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The Rise And Fall Of Aluminum: A Cautionary Tale

Aluminum, which is so cheap now that it is used to make cans and cooking utensils, wasonce more valuable than gold. At a banquet, the Emperor of France, Napoleon III, gave his most honored guests aluminum cutlery, while everybody else had to make do with silver. Aluminum bars were exhibited alongside the French crown jewels at 1855's Exposition Universelle and the pyramid set atop the Washington Monument is made of 100 pure ounces of the metal.

Aluminum was valuable because it was exceedingly difficult to extract from ore, but in 1886, with invention of the Hall-Héroult process, its supply exploded and its price fell through the floor. An equivalent explosion in the supply of other precious metals is unlikely, but industrial demand for precious metals is unreliable. Much of the platinum and palladium presently sold is bought by the motor industry. It uses the metals to make catalytic convertors, but is hunting for a way around its dependence on such scarce resources. Demand for silver declined with the rise of digital photography, because the metal was an important part of developing film. Technological advances like these can't be predicted, but they can easily make a fool out of investors hanging onto metals they think are worth more than gold.