If you’re considering investing in precious metals, conventional wisdom would point to age-old options such as gold and silver, but recent developments have made rhodium a serious contender.
A lustrous, silvery platinum group metal, rhodium has become increasingly valuable with recent price surges mostly sparked by demand from the automotive industry. We’ll go into detail about whether it is a wise investment and where you can buy rhodium.
A History of Rhodium Investment
In the past, rhodium was rarely considered an investment in the way that precious metals such as gold, silver, platinum and palladium are. Until recently, due to its rarity, you could not invest in rhodium through ETFS, futures, or stocks. Even bullion was not available, with the exception of a few companies offering rhodium dust as a way to purchase the metal.
As a rare precious metal, rhodium can be a particularly tricky asset class. Some investors will benefit greatly from adding rhodium to their portfolios, while others won’t. As a general rule, rhodium is recommended for experienced investors as it is expensive and volatile in regards to its value on the market.
Here are some of the pros and cons of investing in rhodium.
Pros
• Serves as a good long-term hedge
• In demand from the automotive industry
• Frequent price fluctuations make it an attractive option for diversifying your portfolio
Cons
• Expensive
• Short-term vulnerability to price fluctuations that can significantly diminish its value
• The majority of rhodium comes from South Africa, putting the value of rhodium at risk to any geopolitical turmoil in the region
After you consider the pros and cons, if you’re still interested in rhodium investments, various methods for purchasing rhodium exist.
Bars and Coins
At the moment, the best way to buy physical rhodium is in the form of bullion bars. Rhodium coins exist, but they are not significant players in the rhodium bullion markets, so buying cheap rhodium bars is the least expensive way to acquire it. This is because the minting process for coins is extremely hard to attempt when using rhodium. The metal is very difficult to work with due to its high melting point and hardness – often resulting in fractures when the coin is stamped.
Three main brands exist for rhodium bullion, each providing their own physical investment options:
Baird & Co.
Baird & Co. is Britain’s only gold refinery. One of its starring achievements is launching the world’s first legal tender coin made of rhodium: the Tuvaluan $100 coin. They also produce one ounce rhodium bars made of 99.9% fine rhodium that are more readily available than the Tuvaluan coin.
PAMP Suisse
Another popular option is the rhodium bar produced by PAMP Suisse. The PAMP Suisse Lady Fortuna bars are known for their artistic design and are sought out by collectors as well as investors.
Cohen Mint
If you’re looking to buy rhodium coins, a small amount of options exist. Among the few mints available, Cohen mint is the most popular. Its coins come in a tamper-evident case with a label containing technical specifications of the coins. In addition, the case has a security hologram on the back and a certificate of authentication comes with all rhodium coins issued by Cohen mint. However, anyone interested in buying Cohen coins should know they closed their doors years ago, so buying from a third party supplier is your best bet.
If you’re interested in rhodium investment, but you don’t necessarily want to buy the physical format, there do exist possibilities.
Rhodium ETFs
Although there is no futures market for rhodium, a few exchange traded products are available such as Xtrackers Physical Rhodium ETF XFRD and AfricaRhodium ETF ETFRHO.
Remember to brush up on your knowledge of ETFs before proceeding. They are very different in that they work like a stock. In no way is purchasing rhodium through an ETF the same as buying it physically.
No matter how you decide to invest, ensure you are acquiring your rhodium products from a trusted vendor.
Taking Action
If you’re a serious investor with sufficient capital and experience, rhodium could be a great way to diversify your portfolio. Consider your financial goals and see if rhodium might be a good fit for you.
If you’re in possession of any physical rhodium products or scrap, you can send them to a precious metal refinery (like Manhattan Gold & Silver) to exchange them for cash.
