Who is Buying Rhodium? Why is Rhodium so Valuable?

Rhodium

If you’re looking into investing in precious metals, you might have noticed one asset priced higher than the others. That asset is rhodium, and it is often considered the most expensive precious metal out there.

In this post, we’re going to break down why rhodium is valuable and who is even investing in it anyway.

Why is Rhodium Valuable?

For one, rhodium is an incredibly rare precious metal. The asset is actually extracted from platinum, which in itself is a rare metal. That just makes rhodium even rarer. It’s a tiny market in comparison to the others, with most of it (85%, in fact) coming from South Africa alone.

South Africa is one of two places in the world that can mine platinum. That market is already affected by even slight changes there. Rhodium is the same way but affected even more. Consider if a mine shuts down or South Africa has a bad relationship with, say, the United States. Knowing that there are very few places to find it otherwise, rhodium’s price might rise significantly.

Rhodium is also considered a very pretty metal to many. Very rarely is it pressed into jewelry, but the few pieces that exist are quite expensive. Jewelry made of this metal is often quite shiny, which marketers can manipulate in photos and other ways to make it more appealing.

What is Rhodium Used For?

Similar to platinum and palladium, rhodium is often used in automobiles. More specifically, it’s used in the catalytic converters of cars, which help reduce nitrogen emissions. While that’s the metal’s most popular use case, rhodium is also used to toughen glass and to produce acids in chemistry.

However, because the metal is so rare, auto manufactures are considering moving to more palladium-based converters. This could raise or lower the asset’s price. For one, it will become used even less, dropping its price and making it more available to buyers. But, if more buyers invest in rhodium due to accessibility, it will become more expensive again.

Pros and Cons of Investing in Rhodium

As mentioned, rhodium is an expensive asset. Most investors appreciate that the metal is constantly in the thousand range. It almost never drops into the hundreds. Of course, that doesn’t make rhodium much of an accessible asset, but those who can afford it will buy-in.

Also, rhodium’s use in automotives makes it a safe investment. After all, the car industry isn’t going to disappear randomly. Investors know that the metal will be in use for a long time.

That said, rhodium’s rarity makes it a volatile asset. Some investors will like this. After all, they can profit largely in the short-term. New investors might want to be wary, however. If they’re not paying attention, that volatility can ruin them.

While rhodium might be hard to discover, investors will appreciate that it’s relatively easy to buy. You can buy rhodium physically in terms of bars or coins, or even buy rhodium online. Of course, the asset is quite expensive, so it’s only reasonable to invest in a significant amount. Investors can even purchase bars made of other metals as well since a pure rhodium bar is so pricy.

With all of this talk of price, it’s pretty easy to know who is buying rhodium. Investors with a ton of money to throw around are doing so. Those who want to buy expensive jewelry for their friends and family are as well. Automotive companies buy the metal in bulk, so they’re also investing in it.

Rhodium is certainly a target investment for many. If you can afford it, certainly try to diversify. Otherwise, stick with other, safer assets for now.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.