zaterdag 5 mei 2012

Significance of Rhodium Prices on the automotive industry

Rhodium is a metal in the platinum group metals group (PGM) that nobody really knows about in the investor world. It isn't traded online through futures, while gold, silver and platinum does. You can only buy this metal physically through dealers which makes this metal perfectly unmanipulated. So I am very keen on using rhodium prices to find correlations in the macro-economic world as they are a very reliable indicator.

Rhodium prices are extremely inelastic, which means that its price is very dependant on supply and demand. If there is no supply and a lot of demand for rhodium, the price will skyrocket. The rhodium market is very small compared to the gold market and will have high volatility and low liquidity. For example, prices in 2003 were below $US 1000/ounce, but went up to $US 10000/ounce, which is a ten fold increase (Chart 1).

Chart 1: Historical Rhodium Price
To read more about this trend correlation, visit: Significance of Rhodium Prices on the automotive industry.

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