Rhodium may be the least known precious metal but don’t let that fool you. The value of this extremely rare and important element once soared to over nine times that of gold and even four times the value of Platinum. In 2008, Rhodium prices made it the most precious metal on earth.
Anyone who was lucky enough or smart enough to invest in Rhodium five years before its high was able to purchase the precious metal for less than $400 per ounce and make a profit of thousands of dollars per ounce.
The driving force of the high price of Rhodium was two-fold. First was the rarity of the precious metal. It only occurs in a few locations around the world, most often in association with platinum or as a byproduct of platinum and copper mining. The major producer is South Africa. Due to the extremely small concentrations of the element in the earth, it would probably not be feasible to mine by itself, even at a value of $10,000 per ounce.
The other factor that was causing the price of Rhodium to soar was the growing use of it in catalytic converters for the automobile industry. A very small amount of the element is typically used in each catalytic converter, along with platinum, which together act as a catalyst to help reduce auto pollution. Recent scientific break-throughs have led to an even greater use of the precious metal for this purpose.
Rhodium was considered a new "Gold Mine.” Most often sold in sponge form, the element was committed for sale, typically under contracts that continued years into the future. The automobile companies were projecting high growth and had to lock up long-term supplies.
Unfortunately for the investors in the precious metal, the market for automobiles tanked and the auto companies began dumping Rhodium back onto the market. They also cancelled future contracts to buy more of the metal.
The spot price of Rhodium then, amazingly fell in 2009, to way under $1000 per ounce. Less than gold.
A small market for Rhodium exists in the jewelry industry. Surprisingly, the use is not considered by the general jewelry-buying public as adding much value. This is most likely due to its history as only a plating which is applied in an extremely thin layer, thereby using very little Rhodium.
While Rhodium prices may vary, it is unlikely that a large new source will be found. Could this lead to a prolonged shortage and the return of high prices? If that happens then it may be said again that the Precious metal rhodium is the new gold.