How To Invest In Rhodium

At the end of last week Rhodium for 30 day delivery was trading around $1500 an ounce, more expensive than platinum and palladium with which it shares its primary use in auto catalyst applications to control exhaust emissions.

We assume that our readers are conversant with its properties and range of uses. Now lets see how to invest in Rhodium and if it is worthwhile.

As it is such a rare metal there is no primary miner, that is, it is a by- product of other mining activities.

Just to cloud the issue the two principle sources of the metal are South Africa and Russia, both countries with question marks over their political futures so gaining exposure by investing in Rhodium miners will require a high degree of research, together with an outlook on the future political direction of both countries.

It is also known that auto manufacturers are actively researching ways to cut down on the dependency of expensive Platinum Group Metals in catalytic converters, with Rhodium the most costly of all.

We know of no ETF, mutual fund or unit trust trading solely in Rhodium on any world market.

To gain investment via this route your best bet is through one of the several PGM or precious metal funds where rhodium is part of the mix.

There is a Rhodium ´pool´ operated by Kitco through whom you can buy and sell the physical metal as ´sponge´, that is in a powder form. You should be aware that the spreads can be very high indeed when trading the metal by this route.

For more information about joining the ´pool´ go to www.kitco.com and search Rhodium pool.

That leaves the physical metal in ingot, bar or coin form. This is an exceptionally grey area that we are reluctant to comment on with the exception that we have heard of platinum/rhodium coins being minted.

Our advice is that trading in physical rhodium is highly specialised and is the domain of a few very high worth players. It is not a market that even the most sophisticated of knowledgeable general market investors can expect success by trading this exceptionally rare metal with its extraordinary properties and with a limited usage base as it rarely obeys the rules of the game.

For instance, just check out the spreads.

Although we have had questions on how to invest in Rhodium, we trust that readers will not mind if we sum up, in the hope that everybody will benefit, by advising that the safest way to get a toehold into Rhodium is via a producer.

• If the metal flies to the moon the odds are heavily in favour of the other PGMs doing the same.

• If a less expensive substitute for Rhodium and Platinum does arrive in the auto industry, at least some sting will be taken out of the downside by the wider applications enjoyed by the other metals produced by the miners.

One final thought, just like platinum and palladium, rhodium remains unchanged in the catalytic process and therefore is subject to very intensive recycling.