Precious Metals: Definition, Properties, Uses, and Types

Precious metals are a group of several metals that are inherently rare and of high value. They also usually have certain high-performing properties, including malleability, reflectivity, and conductivity. The most commonly recognized metals are gold, silver, palladium, iridium, rhodium, osmium, ruthenium, and platinum.

What Is a Precious Metal?

A precious metal is known for its high value, which is usually caused by its scarcity. Other factors leading to the high value of precious metals are the intensive industrial processes used to obtain them, and the metal’s performance against inflation. Precious metals have historically been traded as money. However, central banks now keep reserves of gold, and cash or electronic bank credits are traded instead.

What Are the Main Properties and Purposes of Precious Metals?

There are several different properties and purposes that a precious metal will have, which are described below. Precious metals may have some or all of the following:

1. Currency and Investment

Currency and investment are some of the most common uses of precious metals. Due to the metals’ rarity and use, they are intrinsically valuable and have historically (although not always) performed well as an investment to hedge against inflation. Not only are they an investment, but precious metals were once physically traded as money. However, modern currencies are no longer backed by precious metals such as gold; instead, they are fiat currencies supported by government policy and economic stability.  An advantage of investing in precious metals is their historical role as a store of value during inflationary periods, though their prices can be volatile and influenced by market speculation, interest rates, and geopolitical events.

2. Malleability

Malleability is a property that denotes a material’s ability to be shaped and formed without breaking. Many precious metals exhibit a high degree of malleability, but not all—some are less malleable or more brittle. The malleability of a metal is very important for making products, especially those used in the jewelry industry, in which creating intricate parts is key. Without malleability, these parts would simply break. The disadvantage of malleability is that malleable metals are often softer and more prone to deformation under load, making them less suitable for structural applications.

3. Rarity

Rarity is a measure of how scarce the supply of the metal is. Precious metals are among the rarest materials on earth, with gold only making up approximately 4 parts per billion of the earth's crust. The rarity of a metal is a direct factor in its value, which is usually a disadvantage as the value of the metal can fluctuate depending on its supply. Even worse, the supply of certain precious metals may become impossible due to geopolitical factors since these metals are only mined in a small number of places. The advantage is that, since there is a finite supply, precious materials will generally always hold value.      

4. High Durability

Durability is a material’s ability to withstand wear, pressure, and damage, which requires some material properties like corrosion resistance, wear resistance, hardness, ductility, and resistance to corrosion and oxidation. The advantage of durability is that it means the material can last a long time. However, one disadvantage is that durable materials are often more difficult to recycle or refine, and some (like platinum and gold) are relatively dense, which can be a consideration in certain applications where low weight is of importance.

5. Resistance to Corrosion

Corrosion resistance is a measure of a material's resistance to permanent degradation due to chemical reactions, typically oxidation or exposure to acids, moisture, or environmental contaminants. Many of the precious metals have this property. A precious metals’ resistance to corrosion is important as it increases the durability and longevity of the metal. Other advantages of corrosion resistance include lasting aesthetics and reduced repair and maintenance. The main disadvantage of corrosion-resistant materials is that they are often expensive.

6. Non-Reactivity

Non-reactivity means a material will not undergo significant chemical processes with other materials. This is different from corrosion resistance, which generally refers to a material’s ability to withstand chemical degradation, especially oxidation and exposure to environmental agents, whereas non-reactivity could be referring to reactions with acids, bases, salts, or other reactive species. Non-reactivity is advantageous as it means the material won't corrode or tarnish under most environmental conditions, contributing to its aesthetic and functional longevity.

7. Lustrous Appearance

To have a lustrous appearance is to have an even, shiny appearance that almost creates a glow. This is particularly important for precious metals which are used in jewelry as it gives the final product an aesthetic appeal. This shine could also be important in applications such as high-performance optical equipment. A disadvantage of a lustrous appearance is that, at some point, the appearance will need to be maintained as it can go dull. However, precious metals keep their lustrous look extremely well, even in relatively aggressive environments, due to their resistance to oxidation and corrosion.

