Precious metals are typically traded on the Commodity Exchange (COMEX) part of the New York Mercantile Exchange (NYMEX). Other non precious metals are traded on the London Metal Exchange.
Typically the word precious metal refers to Gold, Platinum, Palladium and Silver. Precious means they are rare or have a high value. The value of the metal is usually measured in Troy Ounces as the price is determined by a mixture of supply and demand variables.
If supply is restricted this increases the value of the metal.
If the demand for the metal outstrips supply, this increases the value of the metal.
Examples of demand include the purchasing of gold by the federal reserves. This increased demand to an already limited supply of gold pushes up the price.
If all the gold in the world was collected and smelted together we would probably have a 25 meter cube.
Gold has no real discernible use apart from for Jewelry and the fact it is so rare. However, Silver is different.
Silver’s value tends to be more volatile than gold and can be impacted by the supply, but also by the demand from industry and investors.
Silver is incredibly useful for industry having the highest electrical conductivity of any element, and the highest thermal conductivity of any metal. Silver performs vital roles in electronics, photography, water purification systems and even deodorant. Silver is a natural germicidal agent like other heavy metals but is not toxic to humans.
Gold and Silver are often seen as investments that can hedge against the devaluation of currencies. Worries about the dollar and the euro eventually losing most of their value drives investors to seek to collect as much gold and silver as possible.
One can easily invest in silver and gold by buying coins and bullion. Of course the price of silver means it is easier to accumulate in smaller amounts over time. A 2012 1 oz American Eagle coin costs approximately $60 in 2012 whereas the gold version of the coin sells for approximately $2000.
One can also invest in mining stocks specializing in exploration or excavation, or alternatively precious metal ETF’s or gold and silver futures.