While most precious metal investors closely watch the price of gold and silver, many miss major moves in some of the industrial precious metals such as platinum, palladium, and rhodium. For many investors, diversification into these industrial metals can add diversity and profit potential to any balanced precious metals portfolio.
Rhodium, a sister metal to platinum is already up 35% in 2019 with demand outstripping its limited supply. Whether you are considering a new investment in precious metals or seeking to increase the return on an existing metals portfolio, you should pay special attention to rhodium, the most precious of all the metals.
Precious metals have different attributes. Gold is seeing increased global demand as central banks are adding to their reserves as a hedge against global turmoil. Silver is a high-bred metal that can trade as an industrial commodity or as a currency. Silver demand and global uncertainty seem to paint a bullish outlook for silver, but investors have been frustrated with lackluster performance.
All precious metals have important industrial properties given their density and resistance to heat. The rarest of the precious metals belong to the family of platinum group metals (PGM) and are essential elements in the production of catalysts, chemicals, and other industrial purposes. The platinum group metals include platinum itself, palladium, and rhodium, all of which are available in coin and bar form to investors.
Recent Performance
While platinum saw double-digit losses in 2018, both palladium and rhodium saw significant gains, of more than 33%. In fact, palladium was the second-best performing asset in 2018 after only natural gas. In 2019 we have seen continued gains for palladium and over a $1,000 per ounce or 35% increase in the price of rhodium. Over ¾ of the demand for rhodium comes from the automobile sector which has been surging in China and in India.
Rhodium Fundamentals
Rhodium is one of the most precious metals on earth; it is over 30 times rarer than platinum and over 100 times rarer than gold. Rhodium is mined as a byproduct of platinum and palladium. 82% of the world’s supply comes from South Africa and 14% comes from Russia. South Africa has recently seen political changes with a government that is increasingly left-leaning and favoring nationalization of resources. Johnson Matthey estimates that the global supply of rhodium is less than 600,000 ounces.
Well Below Historical Highs
Because rhodium is produced in such limited supplies and a significant increase in demand or drop in supply can have a drastic effect on price. In 2008, a decrease in supply drove the price of the precious metal up to over $10,000 per ounce. With the current price around $3,000, it remains well off its all-time high price. When you consider that palladium has reached an all-time high price, the Chinese auto industry has shown no signs of slowing, and the rhodium supply chain is volatile, many analysts believe that the price of rhodium has tremendous room for growth.
Investing in Rhodium
Rhodium is available to an investor in the form or qualities bars of .999+ fineness produced by the finest Swiss mints. Recently the world’s first legal tender rhodium coin was produced – the Tuvalu Rhodium South Sea Dragon, which is legal tender in the British territory of Tuvalu.
If you are interested in investing in rhodium or wonder if it may be a good fit for your portfolio, talk to Midas Gold Group. We can help you understand the market and deliver quality rhodium products promptly and securely.
