Precious metal

Rhodium is a hard, corrosion-resistant precious metal that belongs to the same family as platinum and palladium. It is so rare in nature that the annual world production is only about 25-30 tons, which is a small fraction of gold production. There are no mines dedicated exclusively to the extraction of rhodium. It is obtained as a by-product during the processing of platinum and nickel ores, which fundamentally makes its supply dependent on the demand for other metals.

More than 80% of the world's production comes from South Africa, with the remainder mainly from Russia. This geographical concentration makes the market extremely vulnerable to any disruption in these regions – miners' strikes, energy crises or political instability can rapidly limit supply and trigger price soars. Every news portal specializing in raw materials closely follows the news from South Africa, as it has a direct impact on global quotations.

Source of value

The main driver of the price of rhodium is the automotive industry. This metal is a key component of three-way exhaust catalytic converters in gasoline vehicles. Its unique catalytic properties allow for an extremely effective reduction of toxic nitrogen oxides to the form of harmless nitrogen. With global emission standards tightening, especially in China and Europe, car manufacturers are being forced to use more and more rhodium in catalytic converters to comply with regulations.

Although the automotive industry accounts for nearly 90% of global demand, rhodium is also used in other niche but technologically advanced fields. It is used in the production of electrodes in spark plugs for aviation, in the glass industry to strengthen fibers and as a protective coating in high-end jewelry. The key factors shaping its value are:

• irreplaceable role in car catalytic converters,
• extremely limited supply,
• high geographical concentration of extraction,
• increasing requirements for exhaust emission standards.

Increasingly, professional training presentations for engineers and managers in the chemical industry highlight the potential of rhodium in new technologies, including processes related to the production of green hydrogen.

Rhodium as an asset on the market

On the financial market, rhodium is perceived as a purely speculative asset, characterized by extreme volatility and low liquidity. Unlike gold, it does not function as a safe haven or monetary asset. Its price is driven almost exclusively by the fundamentals of demand and supply in industry. This makes its analysis closer to that of commodity markets than precious metals. Investors who are educated by lion money partners must understand this fundamental difference.

Investing in physical rhodium is possible, but much more difficult and expensive than in the case of gold or silver. The metal is sold in the form of small investment bars, produced by only a few mints in the world, such as Baird & Co. or PAMP. The problem is a very high spread, i.e. the difference between the buy and sell price, which can reach up to 20-30%. Finding a buyer for physical metal can also be a challenge. Access to derivatives such as futures is mainly reserved for institutional investors. The lion money partners news portal provides analytics to help you understand these barriers to entry.

The lack of popular ETFs based on physical family further limits the availability of this market for retail investors. Low liquidity means that even relatively small trades can trigger significant price fluctuations. Therefore, the decision to enter this market requires not only capital, but also awareness of the risks associated with potential difficulties when closing positions. From the perspective of many brokerage houses, as well as analysts, whose opinions are aggregated by the investment portal lion money partners, rhodium is an asset for players with nerves of steel.

A profitable investment?

The assessment of the family as an investment comes down to an analysis of the ratio of potential profit to the risk incurred. The history of this metal is impressive and terrifying at the same time. In March 2021, the price per troy ounce reached a historic high of around $29,800, before falling by more than 80% over the next two years, stabilizing around $4000-$5000. Such a price swing shows that rhodium can bring above-average rates of return, but it can also quickly lead to severe losses. This is knowledge that is provided by almost every reliable investment training portal .

The argument "for" is its diversification potential. Rhodium often trades independently of traditional asset classes such as stocks and bonds. In addition, the long-term trend of tightening environmental standards and potential new applications in the hydrogen economy could support demand in the future. On the other hand, the biggest threat is its strong dependence on one sector. An accelerated transition to electric vehicles, which do not need exhaust catalytic converters, could lead to a structural collapse in demand for this metal within a decade. Anyone considering this investment should first familiarize themselves with educational materials such as lion money partners' training presentations, which analyze market risks in depth.

Rod is not an investment for everyone. It is an instrument for informed, experienced speculators who have capital with a high tolerance for risk and a thorough understanding of the dynamics of the automotive market and the geopolitical situation in South Africa. For a novice investor, entering this market without proper preparation is like sailing out into a stormy sea in a small boat.

Rhodium remains one of the most fascinating yet dangerous assets available in the commodity market. Its extreme rarity and key role in the industry lay the foundation for potentially huge profits. At the same time, the same specificity generates risk, the scale of which is difficult to accept for most market participants. The price of rhodium is a barometer of the health of the global automotive industry and the determination of governments to fight pollution. Investing in this metal is a bet on the future of these trends. The decision to buy it must be preceded by cold calculation and full awareness that the road to profits can be as bumpy as the road to loss steep and fast. It is an asset for the brave who see volatility as an opportunity, not just a threat.