Precious metals are precious because they’re rare.
There is a limited amount of these minerals produced each year, and scarcity is the reason for their value.
The three major precious metals that trade on futures exchanges around the world are gold, silver, and platinum.
Website, ‘the balance’, states the case for gold.
Gold is the most popular precious metal in the world as individuals and governments, over thousands of years, ascribe tremendous value to the metal that reflects light like no other. Gold has a dual role — it has industrial uses as well as financial applications.
Gold has a high resistance to heat, it is malleable, and it conducts electricity.
Therefore, industrial users consume 10 percent of the mine supply of gold each year, including the electronics, dentistry, and medical sectors.
Gold has a long history as an ornamental metal and fabricated, or jewelry demand accounts for 50 percent of annual production.
Finally, gold is money and many investors around the world hold gold rather than other investment assets.
40 percent of gold production each year finds its way into stockpiles or holdings by investors and governments around the world.
When investment demand is high, the price tends to rise. Countries own over 30 percent of the gold ever produced in the history of the world as part of their foreign exchange reserves.
While gold production is primary, meaning that companies explore for and extract gold from the crust of the earth as their main business, over 70 percent of the silver produced in the world is a secondary output.