Rhodium (ten page analysis inside)

swissaustrian · Mar 9, 2012

First, a few brief comments by me:

Historically rhodium has rarely been lower priced than gold. In fact, it had a long term correlation to gold prices which was not 1:1, but clearly visable. Especially during gold and silver bull markets (1970s, 2000s), it more or less followed the direction of the bigger PM markets. See here

here are some fundamentals:

- UBS is launching physically backed rhodium certificates next year, said to be 1 t (not confirmed as of 3-9-12). Global annual production is just 25 tonnes, so this market is ultra tight. The spike in 2008 was caused by RBS launching a certificate plus strikes in South African platinum mines.
- Once these miners experience strikes again - a question of when not if - watch rhodium go to the moon.
- The car industry is the primary user of rhodium (mainly catalysts). Maybe they´ll have two or three tough years tough years with low demand. But car purchasing in the BRICs is exploding. This is a long term trend.

You can buy rhodium coins here:
http://www.rhodiumcoin.com/

-----------------------------------------

Now here is a great research study by UBP (Union Bancaire Privée; not ubS).
PDF here: http://www.ubp.com/cms/ubp/investme...ommodities/template/document.jsp?fileId=23240
Conclusion

In a nutshell, we believe that Rhodium is undervalued both in absolute and relative terms. Given its unique properties in the autocatalytic sector and unmatched prestige as a jewelry component, Rhodium should trade at multiples of Platinum and Gold rather than at a discount to both. Nascent mainstream investor demand bodes well for Rhodium prices as it has the potential to unleash the same kind of demand that has been partially responsible for driving Gold, Platinum and Palladium prices to where they are today.
Should investor interest in Rhodium grow, we believe that the impact on prices will be much greater than on other precious metals, since the average value of supply demand figures is around USD 1 bn for Rhodium compared to USD 12 bn and USD 230 bn for Platinum and Gold respectively.
Moreover, the higher proportion of Rhodium supply coming from South Africa – a country we have analyzed in previous issues of this publication – than for Platinum and Palladium makes the case even more compelling as country-specific supply shocks could have a more pronounced effect on Rhodium than on Platinum or Palladium.
An investment in Rhodium at current prices is justified from the value perspective, since it trades at considerably low values with
respect to Gold and Platinum. The catalyst to unlock the value and trigger a price increase could be coming from investment demand. Even a modest interest in this metal as an investment vehicle could tip the supply/demand balance into serious deficit.
In spite of all the above, we fail to see a fundamental that could unlock the realization of Rhodium’s unique value at current prices.
‘While lack of evidence is not evidence of a lack’, we would recommend investors who wish to enter now to arm themselves with plenty of patience.

KMS · Mar 9, 2012

I gotta head out soon for work, and the rhrodiumcoin premiums seem kinda high, but are there competitors?

pmbug · Mar 9, 2012

I'm concerned about a resale market for rhodium. Not sure my local coin market would buy them (for instance). What kind of liquidity is there for rhodium coins?

rblong2us · Mar 10, 2012

Rare earths are always in tight / ultra tight markets.
I am attracted to em mainly because I like the names they get .......

Im scared of em because its too easy for some big player to 'bunker-hunt' them and more importantly, for some nano tech filter layer to pop up out of the graphene lab and effectively make any rare earth that I own, redundant.

I therefore offer to support the rare earth markets in general, by not buying in.

Yes this is a big sacrifice on my part but its for the greater good of these markets. (-:

DoChenRollingBearing · Mar 10, 2012

Hey, I hear you re rare-earths and rare metals in general. Yes, just as I would jump in and buy some Dysprosium Oxide, DCFusor would come along and obsolete it for me...

Rare earth metal Molycorp (ticker MCP) yesterday announced a deal where they will but Neo Materials (in Canada), a producer of powders and other intermediate materials for magnet makers, etc. This will move them well along their goal of becoming a vertically integrated supplier of rare earths ("mine-to-magnet" strategy).

It looks like I am going to have to do some real research into this company to see if this is something (their shares) I want to own.