8. Desirability for Jewelry

Precious metals are desirable for jewelry-making for multiple reasons, including their high value, high malleability, lustrous look, and chemical inertness. These properties mean that the metal can be more easily formed into an attractive piece of jewelry with excellent longevity.

9. Excellent Conductivity of Electricity

Precious metals are generally good electrical conductors, though not all are better than common non-precious metals like copper or aluminum. This means that precious metals are used in electronic applications, including electronic contacts, printed circuit boards, and processing chips. The advantage of this is that there is less energy loss due to resistance, and microelectronics can, therefore, perform better. The disadvantage is the high cost and rarity, which reduces widespread use in all but high-value items. Silver is the best conductor of electricity of all elements and is a precious metal.

10. Industrial and Ornamental Versatility

Precious metals are versatile as they can be used in industrial applications for their high performance, as many precious metals are very corrosion resistant, have a high melting point, and have high electrical conductivity. Precious metals are also used in ornamental applications because they are malleable and corrosion resistant, and gold in particular for its unique color. This is an advantage as it means the precious metals have a lot of applications. However, this means scarce precious metals are even more sought after!

11. Intrinsic Value as a Hedge Against Inflation

Due to the scarcity of precious metals and the high demand for their performance and aesthetic, precious metals have a high intrinsic value. This makes a great investment to hedge against inflation as they will hold their value as inflation rises (other materials will often experience a real cut in value even if the actual cost of the goods rises).

What Are Examples of Precious Metal Products?

The most well-known precious metal is gold, which is appreciated for its use in jewelry. Silver and platinum are also used for this purpose. Gold and silver are also used in electronics as they are both very good at conducting electricity. Platinum is used in catalytic converters to pull contaminates from the exhaust gasses of engines. Platinum is also used for electronic storage as its high magnetism allows high levels of data to be stored. Silver can kill bacteria and is nontoxic, so can be used in various antibiotic applications. Silver can also be used in X-rays to capture images from light.

Are Precious Metals Investment Portfolio Hedges Against Inflation and Economic Uncertainty?

Yes, precious metals are considered to be safer investments in times of inflation or economic uncertainty. While precious metals do not have a high influence on inflation, their value is affected by currency fluctuations, supply and demand issues, and geopolitical factors. So, while they are considered to be safer options during inflation, it is not necessarily true that they will always perform well.

Are Precious Metals Used in Electronics Because of Their Conductivity?

Yes, most precious metals used in electronics are exploited for their conductivity, including gold and silver. These metals are often used in processors to improve speed, though their use is typically limited to critical components like connector pins, bonding wires, and contact pads due to their high cost. Platinum is used in hard disk drives (HDDs), not for its magnetism but as an alloying element in magnetic layers to enhance thermal stability and write precision. Palladium is also used in ceramic capacitors to help store charge, primarily as an electrode material in multilayer ceramic capacitors (MLCCs).

What Is the Use of Precious Metals?

One common use many precious metals have is to store value. As such, they are often seen as a safe investment in times of economic uncertainty. However, precious metals are also used for their unique properties, such as their chemical inertness, which prevents corrosion in medical implants. Gold is applied as an ultra-thin layer to an astronaut’s visor to reduce radiation from the sun. 

Silver is used in the production of solar panels and batteries for its high conductivity. Platinum is used in oil refineries as a catalyst to reform naphtha into a high-octane additive for petrol and in catalytic converters to remove pollutants from the exhaust gas of vehicles. Rhodium is used for electrical contacts due to its excellent corrosion resistance and high melting point, particularly in demanding applications like spark plugs and catalytic converters, though its electrical conductivity is lower than other metals like silver and gold.

What Industry Uses Precious Metals?

Many industries use precious metals, most of which use the minimum amount possible due to their high cost. However, in some applications, the high cost is worth it. Industries that use precious metals include aerospace, electrical, medical, oil and gas, automotive, and fashion (jewelry).

