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Silver

When you Buy, Invest or Trade Rhodium – Watch the Spreads!

Mac Slavo
January 7th, 2009
SHTFplan.com
Comments (15)
Read by 3,659 people

I’ve recently spent some time researching Rhodium trading via some great articles by Jack Lifton and posts at the Kitco forums. If you are interested in Rhodium as an investment, I highly recommend you spend some time learning more about the volatility of this particular metal.

I won’t go into the details of what Rhodium is used for. If you’d like to know more about this, check out Rhodium at Wikipedia or read Jack Lifton’s article (linked above).

As I am interested in investing in Rhodium myself, I thought I would do a little research into the Buy/Sell spreads. Now, if you’ve done any research yourself, you’ll find that it is nearly impossible to buy rhodium if you are not a major industrial user of the metal. From what I understand, Rhodium can be purchased as a commodity future, but I have yet to find a broker who can do that for me. I am not a big fan of futures anyway, so even if I did find a broker, I would probably pass on this method of investing.

The only other option available to the individual investor (that I have found thus far) is the Kitco Pool Account. The posters over at Kitco and other forums have only one real complaint, and that is the Buy/Sell spreads on Rhodium. I can sort of understand these spreads at their current levels, because Rhodium is just too darn volatile!

As of today (01-07-09), Kitco will SELL you Rhodium for $1500.00 oz. Kitco will buy back your Rhodium for $1100.00. So the minute you buy Rhodium, you’ll instantly lose $400.00 or, roughly 25% on your investment! ouch. If the spread stays at around 25%, you’ll need the price of Rhodium to rise to at least $2000 just to make your money back.

So, I started wondering, are the spreads always this high? These premiums are worse than buying physical silver right now!

Using Archive.org, I was able to pull Rhodium Buy/Sell spreads for the last 4 years. I am not going to go through all of the spreads here, but I’ll give you some indicators. Please note that Archive.org stopped indexing Kitco’s “Market” page (http://www.kitco.com/market/) on Feb 14, 2008. So unfortunately, we don’t get to see the spreads as they were when rhodium bounced to $10,000 an ounce.

DATE
BUY

SELL

     
01-24-02
$850.00
$1100.00
05-30-02
$860.00
$980.00
08-28-02
$700.00
$800.00
02-05-03
$560.00
$670.00
07-31-03
$470.00
$520.00
12-03-03
$440.00
$510.00
02-09-04
$480.00
$550.00
06-24-04
$760.00
$930.00
08-22-04
$1180.00
$1260.00
03-02-06
$3490.00
$3570.00
12-04-06
$4930.00
$5010.00
05-09-07
$5930.00
$6220.00
11-16-07
$6575.00
$6780.00
12-30-07
$6775.00
$6825.00
02-01-08
$7260.00
$7360.00
02-14-08
$8650.00
$8750.00
01-07-09
$1100.00
$1500.00

sourced with: http://web.archive.org/web/*/http://www.kitco.com/market/

This makes me feel a little better about getting into a pool account. While we have some large spreads now, we could see them return to previous levels where there isn’t that big of a difference between the buy/sell price of Rhodium. I could be wrong, so buy Rhodium at your own risk.

Also, notice those last two items… Had you bought Rhodium 12 months ago, and held until today, you’d probably be sick to your stomach right now.

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Author: Mac Slavo
Views: Read by 3,659 people
Date: January 7th, 2009
Website: www.SHTFplan.com

Copyright Information: Copyright SHTFplan and Mac Slavo. This content may be freely reproduced in full or in part in digital form with full attribution to the author and a link to www.shtfplan.com. Please contact us for permission to reproduce this content in other media formats.

15 Comments...

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  1. wintermute says:

    Mac, I too have been fascinated by the rare metals (and rare earths). Consider erbium. Until fibre optics this was a curiosity. Now it is of strategic commericial importance. Tellurium, indium and others all have niche roles where there is no good substitute. And furthermore – they are all by-products from mining commoner metals – but potential worldwide demand in the next decade is far more than supply could keep up in the long term. Good research on rhodium.

  2. Mac Slavo says:

    Winter, thanks for the comment. I used to work in Telecom and never heard anyone discuss erbium! I kind of wish there was some way,other than pool accounts, to trade these metals! Something like a Forex for metals would be really cool. I guess there’s Comex, but i am not really big into owning futures. If they made it easier for the average investor, more people would get involved with this type of stuff. Thanks for visiting SHTF!

  3. wintermute says:

    Hi Mac, thanks for the feedback. I have just checked wikipedia and it has a nice section on optical amplifiers and erbium.
    http://en.wikipedia.org/wiki/Optical_amplifier

    If you follow Eric Drexler and Ray Kurzweil’s nanotech future – then it becomes apparent that a future “Elements Exchange” is required. Not only for all elements – but their isotopes too. I look forward to such a time when commercial units and speculators can trade in them all with narrow spreads and good liquidity.

