Tuesday, June 16, 2009

Rhodium Supply & Rhodium Demand

2007 Rhodium Demand Increase

Rhodium demand has been steadily increasing nearly each year in the 2000s. The total demand rhodium in 2007 was 856,000 ounces. Overall demand increased by about 2%.

Auto-Catalyst Rhodium Demand

The demand for rhodium from the auto sector alone was 879,000 in 2007, a 2% increase from 2006. This increase was mostly due to increased automobile production in China, India, and Russia. Keep in mind that in 2007 the auto-industry hadn't yet felt the full shock of our current economic crisis. Demand also grew in North America largely due to the production of medium sized diesel engines.

In Japan demand fell since, due to the rhodium price trading $5-7000 per ounce, car makers used stockpiles of the metal instead of buying more. Europe is producing more and more light duty diesel engines which may use little to no rhodium. Therefore demand in Europe fell as well.

Rhodium Price Chart Through 2007 (2009 Chart Available Below)

Recycle Rhodium

Notice that the auto sector required 879,000 ounces of the metal whereas supply in 2007 was just 856,000 ounces. The supply is met considering that 183,000 oz of rhodium were recycled, mostly from used catalytic converters.

Rhodium Production Glass Sector

Rhodium demand edged up less than 1% in the glass sector. In North America and Europe some glass factories have shut down. But in Asia and India demand increased for flat panel TVs and computer monitors, thus increasing worldwide demand in this sector overall. Demand would have increased more had some manufacturers not substituted platinum, which was trading about 20% the rhodium price, for some production.

Invest in Rhodium Demand

There has never been much of a demand for investment rhodium. Part of the reason is that rhodium is fairly brittle by comparison to gold or even palladium and that stamping into a coin would cause the coin to crack a bit. It was available in rhodium dust, called rhodium sponge, however, this generally wasn't available to the general public. However, rhodium coins are now available as the Cohen Mint will soon be making rhodium bullion coins for investment. If you want to read more about nonexisting rhodium bars and other type of rhodium investing, there are several links in this rhodium article.

2007 Rhodium Supply Increase

The supply Rhodium increased by 3% to 822,000 ounces worldwide. The two main countries producing rhodium, however, showed slight decreased output. In South America less PGM ore was mined therefore overall rhodium production decreased. Russian production fell slightly as well. Since Russia is so valuable a rhodium mine country, shipping interruptions are a main factor that helped push the rhodium price to nearly $7000 in 2007.

Notice how Rhodium Continued to Rise and Dropped in Summer 2008

(Charts courtesy of Kitco. Rhodium information is from Johnson-Matthey in their 2008 "Platinum" report)

Saturday, June 13, 2009

Insight to Investing: Palladium Supply and Demand

Palladium Supply and Demand

Here is a brief account of the demand palladium has seen over the past few years. The information comes duing the econmomic crises, in spring 2008, from Johnson Matthey in its 60-page "Platinum" report. However, the report contains quite a bit of information about palladium. I'm awaiting some 2009 information to get things updated, but for now, this info is through 2008.

Why Study Palladium Demand and Supply?

Looking at the current usuable palladium supply--the above ground reserves, that is--the metal coming out of the ground through mining, and the metal being recycled, we can accurately gadge whether consumer demand is being met or not. If demand does not look like it will be met, palladium investing now would be a good choice. If mines are upping production to invest in palladium wouldn't be wise, all other factors remaining constant. If this is all you want to know for your palladium invest purposes and you don't want to read further, reading the following paragraph will save you time.

The Stillwater Mine in Montana, USA

Is Palladium Demand Being Met by the Palladium Supply?

With all of the scrap palladium--and platinum and rhodium, for that matter--being recycled along with continued mining, palladium demand is currently being met and palladium supply should keep up with demand through 2010, at least. The troubled ecomony means less money for consumers (should I say less available credit?) to purchase new vehicles--the main source of palladium demand.

2007 Palladium Demand was up 4% over 2006 to 6.84 Million Ounces

In 2007 the economy wasn't in the recession we are in now. Therefore, more cars were being build utilizing palladium as an emissions catalyst. Another 1.29 million ounce palladium was demanded from the industrial sector, with electronics manufacturing demanding the bulk of this. Jewelry demand, in part due to the use of recycling scrap palladium in China, dropped 25% over 2006 to 740,000 ounces palladium.

The Stillwater Mine During a Miner's Strike

2007 Palladium Supply up 8% over 2006 to 8.59 Million Ounces

When discussing supply we are not including the palladium gained through recycling, because that's already been in the market. The following figures are from palladium mining (platinum mining and palladium mining are often produce by-products of each other) only. South Africa palladium mining stayed steady at 2.77 million ounces. The same is true of mines in North America, Zimbabwe, and other countries. Russia, however, upped 2007 palladium production through "state sales" to produce an extra 500,000 ounces. This was the reason for the overall 8% increase (NOTE: "steady" means a very small percentage change; Russian figures cannot be expected to be totally accurate. There may be more or less Russia palladium that reported.

