PRECIOUS METALS PRICE DEVELOPMENT
In this chapter we want to explain and show historically, how prices of precious metals changed according to specific incidents like shortages or begin of speculative trade manners.
Gold and silver are probably the oldest investments of all. These precious metals drove the trade in antiquity and were used as money. Their value was derived from their rarity and durability.
The history of these two metals shows that supply and demand for rare metals can lead to huge price jumps and that their investment value is therefore subject to high volatility. One by one, science discovered further precious metals. All eight of them have now been discovered and are used in a wide variety of industries. Nevertheless, trade with these metals progressed in tiny steps, metal for metal. Palladium became known in the investment market as the third precious metal and was sold in ingots.
Looking at the periodic table, next to come was platinum. Since its special bending stiffness allowed for special ring shapes that could not be achieved with the soft metals gold and silver, platinum quickly established itself on the jewellery market. Everyone has seen a platinum ring where the set diamond is only slightly touched by the two ends of the ring. The markets became increasingly tighter from metal to metal. Most platinum metals are found in massive quantities in world trade and are comparatively easy to recycle, which keeps them available for various applications. Let’s compare the market entries of the different metals on the historical charts below:
When researching palladium, we see its market entry around 1974, which is shortly followed by that of platinum around 1980. Each market entry of a “new” metal was followed by a series of side effects. Most important to note is that what every market entry had in common was an initial peak, which is followed by consolidation and subsequent market stabilization with moderate growth. The rarer the precious metals were, the more extreme the market reactions became.