  4. chris says:

    You can buy Rh as a sputtering target (for e-beam evaporators) from a variety of sources (Kurt J Lesker, for example) and American Elements presses together a “coin” for investing/physical delivery purposes, as well as other metals (Like Er, etc). I’m sure these come at substantial premium to the number printed at Kitco’s website. I would probably recommend using their ‘pool’ method even with the spreads, or otherwise just stick to Au/Pt/Ag for metals investing.

  5. Mac Slavo says:

    Chris, thanks for the info about Kurt Lesker.

    I have actually contacted American Elements in the past – twice. The first time as an individual investor, the second time with a larger pool of funds to purchase a larger quantity of ‘coins’. I did not get a response from them either time. I was looking for around 20 ounces of Rh.. perhaps one needs to be a very large distributor in order to acquire their coins.

  6. John says:

    I am currently researching into Rhodium and other rare metals. It looks like it is just American Elements and Rhodium Coin dot com from Cohen Mint that make the coins. I have only recently contacted American Elements for a price quote on their coins. Looking at Rhodium Coin site, they are pricing them at $99.99 USD a gram. That is over double current market price so I believe you may be right that using the Kitco pool accounts is the cheapest way even with the wide spreads. Perhaps investing in stocks of companies with direct or heavy exposure to the Rhodium price would be a better way to invest into this metal though? I wonder if there is a Rhodium ETF/ETC or if there will be soon?

  7. Charles says:

    i think the point here is your going to lose money when you buy this low….but your gains could be considerable…the key is buy low pay the spread…hold until it stabilizes you make back your spread there alone….so now your even on what you paid…you profit whatever you can sell it for…

    To me its something you need to have five to ten years for !!!!!

    ALSO if you want to buy some you can you can buy 99.76% pure wire….thats as pure as rhodium gets….you can buy as little as .05 grams but it isn’t cheap!!!!

    Thanks for the other info about the pool….

    since this is used in car part mainly this is a great buy whenever the auto makers are doing poorly…and vise versa time to look at selling when production is fully blown….

    both platinum and Rhodium are the same in that sence…however PLATINUM has now become subject to the IMF the same way gold prices are controlled….

    I watch and look for the patterns…these are human created price movements….people are stupid and do the same things over and over….like as of today gold and platinum rebounded…for a month now they have been going up and down together….either IMF is cleaning up they they do from time to time….or it is dollar value movement…i doubt the latter since it went back up 80$ after a 100$ fall….in check with gold…all gold is fools gold….and RHODIUM for under $2000 an oz. is always a good deal!!!!!!

  8. peter says:

    If  you live in Germany you can buy a Rhodium ETF from ABM Amro Bank (now Royal Bank of Scotland). ..both in USD and Euro Quanto.
    The spread is  only about 15% !. The ETF is also traded at Frankfurt Stock exchange and the spead is much lower at about 5%, but the liquidity is lower.  I bought last year for at 1100 USD Rhodium and now it is already at 2700 USD. I think in about 12 month we will be at 5000 – 12000 USD…12000 probably just at a spike. Car industry is recovering, in South Africe where 70% of Rhodium is produced there is big political trouble ahead. Please read also the forecast at http://www.Hereaus.de for 2010. This very professional metal trading company expects Rhodium to be at 2500 – 5500 USD. This was estimated 5 month ago…I think it will go up much more. I my opinion it is still possible to invest now. If you live in Europe it is very easy.

  9. Jack says:

    Comments…..I  want to buy shares in Rhodium mines can someone pont me in the right directon to find North American companies that own mines and are publicly traded?

  10. Mike says:

    There are n rhodium mines. The metal is a by-product of other mining activities.

  11. David says:

    I have been observing the Rhodium market prices over the past decade, and have never followed through. Has anyone in the US bought it through Kitco?

  12. I have also been observing this market, but it is somewhat to volatile for my tastes. If I did ever choose to invest in Rhodium, I’d feel confident putting some money with Kitco.

    I should have bought some around the time I put this article together!

    But with the economy the way it is, I would not be surprised to see Rhodium drop back to $1000 or less, especially if the auto manufacturing markets start bottoming out again…

  13. I did an analysis of rhodium as an investment. If you are interested to read it please refer to my website:
    http://octafinance.com/category/precious-metals/rhodium/

    I expect rhodium to be in deficit no later than 2014 and the price to go up.

  14. I have 48+ grams of rhodium i believe,but need to test. it is solid form. also need to find market for selling it. it melts extremely higher than silver but has no discoloration after it has cooled off. anybody would like to help please e-mail me. thanks

  15. you can buy certified rhodium bars at http://www.goldline.co.uk from a respected mint in London and they also buy back. worldwide shipping. Enjoy

 

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