Alternative Investments

Round Out Your Portfolio With Rhodium

Five years ago, gold was $1,274 per ounce. Today, it sells for about $1,826 per ounce, which is an increase of 43%.

But another precious metal’s growth has made that increase look paltry…

Rhodium has skyrocketed in value by more than 4,107% over the same period!

The shiny metal in the platinum group sells for about $28,000 per ounce today. And it’s so expensive because it’s the rarest of all the nonradioactive metals.

Today, I’ll go over what it’s used for, why its demand is going through the roof and why investors should care.

The Source of Continued Demand

Along with rhodium, the platinum group includes platinum and palladium.

Car manufacturers use all three of these elements to create catalytic converters – the devices in diesel-powered and gas-powered cars that help reduce pollution.

So the increase in demand for rhodium has most recently come from two emerging markets that have seen explosive demand for new cars…

China and India.

Both countries need more cars… but have strict emissions regulations in place.

They require more catalytic converters for new cars to reduce pollution. And rhodium is needed for each converter.

This is causing demand to continue outstripping supply. And it’s only going to get worse.

Outages in South Africa

The principal source for rhodium is South Africa. Its mines produce more than 80% of the world’s rhodium supply.

There’s just one problem: South Africa is constantly plagued by power outages.

Nearly all of the country’s power comes from Eskom Holdings, a state-owned utility. It operates at a loss and has severe financial issues.

The company is nearly $26 billion in debt and has trouble making its interest payments. To rid itself of some of these issues, it’s trying to split into three separate businesses.

Once that’s completed, outside power producers will be allowed to service the area. It’s also starting to shutter some of its coal plants.

But its biggest problem is a lack of spare generating capacity. There have been scores of unplanned breakdowns, which have resulted in power cuts.

Without spare generating capacity, Eskom has been forced to implement scheduled supply interruptions. These last from two to four hours a day – or whenever the grid demand is exceeded.

That happens 40 to 50 times every year. And Eskom acknowledges that those disruptions will continue for the next five years.

South Africa has a fleet of coal plants that are on their last legs. As a result, the downtime at those plants just continues to increase.

All those outages are a big problem for precious metal mining and refining operations because they use a lot of electricity.

Mines use some of that electricity to run pumps and prevent flooding. But combined, these issues create a questionable supply of rhodium, platinum and palladium.

Round Out With Rhodium

So is now the time to invest in rhodium? The short answer is yes.

We have an uncertain supply from South Africa. And we have increasing demand coming from India and China.

It’s a recipe for continued upward price momentum. Like other precious metals, rhodium is available in bullion bars.

This makes it very convenient for investors to own. And there are plenty of places to buy it. Just make sure to use a reputable precious metals dealer.

It’s clear that precious metals have a bright future. But none will shine as bright as rhodium.

Savvy investors should consider adding rhodium to round out their precious metals portfolio. It looks like it has plenty of room to run.

Good investing,

Dave

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