In 2019, the price of rhodium has seen a significant surge, climbing over 55% since the start of the year. Rhodium, a member of the platinum group metals, is a crucial industrial metal utilized in various applications such as specialty optical instruments, electronics, and aircraft turbine engines. Notably, it is widely used in catalytic converters, with over 80% of its production ending up in these devices, particularly three-way catalytic converters that help reduce harmful emissions from vehicle exhaust.

The rarity of rhodium is a defining factor in its market dynamics. With less than 10 mines worldwide producing substantial amounts of rhodium, and the majority of production concentrated in South Africa, the metal faces supply challenges. Past incidents, such as mining strikes in South Africa in 2008, led to supply shortages and a subsequent spike in rhodium prices to over $10,000 per ounce.

Despite facing periods of oversupply, the rhodium market is expected to shift towards a supply deficit due to increasing long-term demand. This anticipated deficit has likely contributed to the recent price upsurge. However, investing in rhodium presents unique challenges, mainly due to limited investment avenues. Traditional physical rhodium investments often come with exorbitant premiums, making it less accessible for investors.

While options like rhodium bullion bars and ETFs backed by physical rhodium exist, liquidity concerns and lack of robust investment platforms hinder the metal’s attractiveness as an investment opportunity. Rhodium stocks are also limited, with major producers like Anglo American Platinum and Norilsk Nickel primarily focused on other metals, further complicating direct investment in rhodium.

The future of rhodium prices remains uncertain, with its market intricacies and limited investment avenues posing barriers to potential investors. Despite its industrial significance and rarity, the challenges associated with investing in physical rhodium may deter many from considering it a viable investment option. As the market continues to evolve, the dynamics of rhodium pricing and availability will continue to influence investment decisions within the precious metals sector.