Auto-Catalyst - Demand for Palladium

Demand in the auto sector for palladium in catalytic converters rose by nearly 11%. Emerging economies China, Russia, and India amounted for most of this increase. In Japan and US, palladium use increase dues to engineers designing new methods to substitute the cheaper palladium for platinum. Palladium use also increased in Europe with its production of small diesel engines. Palladium is the main metal used in these catalysts, however, worldwide demand was still below 300,000.

Jewelry - Palladium Demand

In Europe and North America palladium demand increased slightly as the high prices of platinum forced price-conscious buyers to find a cheaper alternative. While the price of palladium remains around 20% that of platinum ($256 vs $1255 on June 12, 2009), and since palladium is harder yet lighter than platinum, a piece of jewelry made with palladium is as no disadvantage to that made of platinum. Still, palladium hasn't been totally accepted by the masses and demand is still only increasing slightly in this sector. Look for this to increase as a platinum ring sells only marginally higher than a palladium one. When the price separation become largers, consumers will lean more and more towards palladium. In China a large amount of Pd jewelry was recycled therefore keeping new demand low. In fact, jewelrey demand decreased by 35% to 500,000 ounces (we expect this to reverse however, and remain in the 500,000 to 1 million ounce range).

Electronics - Palladium Demand

The demand for palladium use in electronics has been increasing steadily for most of the 2000s. In 2007 demand was up 7% to 1.29 million ounces. Look for nickel to slowly replace platinum in certain electronics, and look for the new small size equipment to require less palladium in the future. However, for 2007 the electronics market was still booming, thus the increased Pd demand.

Dentistry - Demand for Palladium: Use of Palladium, Uses of Palladium in Dentistry

Dental uses of palladium rose nearly 4% to 635,000 ounce Pd in 2007. Since the gold price was up, the cheaper palladium was chose more often. For future palladium investing, keep in mind that more and more dentists are leaning towards using less heavy metals in teeth fillings. Also, as the metal prices increase, more dental scrap metal is being recycled.

Investing - Demand for Palladium: Palladium ETF, Palladium Coins, Palladium Bullion

Exchange traded funds (ETFs) interest increased, increasing Pd demand to 260,000 from just 50,000 ounces in 2006. Figures are not available for the amount of palladium demanded for use in making palladium bars and coins. Sorry.

Where Goes the Excess Half Million Ounces of Palladium Each Year?

Some of this palladium is sitting in my house, I'll tell you that much. And thousands of ounces of this palladium--worth a whopping US$125 million in June, 2009--are sitting in the portfolios of investors like you and me. Also, some companies buy reserves of metals while the prices are cheap. For example, read how Ford lost $1 billion by stockpiling palladium when it was selling at $1000 per ounce: Ford Decides to Stockpile Palladium Reserves.

Palladium Supply and Demand Charts 2003-2007 (By Johnson Matthey)

Thursday, June 11, 2009

Palladia: Palladium Anti-Cancer Drug for Dogs

Palladia: Palladium Anti-Cancer Drug for Dogs

I thought this was kind of interesting. No, I don't think this will increase demand for palladium coins or palladium bullion, but it's interesting nonetheless.

The FDA, on June 3, 2009 has approved Palladia, an anti-cancer drug--for dogs! The palladium-based product is expected to treat tumors or skin cancer in dogs. Tests are reported to be 60% successful in removing tumors.

The product is apparently formed form a combination of palladium, various B vitamins, lipoic acid, and other substances.

Here's a Youtube video showing how this palladium-formed product can help save your pet.

Saturday, June 6, 2009

Palladium vs Gold as an Investment (Fail-Proof Plan Part II)

Palladium vs Gold as an Investment (Fail Proof Plan to Wealth Part II)

"Fail Proof Plan to Wealth" Review (click to view full article)

This is being written assuming that you've already read Part I and yesterday's article regarding price changes. For those who haven't read those, the main idea is--since palladium follows gold's movements--to sell gold for palladium after gold moves up, and then do the opposite after gold falls and palladium is still up.

Let's take a quick glance at price gold, silver, palladium, platinum, and rhodium price have changed over the past week:

(June 1 - June 2 - June 6)
* Gold - $988 - 984 - 956
* Silver - $15.90 - 16.20 -15.30
* Platinum - $1220 - 1245 - 1277
* Palladium - $240 - 250 - 260
* Rhodium - $1225 - 1300 - 1350

How to Invest Gold vs Palladium

What To Do

If we had the means to buy and sell gold quickly, we would have sold our gold coins on June 1st when it was $988/ounce. We would have also sold our silver coins at $16/oz. Then, we would turn right around and buy palladium coins and platinum coins with that money.

Fast-forward to June 6, we do the opposite. We sell the palladium bullion coins and platinum bullion coins for $260 and $1278 respectively. We then take than money and re-buy our gold bullion coins and silver bullion coins.

