Platinum iridiumPosted: February 7, 2011
My 20 percent research time isn’t just spent on new technologies. Occasionally I’ll crunch the numbers on a interesting business model and see if it holds up. Here’s one I came up with recently …
Gold is the traditional asset of last resort. It’s portable and holds its value when economies collapse. Unfortunately gold is currently experiencing a speculation-driven price bubble, and since industrial demand is limited, investors will take a big hit when the bubble bursts. So I wondered, what other metals could you invest in? And could I launch a business selling (and buying back) coins and ingots made from those metals?
The metals have to satisfy a few criteria.
- They must be valuable, at least $10/gram ($300/ounce). Low-value metals are useless – just try fleeing the country with 100kg of copper in your carry-on!
- They must be tough, non-toxic, not radioactive, and not corrode easily. So no mercury, arsenic, sodium, or plutonium.
- Their value must be primarily driven by industrial demand.
A few metals made the cut, in particular platinum, iridium, and palladium. Osmium is a possibility, but might be too brittle. The rare earths got a lot of publicity recently, but their price was driven by an artificial supply shock, and don’t look like good long-term investments.
Platinum is actually ideal, especially given its industrial demand as a catalyst, but doesn’t seem very original. After all, platinum jewellery has been around for centuries.
But iridiun is the one I like. It’s the second densest element known to man and the most corrosion-resistant. It’s also relatively abundant in meteorites. How cool is that. But, as I discovered after chatting to a metallurgist I met at a pub, making coins is hard. You can’t just stamp them out of cold metal, you’d have to heat them to 2000 degrees first. To cast them you’d have to heat the metal to 2500. In theory you could mill them, but it’s one of the hardest materials out there, so you’d chew through a lot of tools.
Details, details. The basic idea looks sound, but probably won’t scale beyond a small business. I might write it up for a business plan competition.