***

Re Rhodium, I am attracted to buying it because of its apparent undervalue (vs. gold), but PMBug raises a great point about its liquidity...

rbelong2us! I believe there is a company there in the UK that sells Rhenium and other oddball metals, I forget the name (minor metals something, perhaps?), but you may be able to track them down via the below gold price website:

www.thebulliondesk.com

And thanks for commenting at my blog! Another guy who looks UP sometimes too!

swissaustrian · Mar 10, 2012

There are two exchange traded rhodium certificates, if you're searching for liquidity

The first one was issued by Deutsche Bank and is listed at the London Stock exchange:
Here's the factsheet
http://www.etc.db.com/GBR/Documents/ENG/Products/Factsheets/factsheet_GB00B684MW17.pdf

The second one was issued by RBS and is listed in Frankfurt, Germany.
Here's the prospectus: http://markets.rbs.de/MediaLibrary/...s/DE000AA0XEK0/DE000AA0XEK0_DE_Prospectus.pdf

Kitco also offers Rhodium trading:
http://www.kitco.com/charts/rhodium.pool.html

swissaustrian · Mar 10, 2012

KMS said:
I gotta head out soon for work, and the rhrodiumcoin premiums seem kinda high, but are there competitors?

I doubt that there are any, because it's extremely difficult to coin. The Cohen Mint actually claims to be the only coiner:

Q: No one has ever made a Rhodium coin before? Is that
because no one would have wanted to buy one?
Why is your company the first to make Rhodium coins, why
hasn't it been done before?

A: There are several factors that have come together that have kept a
pure Rhodium coin off the market up till now.
The first is the time we live in. Although Rhodium has always been
valuable, only in the last decade has its price really broken records, and
the level it reached in 2008 astonished even the most jaded metals
traders. Its getting to be more and more important to society as time goes
on. As emissions standards become stricter, the need for this metal to
reduce dangerous gases will increase.
It is already incredibly rare, and as industrial demand increases,
speculation will tend to magnify value on the open commodities markets.
Only a few years ago did we see the appearance of Rhodium investment
pools, which are ways to buy paper shares in rhodium and bet on the
price moves. People are getting interested, those who are in the know.
So we see a trend forming where over time there is a gradual increase in
price, and a gradual interest in investors.
The problem is that to invest in the metal has up till now meant buying
paper shares in a pool, which was backed up by who knows what. The process was very opaque and not many people understood it, including those who plunked down thousands of dollars for paper certificates.
Rhodium is a strange, exotic metal, with properties unlike more common
precious and coin metals such as gold, silver, and copper.
With these more common metals, if you apply force to them they will give
and flow, a property called "ductility". They will bend, they will allow
themselves to be rolled into sheets, to be stamped with designs, they're
perfect coinage metals.
Not Rhodium. Rhodium is very hard, its brittle, and its a nightmare to work
with. Its not easily processed into a sheet. Its nearly impossible to punch
blank disks once you do manage to make the sheet because the metal
just wants to snap and flake. This is to say nothing of striking designs on
the blanks if you can get them to come out right. Its a hard, stiff material
closer to the consistency of really hard glass than any metal we're used to
holding in our hands.
To illustrate this point, we took one of our pure Rhodium coins and we put
it into our vice and proceeded to bend it. If we had a quarter, a penny or
any other coin, it would just bend and thats it. All common metals behave
that way. Here's what happened to the Rhodium coin:
It didn't bend, not even a little. It just snapped, like we knew it would. The
grips of the vice - didn't even cause dents where force was applied.

Mostly this picture is up to satisfy the curiosity of our customers, as I know
some of you would have otherwise been tempted to do this experiment
yourselves, and thereby ruining a perfectly good coin.
So there we have our answer as to why this hasn't been done before we
did it: The price only in recent years has gone up very high, and all along
it was a horrible substance to try and make coins out of, discouraging
everyone from trying.
In terms of demand, its incredible. We have sold such a number of these
coins that as soon as they were offered they quickly shot up to be our
number one product. People who understand what Rhodium is want it, and
they want a lot of it.
As to how we managed to do it, when all others who tried failed? Well,
thats a little bit of a company secret.

http://www.rhodiumcoin.com/FAQ.html

DoChenRollingBearing · Mar 11, 2012

swissaustrian, great thread, thank you very much for providing this information on a unique metal. I wonder how the Cohen Mint does it... Do you know of anyone who has bought from them?

@ rblong2us,

Here is the website for that company that sells minor metals in the UK:

www.lipmann.co.uk/

Click on the "Metals Traded" tab up there at the top, and you will see they sell a whole bunch of them, highlighted on the Periodic Chart of the elements. It's kind of cool. They even sell Rhenium (Re) "almost" a platinum group metal.

swissaustrian · Mar 11, 2012

DoChenRollingBearing said:
swissaustrian, great thread, thank you very much for providing this information on a unique metal. I wonder how the Cohen Mint does it... Do you know of anyone who has bought from them?

