Rhodium’s Effect on the Economy

The most precious metal of which you probably have never heard — rhodium — most likely affects your personal and financial life much more than you know. Chemically, rhodium is a hard, light silver metal, and currently ranks as the most expensive precious metal in its class because of its rarity. (Rhodium outpaces gold, platinum, and even titanium in terms of both rarity and price.) Currently, rhodium demands approximately $80,000 US dollars per kilogram.

Because of its inert status and resistance to abrasion and corrosion, rhodium inhabits your everyday life as an alloy of white gold, platinum, and palladium. If you own white gold or platinum jewelry or other niceties, chances are that your possessions have been either coated with a rhodium surface to help preserve color, luster, and resistance to corrosion, or alloyed earlier in the process to create a stronger hybrid. Because of rhodium’s rarity and price, materials alloyed with rhodium hardly lose value or authenticity, while actually gaining longevity. Many times, rhodium is actually found in nature and mined as an ore mixed with the aforementioned precious metals, and is sometimes extracted for purity, but many times is preserved as is.

The Economic Effects of Rhodium

The price of rhodium acts like a leveraged precious metal: The price goes with the current commodity level, but fluctuates to a greater degree. For example, and most relevant to current economic conditions, rhodium dropped in 2008 to lower than $1000 per ounce from a high of about $10,000 per ounce. The slowdown of 200 was so prevalent that rhodium actually dropped below its historical pricing, which is $1000 per ounce. Early 2010 has rhodium priced at approximately $2750 per ounce, about twice the current price of gold. Historically, rhodium is four times the price of gold.)

Rhodium is available in the market through investment in mining companies and in the portfolio of certain exchange traded funds, but it always adds an element of risk. Portfolio managers who invest in rhodium are usually aggressively based and growth oriented. Also, with the use of rhodium in the catalytic converters of automobiles, its price does have an effect on the automobile induustry, and vice versa.