Rhodium’s Meteoric Rise, and What it Really Means for the Economy

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Rhodium started 2019 priced at $2300 per ounce. It is currently priced at $8900 per ounce, for a 386% rise in the last 13 months. What is Rhodium, why is the price rising, and what does that tell is us about to happen in the economy?

Everything You Need to Know About Rhodium

Rhodium is the rarest metal in the platinum group metals (PGM) on the periodic chart that happens to have very valuable properties in several areas of industry. Rhodium’s primary use is in automotive catalytic applications, as an enhancement to both palladium and platinum. It is highly resistant to corrosion and is extremely reflective. Rhodium is therefore also used in mirrors, jewelry, aircraft engines, and electrical connections.

Rhodium Supply Risk
Source: Royal Society of Chemistry

Being rare, Rhodium is mostly mined in two places – South Africa and Russia, with SA accounting for 60% of global supply. Supply can sometimes be tight due to economic and political pressures in South Africa which causes some volatility in prices. However, the following historic price chart for Rhodium shows that the overwhelming majority of price spikes occur just before recessions.

Rhodium Prices
Source: Quandl

This is when market bubbles are at their highest. As we have written here many times, auto market crashes are predictors of recessions and this is reflected in Rhodium’s rise and subsequent crash in prices. Rhodium is a canary in the coal mine for the auto market which happens to be one of the key predictors we at Gold Silver Pros uses to gauge economic health and oncoming recessions.

Auto Market Consumer Health, Part 6

Exciting New Applications

Swiss researchers have developed a process to convert carbon dioxide and water into high energy fuels. The material they used consists of cerium oxide and small amounts of rhodium that is used as the catalyst in the process. The discovery is an important step in the process of chemical storage of solar energy. Rhodium should continue to have critical uses in industry and we expect its demand to remain strong around the world due to its very unique properties and relative scarcity among the platinum metals group.

Enjoy the following video for much more on why Rhodium is an extremely valuable, but rare metal.

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