A liquid that is ferro magnetic, meaning it is attracted to magnetic fields. Outside of the influence of a magnetic field, ferro fluid has a consistency similar to oil, but in the presence of a strong field it becomes relatively stiff. The fluid is often used in loudspeakers (especially tweeters) to conduct heat from the voice coil to the magnet assembly. It is placed in the magnetic gap along with the voice coil of the speaker. The magnetic field keeps it in place, where it serves as a much better conductor of heat away from the coil than air would. The result is that much more power can be applied to the voice coil without burning it out.
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