Rhodium: the Unsung Hero of Precious Metals
As far as hard asset investment go, gold and silver are a clear favourites among investors because they are a long-term store of value. In recent years, however, other precious metals are slowly stepping into the spotlight and are becoming an attractive option to diversify investment portfolios.
In this article, we will be talking about rhodium: the unsung hero of precious metals and how you can effectively add it to your investment portfolio.
What is Rhodium
Rhodium is a precious metal that belongs to the Platinum Group Metals alongside platinum and palladium and is the rarest of the three. It has a silvery appearance and is brittle and glassy. It is also resistant to corrosion and oxidation. It is a by-product of nickel and platinum mining.
A majority of the available rhodium in the market is used in the automotive industry while a small portion is also consumed by the chemicals industry. Some uses of this metal include automotive manufacturing, production of oxo-alcohol, fertilisers, explosives, and nitric acid, as well as for creating glass reinforcement fibre for digital displays. Moreover, rhodium is also used as a plate for white gold and silver jewellery because of its unique properties.
Less than a dozen mines can produce rhodium. Its main source is South Africa, followed by Russia, and then Canada. Since there are very few producers of this metal, its price tends to skyrocket particularly in times of increased demand.
Investing in Rhodium
Rhodium is an attractive investment option for people who want a hedge against economic uncertainty, particularly if you invest in rhodium in small amounts. Factors such as the metal’s rarity, instability of its biggest producing country, South Africa, and the demand from Chinese and Indian automakers tend to result in price volatility.
But the demand and limited supply for this metal can mean better days for investors as the factors previously mentioned can put an upward pressure on the price of rhodium in the years to come.
Unlike a decade ago, when the average investor could not buy rhodium, there are now numerous ways to invest in this precious metal. Apart from physical bars or rounds, you may also invest in exchange-traded funds (ETF), mining stocks, and futures/derivatives. An important note here is that it is critical to compare prices across different suppliers, so you can get the best bang for your buck.
Be wary of ETF’s as the actual backing by actual physical metal Rhodium can be vastly different than what is traded by the ETF. This can put you in a perilous position due to the disconnect between the size of paper market and the physical market.
Secure Your Precious Metals
Like gold or silver, once you’ve invested in rhodium it is important to store your precious metal in a secure location, such as in a safe deposit box provided by a secure storage facility.
At Private Vaults Australia, we ensure the protection of your valuable items with multiple layers of state-of-the-art security and offer complimentary insurance of $20,000 on your safe deposit box to get you started; you can also buy precious metals directly from PVA!
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