I’ve recently spent some time researching Rhodium trading via some great articles by Jack Lifton and posts at the Kitco forums. If you are interested in Rhodium as an investment, I highly recommend you spend some time learning more about the volatility of this particular metal.
I won’t go into the details of what Rhodium is used for. If you’d like to know more about this, check out Rhodium at Wikipedia or read Jack Lifton’s article (linked above).
As I am interested in investing in Rhodium myself, I thought I would do a little research into the Buy/Sell spreads. Now, if you’ve done any research yourself, you’ll find that it is nearly impossible to buy rhodium if you are not a major industrial user of the metal. From what I understand, Rhodium can be purchased as a commodity future, but I have yet to find a broker who can do that for me. I am not a big fan of futures anyway, so even if I did find a broker, I would probably pass on this method of investing.
The only other option available to the individual investor (that I have found thus far) is the Kitco Pool Account. The posters over at Kitco and other forums have only one real complaint, and that is the Buy/Sell spreads on Rhodium. I can sort of understand these spreads at their current levels, because Rhodium is just too darn volatile!
As of today (01-07-09), Kitco will SELL you Rhodium for $1500.00 oz. Kitco will buy back your Rhodium for $1100.00. So the minute you buy Rhodium, you’ll instantly lose $400.00 or, roughly 25% on your investment! ouch. If the spread stays at around 25%, you’ll need the price of Rhodium to rise to at least $2000 just to make your money back.
So, I started wondering, are the spreads always this high? These premiums are worse than buying physical silver right now!
Using Archive.org, I was able to pull Rhodium Buy/Sell spreads for the last 4 years. I am not going to go through all of the spreads here, but I’ll give you some indicators. Please note that Archive.org stopped indexing Kitco’s “Market” page (http://www.kitco.com/market/) on Feb 14, 2008. So unfortunately, we don’t get to see the spreads as they were when rhodium bounced to $10,000 an ounce.
|
DATE
|
BUY
|
SELL |
| Â | Â | Â |
|
01-24-02
|
$850.00
|
$1100.00
|
|
05-30-02
|
$860.00
|
$980.00
|
|
08-28-02
|
$700.00
|
$800.00
|
|
02-05-03
|
$560.00
|
$670.00
|
|
07-31-03
|
$470.00
|
$520.00
|
|
12-03-03
|
$440.00
|
$510.00
|
|
02-09-04
|
$480.00
|
$550.00
|
|
06-24-04
|
$760.00
|
$930.00
|
|
08-22-04
|
$1180.00
|
$1260.00
|
|
03-02-06
|
$3490.00
|
$3570.00
|
|
12-04-06
|
$4930.00
|
$5010.00
|
|
05-09-07
|
$5930.00
|
$6220.00
|
|
11-16-07
|
$6575.00
|
$6780.00
|
|
12-30-07
|
$6775.00
|
$6825.00
|
|
02-01-08
|
$7260.00
|
$7360.00
|
|
02-14-08
|
$8650.00
|
$8750.00
|
|
01-07-09
|
$1100.00
|
$1500.00
|
sourced with: http://web.archive.org/web/*/http://www.kitco.com/market/
This makes me feel a little better about getting into a pool account. While we have some large spreads now, we could see them return to previous levels where there isn’t that big of a difference between the buy/sell price of Rhodium. I could be wrong, so buy Rhodium at your own risk.
Also, notice those last two items… Had you bought Rhodium 12 months ago, and held until today, you’d probably be sick to your stomach right now.
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