The Obscure Metal That’s Beating Any Other InvestmentEddie van der Walt
The best asset over the past week is a metal you’ve probably never heard of: rhodium.
Rhodium, one of the rarest precious metals, soared 29 percent in the five days through Wednesday, beating every single stock in the MSCI World Index, all currencies and major commodities. While the market for rhodium is tiny and doesn’t trade on an exchange, a fund that holds the physical metal rose 23 percent since July 9, and shares of producers climbed.
Low prices are attracting companies that use rhodium for catalytic converters in cars, according to Jonathan Butler, a precious-metals strategist at Mitsubishi Corp. in London. The metal plunged to an 11-year low earlier this month on forecasts that South Africa, the biggest producer, is increasing production at the fastest pace in two decades.
“Everyone wants a slice of the pie when something as volatile as rhodium breaks higher,” Butler said by phone. “We’ve seen demand rush back over the past few days with industrial buyers trying to lock in prices below $1,000 an ounce.”
Rhodium is prone to volatility because it’s a smaller market than similar metals like platinum and palladium, said John Meyer, a mining analyst at SP Angel Corporate Finance LLP in London. It mostly trades in over-the-counter transactions between banks, he said.
The five-day advance in rhodium was the biggest in six years and the metal fetched $1,000 an ounce on Wednesday, according to prices from Johnson Matthey Plc. It was unchanged on Thursday. Before this month’s rebound, it had fallen almost 50 percent since August 2014.
An exchange-traded fund run by Deutsche Bank AG that holds rhodium has seen trading volume increase this week in London, reaching a one-year high of 24,600 contracts on Tuesday. The fund has less than $80 million in assets.
Anglo American Platinum Ltd., one of the biggest producers, climbed 5.5 percent in three days through Wednesday in Johannesburg. The shares lost 0.9 percent on Thursday. Lonmin Plc gained 9.9 percent in two days in London, and was 0.6 percent higher on Thursday.
The metal’s decline has made rhodium more competitive with other metals used in autocatalysts. An ounce of rhodium bought as little as 1.15 ounces of palladium on July 2, the smallest amount in data going back to 1993 compiled by Bloomberg. It fell to the lowest versus platinum in more than a year.
European car sales rose 15 percent in June, the fastest growth in 5 1/2 years, the Brussels-based European Automobile Manufacturers’ Association, or ACEA, said Thursday.
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