What Are the Different Types of Precious Metals?

There are several different precious metals that all have similar characteristics and, therefore, similar uses, but they are slightly different. These unique properties and applications are discussed below:

1. Gold

Gold is a unique metal due to its distinct color which makes it easily identifiable. Gold is extremely malleable which makes it almost indestructible. Gold is also very dense and a great conductor of heat and electricity. The main uses of gold are for jewelry and trading. Gold is used for jewelry due to its high malleability and desirable appearance and for trading due to its high value. Gold has historically been used to make high-denomination currency. 

However, since the 19th century, it has been used as the backing for paper currency. The advantages of gold are its high malleability and the low processing required to mine gold as it is found in an almost pure state. The disadvantages of gold are that it is very expensive, heavy, and soft. Gold is used for electroplated contacts in electronics, as well as bullion for trading, and in bracelets, earrings, and necklaces for jewelry.

2. Silver

Silver is a reflective metal that is very ductile and is the best conductor of electricity and heat of any metal. Silver is fairly inert and only reacts with hydrogen sulfide in the air, which causes the silver to tarnish. Due to silver’s color and reflective properties, it is used in photography, cutlery, jewelry, and mirrors. Silver is used in the electronics industry for printed circuit boards and electrical contacts due to its conductivity. The advantages of silver are its high conductivity, low reactivity, and high malleability. The disadvantages of silver are its high cost and low wear resistance. Silver metal is often used to make coins, jewelry, and ornaments.

3. Palladium

Palladium is a gray-white metal that is very malleable and ductile. Palladium is soft and has a lower density than other metals of the platinum group. Palladium is also unreactive to the atmosphere. The advantages of palladium are that it is lightweight, scratch-resistant, and cheaper than other precious metals. Its disadvantage is that it is logistically hard to source as it is about 30 times rarer than gold, though this can vary by mine and deposit.

4. Iridium

Iridium is a silver-white metal that is very dense, hard, and brittle. Iridium is also highly resistant to temperature and resistant to corrosion. Iridium is the most corrosion-resistant metal known. Iridium can be alloyed with osmium to make pen tips and compass bearings. The high melting point of iridium means it is also used as the contact for spark plugs. The advantages of iridium are that it has a high melting point and resistance to corrosion. Its disadvantages are its cost and rarity.

5. Rhodium

Rhodium is a silver-white metal that is highly reflective. Rhodium is very resistant to corrosion, which is why it is used to plate jewelry to retain a high finish. Rhodium can also be used in high-performance optical devices for its reflective properties. The most common use of rhodium is as an alloying agent to increase the hardness of platinum. The resulting alloy is used in crucibles as the alloy can resist high heat. The advantages of rhodium are its reflectivity and corrosion resistance. Its disadvantage is that it is the most expensive metal available.

6. Osmium

Osmium is a gray-white metal that is very hard, brittle, and the only element denser than iridium. Osmium has the highest melting point of any platinum metal which makes it both hard to fabricate but also temperature resistant — which was perfect for its early application as incandescent light bulb filaments. Other uses of osmium include the tips of fountain pens, needles, and electrical contacts. The advantages of osmium are its hardness and temperature resistance; its disadvantage is its brittleness.

7. Platinum

Platinum is a silver-colored metal with a high density, high malleability, and high ductility. It also has a high melting point and high corrosion resistance. Platinum is used for electrical contacts and wires in pacemakers and catalytic converters. The advantages of platinum are its malleability, which makes it easy to work with, and its corrosion resistance. Its disadvantage is its low hardness compared to other metals.

8. Ruthenium

Ruthenium is a silvery white metal that does not corrode or tarnish in the atmosphere. Ruthenium is a hard metal that is commonly used as an alloying agent for hardening platinum. The high melting point of ruthenium makes it hard to cast, and its high brittleness makes it hard to form into wires. This means that ruthenium is largely restricted to being used as an alloying agent. The alloy of ruthenium and platinum is used for electrical contacts and jewelry. The advantages of ruthenium are its hardness and corrosion resistance. Its disadvantages are its high melting point and brittleness, making it almost impossible to form the metal into usable products.

