Why is Rhodium So Valuable and Could This Foretell Price Action of Other Metals
What is Rhodium?
As it turns out, Rhodium is a strong player in the precious metals group, a silent but impressive leader across the board and in many ways. First, let’s consider rhodium’s value. As of this writing, Rhodium is trading at just a hair above $12,400 dollars an ounce, more than 6 times that of gold. Got your attention? Thought so.
As a part of the Platinum Group Metals, alongside its cousins Palladium and Platinum, Rhodium is extremely rare and in demand as a result of the automotive manufacturing industry. It is used in smaller quantities alongside the aforementioned metals in the construction of auto-catalyst systems. Though global economies are facing uncertain times and car sales statistics have fluctuated wildly as a result, the manufacture of cars and catalyst systems is poised for some dynamic growth in the years ahead and rhodium will be leading the way.
Why is Rhodium So Valuable?
Rhodium is a silver-white metallic element that is highly reflective and remarkably resistant to corrosion. Rhodium is primarily used in the manufacture of catalytic converters because this precious metal is able to reduce the amount of exhaust gas and nitrogen oxides into the atmosphere. As you may know, this is done to help combat potential climate issues which means that the value of rhodium is still riding a strong wave and far from peaking.
There is also the matter of rhodium’s rarity. Rhodium’s value easily holds because it is extremely rare, more so than gold. With the booming catalytic business at hand, one might easily deduce that rhodium will only become more rare and, thereby, more valuable in the years and decades ahead. Supply and demand economics tells us that it’s not too late to reap from the escalating value of rhodium.
Will Rhodium’s Value Positively Affect the Value of Other Precious Metals?
It’s very possible that rhodium’s value might directly affect the overall value of its cousin metals in the Platinum Metals Group. The reason for this is because Rhodium could actually become too costly to use as an element in the manufacture of catalytic converters. Manufacturers might start to rely more on platinum and palladium in the production of their catalysts. As one might quickly deduce, this would translate into a bump in demand which means an increase in value for those particular metals.
The question then begs how and when would this transition happen? The quick and easy answer is ‘not anytime too soon’. A transition away from rhodium is currently not a favorable choice and it would take some time to plan for such a conversion. As a result, the suggestion here is that rhodium’s value will easily sustain or more likely increase in the years ahead.
So, now is a very good time to take a closer look at the Platinum Metals Group and consider rhodium as a potential investment alongside platinum and palladium.
About The Author
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