The subatomic particles electron, proton and neutron have magnetic dipole moments. This magnetic fields are intrinsic properties, means this fields exist under all circumstances. In nonmagnetic materials the sum of all magnetic dipole moments is zero.
In permanent magnets the sum over all this magnetic dipole moments is not zero. To produce strong magnets the material will be milled to powder and than pressed under the influence of a strong external magnetic field. During this production process some electrons are "frozen" with their magnetic fields, all in the same direction along the external magnetic field. Behind a certain temperature the and by the help of the thermic oscillations of the atoms the alignment of the magnetic dipole moments gets lost.
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