Rhodium Bullion

[SMS]

I am doing some light research on Rhodium bullion. For those that are not familiar with Rhodium, it is a durable, highly reflective metal. It is considered the most expensive of all precious metals and has an all-time high of over $320/gram (currently at about $88/gram). It is used extensively in catalytic converters (almost 3/4 of its use). There are two producers that I know of for Rhodium bullion of any kind. American Elements produces Rhodium in bars of 2 ounces or greater. And the Cohen Mint produces fractional gram and 1/4 gram Rhodium rounds (about 1/125th and 1/31st ozt).

 

American Elements has a 2 ozt minimum purchase for Rhodium. So, one would need to invest over $5500 at a time using their bullion. The Cohen Mint offers their 1 gram Rhodium rounds for $120 a piece, which is about $35 over spot per round (unless purchased in bulk).

 

Now, when you consider the 1/10 ozt fractional American Eagle Gold, with a dealer wholesale bid premium of $25 per round, we come to about a 23% premium. That wholesale premium raises to as high as 30% on retail sales. At $120, the Cohen Rhodium round has a comparable premium (36%), however, this should be considered more a wholesale premium with respects to this comparison.

 

Furthermore, these rounds are actually being sold on the secondary market with quite high premiums. Some of these rounds have sold for $160-$175 each. That is nearly a 100% premium! Now, I doubt that as Rhodium continues its climb back toward $10000/ozt again that we shall see this premium percentage hold. Yet, even a $70-$85 premium seems high, at first glance, for a 1 gram fractional.

 

One factor may well be the fact that they are considerably scarce rounds. If you order direct from the Cohen Mint, you have your minimum shipping charges to consider, as well as the fact that you may be waiting for up to 6 months to actually receive your bullion in hand. Sources, such as eBay auctions, are for bullion delivered in quite less time. Usually such purchases would be received within the week.

 

These rounds had once gone as high as $320 in bullion content in the past. Because of its use in the auto industry, Rhodium prices are currently directly tied into that industry, as well as its success and failure. If the auto industry was even able to recover half of its "strength" it had only three years ago, Rhodium bullion prices could well exceed $175/gram and easily return an investment on 100% premium.

 

Again, if the auto industry continues in its failure, and no new markets open for Rhodium, that PM may well be dethroned as the most expensive precious metal, and speculations on Rhodium fractional rounds could be found to be a worse nightmare than penny stocks.

 

What are your thoughts on this?

[KoRnholio]

I've done a little research myself, and it seems to me that it is a highly volatile market due to speculators. I'm not in any hurry to jump on the Rhodium train, even though it seems to have hit a pretty solid bottom on this crash. If the spread on the Kitco pool for Rhodium wasn't so high, I might have bought a little. But it's pretty ridiculous right now.

 

I own a little platinum myself, as it seems to have a longer track record as a quality product/investment.

[Mark Stilson]

I have seen/heard of it in jewelry making. Just never really looked at it. Just got finished looking at the charts and yikes it is volatile. 6 month chart high of $2650 and low of $1500. 5 year high $10010.

[hiho]

During the summer of 2008 the New York Times printed a novel by Colin Harrison called "Mrs. Corbett’s Request".

Each week they ran a different chapter in the Sunday Magazine section.

 

At the time rhodium was over $10000 an ounce and the metal had a starring role in the book which is why I remembered it.

I thought it was a great novel and looked forward to each and every chapter.

 

If you like a well written mystery in which rhodium is featured quite a bit check it out. Here are the links for every chapter...

 

Chapter 1

http://www.nytimes.com/2008/05/04/magazine/04serial-t.html

 

Chapter 2

http://www.nytimes.com/2008/05/11/magazine/11serial-t.html

 

Chapter 3

http://www.nytimes.com/2008/05/18/magazine/18serial-t.html

 

Chapter 4

http://www.nytimes.com/2008/05/25/magazine/25serial-t.html

 

Chapter 5 (?)

http://www.nytimes.com/2008/06/01/magazine/01serial-t.html

 

Chapter 6

http://www.nytimes.com/2008/06/15/magazine/15serial-t.html

 

Chapter 7

http://www.nytimes.com/2008/06/22/magazine/22serial-t.html

 

Chapter 8

http://www.nytimes.com/2008/06/29/magazine/29serial-t.html

 

Chapter 9

http://www.nytimes.com/2008/07/06/magazine/06serial-t.html

 

Chapter 10

http://www.nytimes.com/2008/07/13/magazine/13serial-t.html

 

Chapter 11

http://www.nytimes.com/2008/07/20/magazine/20serial-t.html

 

Chapter 12

http://www.nytimes.com/2008/07/27/magazine/27serial-t.html

 

Chapter 13

http://www.nytimes.com/2008/08/03/magazine/03serial-t.html

 

Chapter 14

http://www.nytimes.com/2008/08/10/magazine/10serial-t.html

 

Chapter 15 (End)

http://www.nytimes.com/2008/08/17/magazine/17serial-t.html

 

ENJOY!

[Mark Stilson]

Thinking it over, if you want to sell later how easy would it be? Since we are talking bullion having some place local you could hit and make a quick sale is one available? I can imagine going up to a dealer and wanting to sell and them getting a blank look on their face. Would the dealer go sure I know the Cohen Mint or American Elements is reputable, here's your money. I see Kitco sells a sealed plastic bottle of "rhodium sponge" with serial number. They suggest letting them keep it so it stays in a Kitco chain of custody. The difficulty and costs in minting probably drives the higher premium.

