like the less costly palladium, a sister group metal of platinum.
• South Africa and Russia are major mining sources for platinum. Mining industries in these areas may decide collectively to control supply, pricing, and marketing.
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