A precious metal is a rare, naturally occurring metallic chemical element of high economic value. Chemically, the precious metals tend to be less reactive than most elements (see noble metal). They are usually ductile and have a high lustre. Historically, precious metals were important as currency but are now regarded mainly as investment and industrial commodities. Gold, silver, platinum, and palladium each have an ISO 4217 currency code.
The best known precious metals are the coinage metals, gold and silver. Although both have industrial uses, they are better known for their uses in art, jewelry, fine jewelry and coinage. Other precious metals include the platinum group metals: ruthenium, rhodium, palladium, osmium, iridium, and platinum, of which platinum is the most widely traded. The demand for precious metals is driven not only by their practical use but also by their role as investments and a store of value. Historically, precious metals have commanded much higher prices than common industrial metals.
Gold is money. This has been a fact since well before the introduction of paper banknotes. The public is generally unaware how currency came into being. What is certain is that without gold, there would never have been any form of currency anywhere in the world.
At one time, gold and other precious metals were the only means of trade throughout the world. Gold was considered a source for acceptable exchange or recognized as a method of payment for goods and services. As we progressed into the modern age, gold began to be stored in safes and vaults resulting in paper currency being circulated in its place. People accepted that this paper was secured by gold and that it corresponded to its exact face value.
The Gold Standard was introduced in 1821. In 1834, one US dollar had a parity value of 1.504632 grams of gold. The Gold Standard was abandoned in 1914 with the outbreak of World War 1. It was later re-established in 1928 but due to the relative scarcity of gold, The Gold-Exchange Standard was adopted by most countries supplementing gold reserves for currency dollars. In time, debt and rising interest rates forced an increase in the manufacture and circulation of paper currency and the disparity between the true value of gold and that of paper currency resulted in a scissor-like divergence.