[KoRnholio]

Thinking it over, if you want to sell later how easy would it be? Since we are talking bullion having some place local you could hit and make a quick sale is one available? I can imagine going up to a dealer and wanting to sell and them getting a blank look on their face. Would the dealer go sure I know the Cohen Mint or American Elements is reputable, here's your money. I see Kitco sells a sealed plastic bottle of "rhodium sponge" with serial number. They suggest letting them keep it so it stays in a Kitco chain of custody. The difficulty and costs in minting probably drives the higher premium.

 

Yeah I just saw those rhodium bottles on the kitco site as well, they must be quite new.

 

You bring up a good point about the reputable mints. I have a feeling that even if you could find a dealer to buy them back, you would likely get little to no premium back. The only fractionals I know of that really keep a premium on the buy and sell are government issued gold/platinum coins.

[SMS]

I just received a Cohen Mint 1 gram Rhodium round on Monday. I will have to say that this metal is the absolute most difficult metal to get a good photo of. Too much light and it just completely fills a white flash into the camera lens. Diffuse the light, and you get a plastic effect. I had to use a couple thousand lumens from overhead florescent daylights at about 10 feet.

 

Now, to some things in the posts, Rhodium "bullion" has historically been traded on contract for bottle of "sponge" or dust. I do not believe I need to explain COMEX contracts and how out of league even a silver contract would be for most here, let alone a rhodium contract. But, Kitco does offer incremental ounce bottles of rhodium sponge. American Elements offers incremental bars of rhodium. In fact, American Elements was the first to offer rhodium bullion in forms such as bar and round. However, because of fabrication costs (and thus premium), it was not beneficial to continue fabricating rhodium rounds.

 

American Elements still does fabricate rhodium bars standard at two ounces troy, but, again that is too high for most "casual" investors. I was told by them that they discontinued the rounds because their clients were not into that market. So, about six months ago, Cohen Mint began to fabricate and sell rhodium bullion rounds. I have not researched enough on American Elements to know exactly how long they offered their own line of rhodium rounds, but they were the first to offer such bullion. Now, Cohen Mint is the only fabricator of rhodium bullion rounds in the world.

 

Now, imagine if your choice for silver were to buy it on prepackaged bottles of "sponge" or dust, with high minimums. And, imagine that when you decide to sell back your silver, there was an assay fee to make sure that the sponge or dust is actually the purity it is supposed to be. I personally believe that there would be far less silver enthusiasts today if this were so.

 

However, we have silver bullion rounds. Now, rounds serve a purpose (as well as bars). By law in the U.S., the rounds and bars must be hallmarked. The hallmark must declare the purity as well as weight of the bullion. Can someone lie? Of course! It's no different from buying a used car. You either trust or do not trust the salesman. And just because a round is minted by a government authority makes no difference, because you have counterfeits out there. You take a chance.

 

You take the chance when you buy bullion, coins, anything you buy in this life.

 

Now, the question about whether or not there is a market out there for the resell of this bullion. Remember that this is a brand new market! It has only existed for six months. These rounds have sold on the secondary market for as much as $175/gram when rhodium was spot at $2600. That is quite the premium!

 

But, just like any new item in numismatics (1999 Silver Proof), in the beginning, there will be hype and speculation. In the long term view, it is more than possible that the original hype and speculation may slow down. Yet, I believe that there most definitely will be a market for these rounds for years to come.

 

There are different markets, as well. It used to be that the two dominant markets were the wholesale and retail markets. You were either a dealer and gained your profits based on retail mark-ups and realized through the retail market, or you were a consumer and gained returns on your investment through buying low on premium and selling high on premium. However, with the advent of the internet and sites such as eBay, eBid, CoinBug, Craigs List, and more, we now have the secondary market as a dominant market.

 

In the secondary market, one is able to deal on both sides of the spectrum. One can well purchase on wholesale, and on the same market turn around and sell at retail. In such a market, premium has less affect on return. It is possible to buy back of wholesale, and sell on no premium and still return a profit. The secondary market is a peer-to-peer market, and it is this market I believe will be the life force in rhodium gram investing.

 

It is this same secondary market that has helped to fuel the investments in silver and gold bullion by the "casual" investor today. Do any of you really think that without the secondary market via the internet that we have today, gold and silver bullion would be thriving as it is? Do you think people would be buying and selling as often and for as much profit as they do today if the secondary market on the internet did not exist?

 

It is because the individual who physically owns the bullion has the power to practically liquidate the bullion immediately that silver and gold bullion (not contract) markets are thriving. Silver and gold are constantly running from place to place on the roads in our country 24/7. The secondary market has created a new breed of speculator.

 

It is this breed of speculator that will feed and fuel the rhodium bullion market. But, because the rhodium bullion round market is in its infancy, it may be a while before we actually see widespread acceptance of this metal or the premiums it currently commands.

 

Any further thoughts on the subject?

[just carl]

Thinking it over, if you want to sell later how easy would it be? Since we are talking bullion having some place local you could hit and make a quick sale is one available? I can imagine going up to a dealer and wanting to sell and them getting a blank look on their face. Would the dealer go sure I know the Cohen Mint or American Elements is reputable, here's your money. I see Kitco sells a sealed plastic bottle of "rhodium sponge" with serial number. They suggest letting them keep it so it stays in a Kitco chain of custody. The difficulty and costs in minting probably drives the higher premium.

I do not collect nor invest in anything that may turn out to be difficult to resell. That includes Gold, Silver, Platinum, etc. There are numerous shows for coins, stamps, guns, cameras, computers, etc but no shows for bulk metals. I go to about 2 to 4 coin shows a Month and almost any bullion stock just is not a biggy for sales. Metals, such as Rhodium, are just not something that people should consider unless they know how to turn it around for sale. At almost any coin store, hobby store and even banks, you can not easilyl sell such items. Might as well try collecting Egyptian Mummies. Although museums might take those.