Rhodium, an extremely rare, silver metal has continued its multi-year growth, increasing 32% this month alone. The precious metal, which is most commonly used in catalytic converters for vehicles, has risen 225% over the past year.
Of all the metals in the platinum group, including platinum, palladium, osmium, rhodium, iridium and ruthenium, rhodium is the rarest — one ton of the Earth’s crust contains about 0.001g. It is a noble metal which means it is resistant to corrosion and oxidation, making it a perfect catalyst.
Rhodium, often with palladium and/or platinum, is mainly used in catalytic converters designed to clean vehicle emissions, which it does by reducing nitrogen oxide in exhaust gas. Rhodium is also used as a finish for jewellery due to its brilliance and its ability to resist tarnishing.
One of the reasons for the significant growth is the increasing demand by Asian automakers. Tightening emissions standards may have also driven prices higher.
Due to its rarity and lucrative value, the metal falls under the radar of investors. However, investing in rhodium is no easy task. The market size of rhodium is 1.1mn ounces, or 34 tons annually. This makes rhodium’s market a tenth of the size of palladium and a hundredth of the size of gold.
It is possible to purchase rhodium bars from refiners, but you can expect to pay a premium when purchasing and a discount when selling. If you have the funds, you can get a hold of the metal for £6357.00 per oz.
How to Trade
Due to the small market size, there is no futures market for rhodium. However, there are several ETF products available including Xtrackers Physical Rhodium ETF XFRD and AfricaRhodium ETF ETFRHO.
Take precaution if you are considering investing in rhodium because it is a small, illiquid and volatile market.