Rhodium: The Rare Metal Worth Knowing About

If you asked a room full of investors to name the most expensive precious metal in the world, the overwhelming majority would say gold. A smaller number might guess platinum, given its reputation for rarity and value. Almost nobody would answer rhodium — yet at its price peaks, rhodium has traded at more than ten times the price of gold, making it far and away the most expensive naturally occurring precious metal on Earth.

Rhodium is not a metal most investors will add to their portfolios, and for good reasons that this article will explore. But understanding rhodium is valuable in its own right — it illuminates how precious metals markets work, why supply concentration matters enormously, and how industrial demand can create extraordinary price dynamics that dwarf anything seen in more familiar metals.

What Is Rhodium?

Rhodium is a silvery-white metal and one of the six platinum group metals (PGMs), discovered in 1803 by English chemist William Hyde Wollaston — the same scientist who discovered palladium. The name comes from the Greek word for rose, a reference to the rose-red color of some rhodium compounds Wollaston observed.

Rhodium is extraordinarily rare. Annual global production is approximately 20 to 30 metric tons per year — a fraction of even platinum’s already small production volume, and less than one percent of annual gold production. To put this in physical terms: the total amount of rhodium mined in a given year would fit inside a small sedan.

Like platinum and palladium, rhodium is mined almost entirely in South Africa (roughly 80 percent) and Russia (around 12 percent), with very small contributions from Zimbabwe and North America. It is almost always produced as a byproduct of nickel and platinum mining rather than mined directly for its own sake. This byproduct nature of supply has profound implications for the market: supply cannot easily be increased in response to rising prices.

Why Rhodium Is So Valuable: Catalytic Converters

The dominant use of rhodium — accounting for roughly 80 to 85 percent of total demand — is in three-way automotive catalytic converters. Rhodium is uniquely effective at reducing nitrogen oxides (NOx) emissions, which are among the most environmentally harmful tailpipe pollutants and are subject to stringent regulations in the United States, European Union, and increasingly in China.

No other element is as effective as rhodium for this specific NOx reduction function at scale. There is no practical substitute that performs comparably in current converter technology. This combination of critical function and irreplaceability is what gives rhodium such extraordinary pricing power when demand rises faster than supply can respond.

The most dramatic illustration of this dynamic occurred in 2020 and 2021. As global auto production recovered from COVID-19 shutdowns and as stricter China 6 emissions standards came into force (requiring more rhodium content per vehicle), rhodium prices surged from around $6,000 per troy ounce to a peak above $29,000 per troy ounce in early 2021 — a move of nearly 400 percent in roughly 12 months. Prices subsequently corrected sharply as auto production faced semiconductor shortages and demand softened, demonstrating the extraordinary volatility that characterizes this metal.

Other Industrial Uses of Rhodium

While automotive catalysts dominate demand, rhodium has other important applications:

• Industrial catalysis: Rhodium catalysts are used in the production of nitric acid (a fertilizer precursor) and in the manufacturing of acetic acid, which is used in solvents, adhesives, and plastics.
• Glassmaking: Platinum-rhodium alloy bushings are used in the manufacturing of fiberglass and specialty glass products, providing the extremely high-temperature resistance required in glass fiber drawing.
• Electronics: Rhodium plating is used on electrical contacts in switches and connectors, providing corrosion resistance and electrical conductivity.
• Jewelry: Rhodium electroplating is widely used in jewelry manufacturing to give white gold and silver jewelry a bright, durable finish. If you own a white gold ring, it likely has a rhodium plating on its surface.
• Thermocouples: Platinum-rhodium thermocouples are used in high-temperature measurement applications in industrial furnaces and scientific instruments.

The Investment Challenge: Limited Options

This is where rhodium differs fundamentally from gold, silver, platinum, and palladium. Practical investment in rhodium is extremely difficult compared to other precious metals, and this is not an accident — it reflects genuine structural limitations of the market.

No Futures Market

Unlike gold, silver, platinum, and palladium, rhodium is not traded on a major exchange with standardized futures contracts. There is no NYMEX rhodium futures contract. Rhodium prices are set through over-the-counter transactions between major industrial users, mining companies, and traders. This means price discovery is less transparent and liquidity is extremely limited.

No Mainstream ETFs

There are no widely available, liquid ETFs that hold physical rhodium. Some European exchange-traded products with rhodium exposure exist, but they are not accessible to most U.S. retail investors and trade with significant spreads.

Not IRA-Eligible

The IRS approves only four metals for self-directed precious metals IRAs: gold, silver, platinum, and palladium. Rhodium is not on that list. It cannot be held in a standard self-directed IRA.

Physical Rhodium: Wide Spreads and Limited Liquidity

Physical rhodium bars and sponge (a powder form used industrially) can be purchased from select dealers. However, bid-ask spreads are very wide, and the market for buying back physical rhodium is significantly thinner than for other precious metals. Investors who purchase physical rhodium may find it difficult to sell at prices close to the quoted spot price, particularly in quantity.

Price Volatility: Understanding the Risk

Rhodium’s price history is a masterclass in precious metals volatility. The metal has experienced multiple cycles of dramatic appreciation followed by sharp corrections. In addition to the 2020-2021 surge, rhodium experienced a massive run from under $1,000 per ounce in 2007 to over $10,000 in 2008 before crashing back below $1,000 during the financial crisis — a drop of more than 90 percent.

These moves are driven by the fundamental illiquidity of the market, the inability to increase supply quickly, the concentration of demand in a single industrial use, and the lack of meaningful above-ground stockpiles that could buffer supply shocks. This is not the behavior of a monetary metal with deep, liquid markets. It is the behavior of an extremely scarce industrial specialty with thin trading and explosive demand sensitivity.

The Electric Vehicle Consideration

As with platinum and palladium, the long-term demand trajectory for rhodium from the automotive sector is affected by the shift toward battery electric vehicles. BEVs do not require catalytic converters and therefore do not consume rhodium. If BEV adoption accelerates significantly as a share of global vehicle production, demand for rhodium from the largest consumption segment could decline materially over the next decade or two.

However, in the near to medium term, the global vehicle fleet remains dominated by internal combustion engines, and increasingly strict emissions regulations in emerging markets continue to support rhodium demand per vehicle. The timeline for a structural demand peak is highly uncertain.

Should You Invest in Rhodium?

For the vast majority of investors, the honest answer is no — at least not directly. The limited liquidity, wide spreads, absence of IRA eligibility, lack of exchange-traded products, and extreme price volatility make rhodium unsuitable as a portfolio position for most people. It is not a practical store of wealth in the way gold and silver are.

Where rhodium is valuable to know about is as context for understanding the PGM complex more broadly. Its dynamics illustrate why supply concentration matters, why industrial demand can be both a driver and a vulnerability, and why the automotive sector’s evolution matters so much for this family of metals. Investors who hold platinum or palladium are indirectly connected to the same set of forces that drive rhodium’s extraordinary price behavior.

For those who want exposure to the PGM space with practical investment vehicles, platinum and palladium remain the more accessible and sensible starting points.