Is Rhodium A Good Investment? Rhodium is one of the 6 PGMs (Platinum Group Metals) that are often found together, but did you know that rhodium is the rarest of them all? In fact, it is the rarest of all the non-reactive and non-radioactive metals! Sit tight and grab a drink as I take you through different paths to back up why I reasonably believe Rhodium is a good investment plan.
Occurrences
Rhodium can be found naturally occurring but is mostly extracted during the mining and refining process of platinum. It is produced in South Africa, Russia, Zimbabwe, and Canada. Currently, there are no mines where rhodium can be directly extracted from.
Properties
Rhodium is not your usual kind of metal. It has a brilliant shine, is silver-like in color with a luminous texture, and is highly resistant to oxidation and corrosion. Its salts are rose red.
Uses
- Rhodium is mostly used as a catalyst:
As a converter in cars to help reduce nitrogen oxides in exhaust gasses, that way, the air we breathe is less polluted
During the production of acetic and nitric acid - Because it is highly resistant to corrosion, it is perfect as an electrical contact material.
- Remember we said it has a brilliant shine? An application of this is as finishing touches for mirrors, pieces of jewelry, and searchlights.
- As an alloy: When combined with platinum and iridium, they can be used as resistance wires, turbine engines for airplanes, furnace windings, high-temp thermocouples, pen nibs, and phonograph needles.
Now that we are familiar with Rhodium and its uses, I can now try to prove to you why I believe a rhodium investment is worth it.
Why You Should Invest in Rhodium
There are 4 major reasons to invest in rhodium. They are:
1. Its Function as a Car Catalytic Converter
Rhodium is the most effective when compared to palladium or platinum. It gets rid of nitrogen oxides from car exhaust way better than its precious metals counterparts.
In addition, rhodium also has an amazingly high activity for the oxidation/dehydrogenation of carbon monoxide and hydrocarbons. All these points point to one thing, which is that car companies will always give preference to rhodium in their production of luxury cars if they want to stay at the top of their game.
Rhodium in turn will be an invaluable raw material and that is good grounds for investing. I mean, it’s not as if these companies will just stop producing cars or settle for mediocrity because their consumers want the creme de la creme.
2. Inelastic Demand
Because there are no direct sources of Rhodium, it does not succumb to market demands. This simply means that a high demand for rhodium will not equal or influence a high production because it is not easily gotten.
However, it can also lead to unstable market prices. This is why it would be best to consult the services of an investment expert to help you get the most out of your rhodium investments.
3. Its Scarcity Increases its Value
Did you know that there are less than a dozen mines on earth that produce rhodium? This just further establishes the fact that rhodium is a scarce commodity. This characteristic equals mostly high prices. Mostly because the price of Rhodium is volatile, which further reinforces the point of inelastic demand. It can be crazily expensive today and the price tag is greatly reduced the next.
The reason for this is it has a small market size and its supply is 80% from South Africa. A typical scenario of this was in the 2008 financial crisis when the price of rhodium was reduced by almost 90% towards the end of the year! That is a bit disappointing I know, but it is labeled a financial crisis for a reason.
Now onto the interesting part. In 2017, rhodium prices rose back up aggressively and it was more than double their original price. The more interesting fact will be my next and last point. Read on!
4. New Scientific Discovery
Science is beautiful because it always looks for ways to make life easier and better. Recent research projects are projecting how rhodium can store solar energy through its function as a catalyst acting on cerium oxide. Interesting, isn’t it?
The combination of these two can convert carbon dioxide (CO2) and water into high-energy fuels. The application of their discovery is a huge step towards achieving the chemical storage of the sun’s energy, which has been giving scientists a headache for ages.
The implication of this genius discovery however is the rise in prices of rhodium since surpassing $21,000 per oz! This price is foreseen to only increase. I can’t think of a better metal to invest in really!
How to Invest in Rhodium
You can choose to invest in Rhodium by buying it in bars or through ETFs (Exchange Traded Funds), derivatives, or mining stocks, which are much cheaper rhodium investment options.
You should however try to do your research before making investments and go through the proper channels. A common investment tip is to compare prices amongst various suppliers to get the most out of your investment.
What to do After Getting Your Rhodium Bar
After investing in your rhodium gold bar, it is of utmost importance to immediately store it in a secure location such as a deposit box in a secure storage facility, just like how you would store your gold bars.
Rhodium is literally the most expensive precious metal there is presently, so you don’t want to take chances. Keep your rhodium safe, and stay safe too!
Final Thoughts
Rhodium is a good investment option and a smart way to beat economic uncertainties. Due to its price volatility though, it is advisable to invest in small amounts. That does not diminish the fact that it is still a better option than investing in silver or gold because as stated earlier, the new scientific discovery will only result in an upward direction of its prices in coming years. It all comes down to having the right information and acting accordingly.
