Commodities trading covers an industry bigger than you think. One of its forms is metals trading wherein (you guessed it right) metals are exchanged with each other. Whether you are aware or not, metals are a significant and powerful element in numerous industries in the world. In different respects, they play an essential role in our day-to-day lives.
Let’s dive more into the types of metals used in metals trading. Below, learn about precious metals and base metals.
PRECIOUS METALS
What are they?
Precious metals are extraordinary, exceptional and rare metals. They exist naturally, don’t usually erode or oxidate, and don’t discolor or lose luster. They are difficult to find and procure. Them being at a premium makes these precious metals own their high-priced commercial value.
What are examples of precious metals?
Considered precious wherever in the world are only eight particular metals. They are gold, silver, platinum, osmium, palladium, ruthenium, rhodium and iridium.
Gold
What were and are they used for?
As most people know, these precious metals were and are still mainly used for jewelleries. It’s the same in the earlier times too – especially in the early times when jewelleries were part of wealthy people’s top priorities, and when metals were the main instrument of exchange.
Precious metals have also been utilized for currency, as money. In the age of advancing technology, precious metals, primarily gold, are installed to and used to create gadgets including computer parts and mobile phones. Apple is a technology brand that uses precious metals on their devices.
How do traders and investors treat them today?
Economically, precious metals really are priced exorbitantly. They are high-cost metals that shine so brightly, especially in the eyes of traders and investors. Since these commodities are rare and exquisite, they absolutely have upmarket value. For traders, these precious metals can diversify their portfolio. For investors, they are a well-heeled financial asset.
Gold remains the most popular and most sought-after precious metal for investment. It has functioned as a shield or hedge opposing inflation and the dwindling of major currencies. This has made gold a profitable and worthwhile investment. Next to gold, silver is another investor-magnet precious metal. It maintains its value for a long time. Silver performs well and carries on even in the middle of low interest rates. Aside from these two, platinum is also a commonly traded precious metal.
Silver
BASE METALS
What are they? How different are they from precious metals?
In many ways that can be rawly explained, base metals are the opposite of precious metals. They are conventional metals that rust or deteriorate due to contact or exposure to air, liquids or vapor. This is where their vulnerability is revealed.
Compared to the jaw-dropping prices of precious metals, the value of base metals is easier to comprehend, though still not completely cheap. They are more inexpensive because they can be more easily obtained and commonly found than their counterparts. Mining them is easier, too, given that there’s a lot of them on site.
What are examples of base metals?
Copper
There are more base metals than precious metals as they are more common. Some well-known base metals are lead, copper, nickel, aluminum and zinc.
What were and are they used for?
As base metals are easily found in many sources, they are the most used metals in industries that need an abundant supply of them.
In manufacturing and construction, zinc and copper are usually utilized. Zinc is primarily used to galvanize other metals, but this also serves a diversity of purposes – from simple daily items you personally use to big technological products that big companies use. You can see copper being used in electrical wirings due to it being a strong conductor. Copper is a very important base metal in electrical purposes as its high ductility makes it reliable and tough; it can be lengthily stretched out, yet it remains robust. Copper also withstands and repels oxidation and corrosion, making it very useful and superior in the world of electrical wiring.
Lead is a base metal with multiple purposes, and it can also be obtained from many countries all around the world. It is a heavy metal that is used in batteries, plumbing materials, paint and more. Popularly known as a chief metal that makes up coins, nickel is also typically used to strengthen metal alloys. That brings us to the unique characteristic of base metals, which is they are frequently used to plate fellow metals.
How do traders and investors treat them today?
They may not be as high-end in price as precious metals, base metals are still valuable and coveted because their manifold uses that heighten their worth. Base metals as currencies are not that resilient because of their tendency to easily tarnish and react to air and moisture and other substances they get exposed to. Higher volatility is seen from base metals because they are vastly used.
Zinc (Photo credit: ThoughtCo)
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METALS
Precious metals and base metals are different from each other. In their uses and in how they are traded in the metals trading industry, both are unique. Nonetheless, they are both valuable in the world of trading, metals trading, and in the world of everyday life.
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ABOUT THE AUTHOR:
Nicole Ann Pore is a writer, an events host and a voice over artist. Quality and well-researched writing is her worthwhile avenue to enlighten and delight others about things that matter. She is a daytime writer for FP Markets, one of the leading forex brokers in the world. Nicole graduated Cum Laude from De La Salle University Manila, Philippines with a Bachelor’s Degree in Communication Arts.