I have no idea how they're doing it.
I also don't know somebody who ordered a coin, I only own certificates. But I might order a coin, though not for profit, but just to hold it.

swissaustrian · Apr 15, 2012

As the biggest Platinum mine in the world (15% of global supply) has been shut down by a 6 week strike ( http://www.pmbug.com/forum/f13/platinum-palladium-etc-77/index3.html#post7110 ), I expect some fireworks in the ultra-tight rhodium market, too.

benjamen · May 18, 2012

Rhodium

Time to start stacking Rhodium:
https://online.kitco.com/bullion/rhodium/product_box_rhodium_bar_1oz.html

:drool: :drool: :drool:

Bonzo · May 18, 2012

benjamen said:
Time to start stacking Rhodium:
https://online.kitco.com/bullion/rhodium/product_box_rhodium_bar_1oz.html

:drool: :drool: :drool:

What are they charging for them? Definitely interested!

Saw a Rh coin but they wanted close to $2000 when Rh is at $1325 spot. Way too high premium!

benjamen · May 23, 2012

Bonzo said:
What are they charging for them? Definitely interested!

Saw a Rh coin but they wanted close to $2000 when Rh is at $1325 spot. Way too high premium!

https://online.kitco.com/bullion/co...m+Post&utm_campaign=rhodium+bar+launch+051712

Looks like they are currently $1,550

:drool:

Bonzo · May 23, 2012

benjamen said:
https://online.kitco.com/bullion/co...m+Post&utm_campaign=rhodium+bar+launch+051712

Looks like they are currently $1,550

:drool:

Thanks B! The Cohen Mint coin is currently $1745 so the bar is definitely the better deal.

http://www.rhodiumcoin.com/index.html

benjamen · Jun 26, 2012

less demand and more supply for rhodium:
http://www.kitco.com/ind/GoldReport/20120625.html

If you skip down towards the bottom, there is an interesting section on rhodium.

"Poor rhodium. It's less than half the price that it was the beginning of 2011 because of deterioration in demand. A couple of years back, rhodium reached $10,000/oz. When that happened, users were saying, "We've got to stop using rhodium!" There was a lot of thrifting. For instance, there have been some technological advances in the auto industry that have helped reduce rhodium use for auto catalysts. Rhodium is competing with that technology.

There's also been an interesting trend development in rhodium supply. Rhodium supply in South Africa has grown at a much faster pace relative to platinum/palladium in the past 20 years. A lot of that is because of new developments in the processing of the metal and greater recovery rates of rhodium. There have been larger surpluses of rhodium in the past decade. That coupled with aggressive developments toward substituting and thrifting in auto catalysts and other catalytic applications is bearish for rhodium. Rhodium is a good medium- to long-term play, but I expect some further declines in the price in the short term."

benjamen · Jul 11, 2012

Positive outlook for Rhodium?
http://www.bloomberg.com/news/2012-...g-on-record-global-car-sales-commodities.html

"The surplus will decline 62 percent to 52,900 ounces this year, the least since 2008, as production contracts, Morgan Stanley estimates. The car industry, which uses rhodium-coated catalytic converters, will consume the most in five years. Prices that slumped 38 percent in the past 12 months will rally 62 percent to $2,000 an ounce by the end of 2013, the median of eight analyst estimates compiled by Bloomberg shows."

Does anyone actually have any rhodium coins? I have never personally seen one.

benjamen · Jul 11, 2012

Kitco is selling one ounce bars of Rhodium for $1,450

https://online.kitco.com/products/31032/1_oz_Rhodium_Baird_Co_Bar.html

swissaustrian · Jul 11, 2012

benjamen said:
Does anyone actually have any rhodium coins? I have never personally seen one.

I haven't pruchased one, but I might do so soon:

http://www.pmbug.com/forum/f13/rhodium-ten-page-analysis-inside-616/#post5324

pmbug · Jan 14, 2020

* necro bump! *

...
Rhodium -- mainly used in autocatalysts and five times more costly than gold -- surged 31% already this month, touching the highest since 2008. Stricter emissions rules have fueled a multiyear rally and there’s speculation that investors are also jumping in, betting that prices will climb toward a record.

Rhodium rallied 12-fold in the past four years, far outperforming all major commodities, on rising demand from the auto sector. Like palladium, the metal is mined as a byproduct of platinum and nickel, but it is a much smaller market and so is liable to big price moves when supply or demand changes.
...
Rhodium was at $7,925 an ounce by Monday ...

https://www.bloomberg.com/news/arti...al-rhodium-leaves-everything-else-in-the-dust

According to the chart on the OP, Rhodium's high mark looks to be right at $10,0000/oz circa 2008. If the speculation in the report above is correct, Rhodium could gain another 25% or so in the near term?

Rhodium (ten page analysis inside)

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Rhodium (ten page analysis inside)

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