ORENDA Commodities

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Gold

Let’s begin with gold, which is known for its durability, malleability, and ability to conduct heat and electricity. Although it has some industrial applications, gold is commonly used for jewelry and as a form of currency. Its value is determined by the market 24/7 and is largely affected by sentiment rather than supply and demand. This is because the amount of hoarded gold far exceeds the new mine supply. Therefore, when hoarders sell, the price drops, and when they buy, the supply is quickly absorbed, driving up gold prices. People often hoard gold for several reasons, including financial instability, inflation, and political crises. When banks and money are perceived as unstable, or political stability is questionable, gold is sought out as a safe store of value. Similarly, when returns in other markets are negative, people turn to gold as an asset that maintains its value. Finally, during times of conflict or political upheaval, people hoard gold as a portable lifetime’s worth of savings that can be traded for necessities such as food, shelter, or safe passage to a less dangerous destination.

Silver

The value of silver is influenced by both its role as a store of value and as an industrial metal, making price fluctuations more volatile than gold. Although silver is often hoarded like gold, its price is also affected by supply and demand in the industrial market. Innovations such as the digital camera have decreased demand for silver in the photography industry, but the rise of a new middle class in emerging economies has created a demand for silver in electrical appliances, medical products, and other industrial items. Silver is also used in batteries, superconductor applications, and microcircuit markets. These developments may impact the demand for silver, but one thing is clear: the price of silver is influenced by its various applications and is not solely used for fashion or as a store of value.

Platinum

Platinum is a valuable commodity that is traded globally around the clock, much like gold and silver. Due to its rarity, it often fetches a higher price per troy ounce than gold during times of market and political stability. The metal is primarily used in automotive catalysts and jewelry, with petroleum, chemical refining catalysts, and the computer industry using up the rest. The price of platinum is influenced by geopolitical conditions in the countries where mining takes place, as well as supply and demand. The COVID-19 pandemic caused a drop in vehicle production and curtailed demand for autocatalysts, leading to a decrease in platinum prices. However, demand increased by 21% during the first quarter of 2021, driven primarily by the automotive industry, which could lead to an increase in the metal’s price. Investors should be aware that platinum mines are heavily concentrated in South Africa and Russia, which creates the potential for cartel-like action that could support or artificially raise prices. All of these factors make platinum the most volatile of all precious metals.

Palladium

Palladium is a lesser-known metal with various industrial uses. It is a shiny, silvery metal that is widely used in manufacturing processes, especially in electronics and industrial products. Additionally, it is utilized in dentistry, medicine, chemical applications, jewelry, and groundwater treatment the world’s supply of this rare metal, which has the atomic number 46 on the periodic table of elements, comes from mines located in countries such as the United States, Russia, South Africa, Zimbabwe, Canada, Australia, and Finland. Jewelers began incorporating palladium into jewelry in 1939. When combined with yellow gold, the alloy forms a metal that is stronger than white gold. Palladium was first used in coinage in 1967 when the government of Tonga issued circulating palladium coins to commemorate the coronation of King Taufa ‘ahau Tupou IV. Metalworkers can create thin sheets of palladium down to 0.00025 inches. Pure palladium is malleable but becomes stronger and harder when worked at room temperature. These sheets are used in applications such as solar energy and fuel cells. The largest industrial use for palladium is in catalytic converters because the metal serves as an excellent catalyst that speeds up chemical reactions. Furthermore, this shiny metal is 12.6% harder than platinum, making it more durable than platinum.