I'm sure some of you have been keeping up with two major events in the news lately: the European monetary scare and the United States credit rating downgrade by S&P. These have been wreaking havok with the world markets. You may hear advertisements telling you to either sell broken gold jewelry or buy gold bullion. These crises and advertisements are very closely related.
I watch the metal markets very closely, especially silver, gold, and platinum, since I trade metals from each. Silver was roughly doubling in price per year for the past two years. The other metals steadily climbed, as well. The factors are different for each metal due to differing uses.
The majority of silver (around 75%) has uses in industry. These uses divide into electronics (best conductor), medical equipment (germicidal), and photography (developing film). It has minor uses in mirrors, solar panels, and other areas, too. Most of the remaining silver goes to jewelry or coinage with just a small bullion market, which has been heavily manipulated by companies like JP Morgan Chase. Arguably, the two biggest reasons for silver's surge in price are the explosion of personal electronics and the newly flourishing bullion market. Silver sits at $38.10USD/ozt as I write this.
Most of gold's use comes in the form of jewelry or bullion. A thin layer is plated onto electronics pins because of the way gold does not tarnish, but that layer has very little actual gold content. (Gold is the 4th best conductor of electricity, so silver, copper, or aluminum, are used for the actual wiring.) Since gold has intrinsic value (and is 17.5 times more rare than silver), it has been used as a sign of wealth and, more recently, a hedge against inflation of fiat currencies. Gold sits at $1755.90USD/ozt as I write this.
Platinum is a more recently-discovered metal, with an existence only being know for a few hundred years (as opposed to silver and gold that have been refined and used for millennia). Although it is one of the rarest naturally-occurring elements in the planet's crust, almost all of its uses are industrial (automotive), leaving just a very tiny jewelry and bullion market. When economies are good, platinum has a high price. When economies are bad, platinum prices plunge. Platinum sits at $1753.00USD/ozt as I write this.
If you make a double-take of the prices, you will see that the gold spot price is currently above platinum by a very small margin. This does occasionally happen, as it also did in the market collapse of 2008 and in the late 1970s. So what happens to all the platinum-level awards various organizations give out? Are those now worse than gold? And what happens with video games where you trade 100 gold coins for a platinum coin? Are they ripping off your character?
