We have synthesized a series of granular Fe‐SiO2 solids consisting of Fe metal granules of nanometer sizes embedded in an insulating SiO2 matrix. The ultrafine microstructures, revealed by TEM, are achieved by using a high‐rate magnetron sputtering system. The magnetic properties of such solids are determined by the granular size and the metal volume fraction. Below the percolation threshold, isolated single‐domain particles having large magnetic coercivity in the blocked state exhibit superparamagnetic relaxation, which has been studied by using SQUID magnetometry and Mössbauer spectroscopy. Above the percolation threshold, magnetic coercivity drops dramatically and the magnetic properties approach that of pure Fe. The anisotropy energy of the magnetic granules, much larger than that due to magnetocrystalline anisotropy, has been determined.

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