Friday , 25 July 2014

A Direct Comparison Between Gold, Silver, Platinum and Copper

So says Krassen Ratchev in edited excerpts from his original article* as posted on www.SeekingAlpha.com.

Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has edited the article below for length and clarity – see Editor’s Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.

Ratchev goes on to say in further edited (updated) excerpts:

Physical Properties Comparison

Table 1 below shows the physical properties of gold, silver, platinum and copper:

Physical Property Gold Silver Platinum Copper
Density (g/cm3) 19.30 10.49 21.45 8.94
Electrical Conductivity (S/m) 4.1×107 6.30×107 9.43×106 5.96×107
Reactivity Series (no units) #2 #3 #1 #5
Thermal Conductivity (W.m-1.K-1) 318 429 71.6 401
Young’s Modulus (GPa) 79 83 168 110-128
Hardness (Mohs scale) 2.5 2.5 4.25 3.0

 

If you didn’t graduate with honors in chemistry you needn’t worry – I have described each of the physical properties below:

  • Density -
    • Platinum has the highest density of the four metals which means that you can fit more mass of platinum in the same amount of volume than gold, silver or copper.
  • Electrical Conductivity-
    • Silver possesses the greatest ability to conduct an electric current through its structure.
  • Reactivity Series -
    • Platinum is the least reactive, followed by gold, silver, mercury and copper. This is why gold artifacts that have been buried for thousands of years have little to no tarnish on them – and why that long-lost silver vase of yours will need some polishing before it looks presentable for the mantelpiece.
  • Thermal Conductivity-
    • Silver has the greatest ability to transfer heat through its structure than any of the other metals.
  • Young’s Modulus-
    • Gold has the greatest ability to be hammered and stretched into long and flat shapes before losing its structural integrity.
  • Hardness -
    • Platinum is the hardest of the four precious metals. This means that you will have more success in scratching a bar of gold with a platinum coin than the other way around.

It is now not very difficult to imagine how the physical properties of these metals have influenced their evolution over the centuries from jewelry to money to a presently ever-growing list of industrial and scientific applications but how do they stack up on a price-to-physical-property value scale?

Ratio of Prices of Each Per Unit of Physical Property

In Table 2 below I have presented the current prices (USD/oz as of May 9th, 2014) of these metals and the corresponding ratios of prices-per-unit-of-physical-property from Table 1.

Gold Silver Platinum Copper
May 9, 2014 Price (USD/oz) $1289 $19.16 $1431 $0.193
RATIO PRICE DIVIDED BY PHYSICAL PROPERTY IN FIGURE 1
Density 66.8 1.83 66.7 0.022
Electrical Conductivity**  ?  ?  ?  ?
Thermal Conductivity 4.05 0.045 19.99 0.0005
Young’s Modulus 16.3 0.231 8.52 0.002
Hardness 515.6 7.66 336.7 0.064

**[Editor's Note: Higher mathematics is not my forte so I was not able to do the required calculations. If you can it would be appreciated if you sent the numbers to me at editor-at-munknee-dot-com. Thank you.]

As can be clearly seen from Table 2, if you want to get decent bang for your electrical buck – or any other buck for that matter – copper stands out as being the best value-for-money. Of course, everyone already knows this.

What useful information is…[ to be had]  from the above figures in Tables 1 and 2?…

Despite silver’s better electrical and thermal conductivity and similar Young’s Modulus to gold, its price ratio in these three physical properties makes it appear to be extremely cheaper than gold. As such, one may conclude that currently silver is a much better investment than gold.

What about platinum and its unusually low price relative to gold today? Historically platinum has traded at a premium to gold. While today you will get a better bang for your buck if you use gold for electrical and thermal conductivity applications rather than platinum, copper trumps both of these metals in that regard so the price difference between gold and platinum must be coming from a different use of the metals.

Stay connected!

Store-of-value Potential

…Clearly a coin or bar made from platinum will be a better store of value – at current prices – than gold. Why? Simply because platinum:

  • is harder (won’t scratch),
  • less reactive (won’t tarnish) and
  • occupies a smaller volume (easier to store) than gold.
[Nevertheless,] the market seems to think that these physical properties are deficient to something else. Perhaps it comes down to the possibility that:

  • central banks simply can’t get enough platinum bullion (due to its rarity in the earth) to make it worth their while to replace their gold bullion or perhaps that
  • platinum has been unable to (in its short existence) shake off gold as the true form of money.

Conclusion

Whatever the case may be for you, I believe that an analysis of precious metals from a physical property perspective not only raises interesting questions but may also yield some valuable insights….

*http://seekingalpha.com/article/548251-a-truly-physical-perspective-on-precious-metals (© 2014 Seeking Alpha )

Editor’s Note: The above article may have been edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.

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