In a previous blog post, we discussed the rise of the rhodium price in the market as a useful material for industries such as the automotive. Rhodium can coat sterling silver jewelry to prevent silver from tarnishing. Jewelers also often mix rhodium into gold and platinum to create a shimmery white effect. Further uses include rhodium an agent in glass fiber production among numerous other methods.

Rhodium’s price plummeted by more than half within a week despite 11-year highs in January. This price was over $11,000 per ounce last Wednesday. Meanwhile, today it is now under $6000 an oz.

Why is rhodium’s price down?

Bullion Exchanges previously looked at the skyrocketing price for rhodium as directly in response to the increase in demand from countries such as China and India. This was due to the rising constraints of the Paris Climate Agreement to limit greenhouse gas emissions. Rhodium is a valuable asset to catalytic converters in cars to reduce harmful emissions. 

Rhodium price drop 5 year chartSource: Kitco.com https://www.kitco.com/charts/rhodium.html

 

It is too easy to pinpoint the drop to the impact of the coronavirus, but this is one huge factor. If factories are either in limited or closed operation, industries are halting their purchases of rhodium. This causes the rhodium price to plummet alongside stocks. This creates a differing trend from gold’s usual inverse relationship with the stock market.  

What will happen to the rhodium price in the future?

Rhodium is an unpredictable market for many reasons. First off, the current impact of the coronavirus was nearly inconceivable one year ago, making previous analyses of the rhodium price now somewhat obsolete. Outside factors such as disease and natural disasters can almost never be predicted, and those always influence the economy. But rhodium’s price has also fluctuated for many other reasons that impacted supply and demand. 

There will always be a short supply of this metal because larger amounts (1 million ounces annually) are only found in South Africa so far as a byproduct of platinum and nickel mining. Also, it is ten times rarer than gold, and the demand for rhodium is a niche market. Secondly, any geopolitical issues in this country directly influence the price because it slows production. On top of that, there are companies who forego mining altogether and recycle rhodium from unused catalytic converters, creating more opportunities for people to invest in places other than mines themselves. All this makes the market unpredictable, and there are two leading opinions by market analysts regarding this metal. 

Remember, these analyses were deduced before the coronavirus reached pandemic status. 

  1. Prices will either experience a spike in demand from the automotive industry, followed by a dip in price followed by another upswing. 
  2. Others suggested the price might not decrease at all.

So while these were the leading predictions for the metal, it is not yet clear what the impact of the coronavirus will have on this precious metal after the spread diminishes. But, rhodium has no substitute, so investors might have to keep their eyes on what happens in the next few months for the rhodium price. 

ABOUT BULLION EXCHANGES

Bullion Exchanges is your trusted precious metals retailer located in the heart of Midtown Manhattan’s Diamond District. Unfortunately, we temporarily closed our storefront until further notice from the impact of the coronavirus. Online orders might take between 15-30 days for shipping and handling because of international distributor delays. We are still working hard for our valued customers and are handling products with the highest care. We offer bars, coins, and rounds in a variety of gold, silver, platinum, and palladium products. If you have any questions, please contact us. We will be happy to help you, but we ask that you remain patient. We are working with a high volume of orders and customers at this time. 

 

Disclaimer: This article is not meant to serve as professional economic advice. Any action you take upon the information from this article and website is strictly at your own risk.

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