Rhodium, the forgotten precious metal

Did Obama really buy a 30000 $ rhodium ring for Michelle in 2008 or not?  One thing is for sure, rhodium was hot in 2008 with a price of over 10000 $ after it made a jump coming from as low as 500 $ in just a few years.  The perception was that 10000 might be a little bit too high but 5000 $ was seen as a “normal” price.

But rhodium soon became a victim of its own success.

Industrial demand comes mostly from carmakers, they use it to lower vehicle emissions  in catalytic converters.  The high price of rhodium in 2008 made them look for alternatives and a way to reduce the use of rhodium.

The price plummeted all the way back to where it came from and didn’t move a lot until late 2016.

It’s been rising since then and more than doubled in 2017 to be back at 1700 $ today.  The most interesting part is the media attention it got: almost nothing.  Did you read a lot about the rising rhodium prices or famous people buying luxury jewelry in rhodium?  Nope.  Ask a random person about what happened with bitcoin in 2017 and they will know, and they may even know Tesla, or Nvidia.   But rhodium, hmmm…. what???

No media attention is a very good thing.

Many investors dumped rhodium (and platinum) because all cars will become electric in a few years.  No more rhodium needed to lower vehicle emissions, and that makes about 85% of industrial demand.   Why would you buy rhodium, while it is clear you should invest in cobalt, lithium, etc for the electric car revolution?

It may be true that we will need less rhodium in 10 years from now, but there are enough reasons to believe in (at least) a temporary revival because of an overreaction.

It will take years to replace all cars by an electric one.  Most sold cars today are still non-electric and this will continu at least for a few years.

In the meantime emission norms are getting more and more difficult.  There is something like Euro 6 in Europe.   Older cars in some European countries are even not allowed in a city anymore, or they have to be modified.  Green politicians don’t care about the fact that these norms are becoming unrealistic and too expensive.

In China they have a huge pollution problem which can not be solved by just electric cars alone.

There was also the CO2 scandal.  Adjusting the software may have contributed in a reduced usage of rhodium to keep it ‘clean’ for years but this trick probably doesn’t work anymore.

Only rhodium can provide in the high quality and high norms.  But it is used in very small amounts, and therefore a high price may not always be the most important factor to stop using it.

We will need more rhodium in the coming years, not less.  It is very volatile and a very high risk to buy but the upside potential looks good.

Oh, and 85% of this stuff comes from South-Africa, not the most stable country in the world these days…

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