Something big is going on with ‘the world’s most exotic metal’. From $1200 last week to over $1400 yesterday, rhodium is on a tear. Here’s the latest…
Historically speaking, Rhodium has gone to $10,000 once before:
And it wasn’t that long ago. When the great recession hit in 2008, rhodium collapsed with everything else around the globe.
Fast forward ten years later, and year to date, rhodium has been on an absolute tear:
The most common use for rhodium is in catalytic converters, and well as other industrial uses, and over 80% of all the world’s rhodium comes from South Africa.
Just last week, rhodium was at $1200 per ounce, and over the last day, rhodium has surged over $1400.
Here’s more on the worlds’ most exotic metal:
Because the market is so small compared to the other metals, rhodium’s moves can be drastic and volatile, explained metals expert, Peter Hug, global trading director for Kitco Metals. From 2003-2008, the metal surged almost 23-fold when it hit that record $10,000.
For those wondering rhodium who? The metal is primarily used in catalytic converters of cars which helps with emission controls.
On average, South Africa produces 86% of the global supply. In 2008, due to a slew of issues with the country’s electricity supply, it affected the mining industry and caused a spike in the price of PGMs. Platinum went from $1700 to $2100, palladium rallied from $390 to $560, and rhodium hit a whopping $10,000 an ounce.
So why is no one talking about rhodium’s recent rally?
It simply has to do with a lack of knowledge, said Hug.
“It traded all the way down to $650 in December 2016 which was a screaming buy. It was begging to be bought with car sales headed higher. I just think people don’t have enough knowledge on the market and are nervous buying something they are not familiar with.”
The South African mining industry has been in turmoil this year:
The mining industry, represented by the Chamber of Mines, and the Department of Mineral Resources are in a standoff over the Mining Charter, which puts extra levies on companies and increases black-empowerment requirements that may dilute shareholders. A judicial review, in which Mineral Resources Minister Mosebenzi Zwane must justify the new measures to a bench of judges, is scheduled for December.
“The whole negotiation has to be reopened,” Mkhize said in a speech at a Johannesburg mining conference Wednesday. “Working together is better to get a formula for decisions we can live with together, rather than subjecting everything to the courts.”
Here’s something to think about. If the “ignored” developments in rhodium reflect a market that doesn’t even raise the eyebrows of the cartel or the MSM, imagine what is going to happen to gold and silver prices when the fundamentals and supply can no longer be ignored.
The South African government is intervening in the mining industry. Between government interventions, supply constraints, and coupling those factors with industrial demand, what is happening in rhodium shows that if market manipulators are not on it every second of every day, price can move up dramatically, even by $100s a day.