What Is the Most Expensive Precious Metal?

Rhodium is the most expensive precious metal. Currently, rhodium costs $15,000 for an ounce due to its rarity, though its price can fluctuate greatly. Rhodium is also only mined in Russia and South Africa, which means its value is impacted by geopolitical factors. Rhodium is only mined as a by-product of platinum and palladium mining and is typically a by-product, but some primary rhodium mining operations do exist.

How To Choose Which Type of Precious Metal To Use?

There are a series of steps to take to choose the right precious metal for your application. These steps are discussed below:

1. Cost: Before trying to identify the right precious metal for the application, you should start by assessing a budget. Precious metals are intrinsically of high value and, therefore, high cost. This means that some of the most expensive precious metals may not be suitable even if they perform the best.
2. Rarity: Next, identify the rarity of the metal, precious metals are all known for being rare and are only usually mined in a few places around the world. Before considering the properties of the metal, it is important to identify if you will be able to source the required amount for the application.
3. Properties: Finally, to choose the right precious metal for your application, the properties required must be identified, then a precious metal can be chosen accordingly. For example, gold is a great choice for jewelry due to its color, malleability, and intrinsic value.

What Is the Advantage of Using Precious Metals?

There are several reasons why precious metals may be advantageous, depending on the application. One of their biggest advantages is they are generally more inert than other metals and less susceptible to corrosion. Also, precious metals usually have a high melting point and can be used as alloys to improve the performance of other metals; improvements include increases in hardness and temperature resistance. Finally, precious metals are often very good conductors, making them ideal for electronic devices.

What Is the Disadvantage of Using Precious Metals?

The two disadvantages that all precious metals share are their high cost and rarity. Their high cost tends to limit precious metals from widespread use in most applications. Additionally, their rarity means that supply-chain disruptions can be frequent and dramatic. 

For example, South Africa mines 85% of all rhodium; therefore, if South Africa fails to supply rhodium, prices will rise sharply, and many potential buyers may not be able to buy it at all. While precious metals may have excellent properties, they are often limited in the applications to which they are suited, as their properties (despite being sought after) are less cost-effective for general use than more readily available substitutes such as aluminum or stainless steel.

Are Precious Metals As Durable as Transition Metals?

Some precious metals are as durable as transition metals, however, not all. Most precious metals are transition metals, but not all transition metals are precious metals. Gold, for example, is both a precious metal and a transition metal and is very malleable, making it durable. This is why it is used in jewelry—it is resistant to breaking, as well as resistant to corrosion.

What Distinguishes Precious Metals From Other Types of Metals?

The distinguishing factor between precious metals and other metals is their high economic value, which is usually driven by their rarity and difficulty in mining and processing. Although the properties of precious metals vary, they usually also excel in certain properties that cannot be replicated with other metals.

What Is the Difference Between Alkaline Earth Metals and Precious Metals?

Alkaline earth metals, also known as alkaline earth metals (but not "rare earth metals," which is a different group), are a set of 6 metals in Group 2 of the periodic table. While rare earth metals (which consist of 15 lanthanides + scandium and yttrium) are uncommon, they are not as rare as precious metals. For example, gold (a precious metal) makes up 4 parts per billion of the earth's crust, while Calcium (an alkaline earth metal) makes up approximately 40,000 parts per million (ppm) of the Earth's crust. Cerium (a rare earth metal) makes up 66 parts per million of the earth's crust. 

Precious metals are also far more expensive, with gold costing $66 million per ton and alkaline earth metals costing between $5k–100k per ton. These figures can fluctuate significantly depending on various conditions.

Summary

This article presented precious metals, explained them, and discussed their various properties and uses. To learn more about precious metals, contact a Xometry representative.

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