How do we predict this? We follow this simple rule:

Palladium, platinum, and silver follow gold

It's not written in stone, but gold usually starts to move first, followed soon after by silver, then by Pt and Pd. As I said, I'm not guaranteeing this will be the case every time as there are far more factors included that can make things work oppositely, however, this is what happens very often.

Is this easy to do? In theory, yes. If you sold a very small amount of Au/Ag or traded it for Pt and Pd coins you would probably have fees involved in addition to the spot price. But, if you sold a very large amount of gold, say 10 ounces, and bought 40 ounces of palladium with that money, then you might be able to pay the transaction fees as well as make money. Let's look at what might have happened had you sold your gold June 1st to buy palladium, then sold that palladium and rebought gold today, June 6.

(Remember, I'm not telling you should or shouldn't do this, I'm just throwing ideas out to get you thinking about your own gold investment strategy. My current strategy is to hold the metal I own.)

What Would Have Happened

June 1: you sold your 10 gold coins on for $988 each (we're selling at spot for simplicity's sake. No transaction fees). You now have $9880 total. Most people at this point go buy a new TV or take someone out for an expensive meal an unhealthy restaurant. Not us. We would have taken our $9880 and bought 40 oz of palladium for $245/oz. We have 40.3 ounces of palladium now and no gold.

June 6: you take your 40.3 ounces of palladium and sell it all for exact spot price, which today is $260. We now have $10,478. We then take our our money and rebuy the same 10 oz gold bar, and today with gold at $956, we have just over $900 left.

We have $900 leftover! We just made $900 virtual dollars by following a simple pattern. Now what do you do with that $900? You get $50 from Uncle Lester with a promise to cut his grass a few times this summer and buy yourself another gold bullion coin.

You now have $0 and 11 oz of gold and all you've done was sell twice and buy twice for a free ounce of gold! Now most readers here don't have $10,000 worth of gold to begin with, they only have about $1000 worth, or about an ounce of gold. So, if you were to do this with one ounce of gold, you would have made $90. What if you had a 100 oz gold bar ($100,000). Then, you would have made $9000.

Why do I tell you this? So we can work together. I give you ideas and I also get ideas from readers' comments and emails. No, I don't have $100,000 either, but if I do, I know what I'd do with it. Isn't that a great feeling? You now have a reason to get some money saved up so we can work together to build our wealth. Did I mention I take donations?? Just kidding, but I do welcome your creative ideas!

Palladium Winning Over Gold Price!

Palladium Moving Opposite of Gold Price

I just thought I'd make another quick note of the gold market and movements of other precious metals over the past week or so.

Around the time of the announcement of the GM bankruptcy gold and silver bullion really started moving up. Then, platinum and palladium--more industrial than silver or gold--followed. Below are the prices of gold rounds, silver rounds, palladium rounds, platinum rounds, and rhodium rounds. Column 1 shows the June 1st morning price and column 2 shows the June 2nd evening price.

* Gold - $988 - 984 (-1%)
* Silver - $15.90 - 16.20 (+2%)
* Platinum - $1220 - 1245 (+2%)
* Palladium - $240 - 250 (+5%)
* Rhodium - $1225 - 1300 (+5%)

Gold Price, Silver Price, Platinum Price, Palladium Price (June 6, 2009)

Today it's June 6th. Let's look how the methods outlined in Fail-Proof Plan to Create Wealth (Gold & Silver vs Platinum & Palladium) would have worked if we were buying and selling precious metals this week. The image below shoes the June 6th prices.

Do you see how gold rose and silver quickly followed? Do you see how palladium and platinum coins lagged behind gold and silver? Do you think you'd be able to think of an investment strategy to actually make money from this knowledge of price movements?

You're a smart person, smart enough to be reading this and at least trying to think about your future, so that shows more action that 99% of the people are willing to take already. Think about the people you know. What do they do? I'll take a guess. They go to work, get money to buy the necessities and a luxury item or two, get drunk or go up north on the weekends, then go back to work on Monday.

You are different. And we have to work together to find more and more ways to increase our wealth to be able to live the lives we desire. Check back in about 2-3 days for part two of our popular Fail-Proof Plan to Create Wealth article.

Tuesday, June 2, 2009

Gold Prices & Silver Prices in Wake of GM Bankruptcy (Part II)

GM Bankruptcy Article Part II: Gold Prices & Silver Prices in Wake of General Motors Bankrupt

This is just a quick update to explain the price movements of the past couple days. Before reading this you might like to read the full-length article "GM Bankruptcy, Gold $1000?" where I predict the future gold prices, silver prices, and also the rhodium prices, palladium prices, and platinum prices. The meat of the discussion about the gold market and price movements. Some quick info about the General Motors bankruptcy is there.

Gold Prices, Silver Prices, Rhodium Prices, Palladium Prices, and Platinum Prices

The following spot prices per ounce are from June 1 (6 am). The second column shows the prices on June 2 at 10 pm:
  • Gold - $988 - 984 (-1%)
  • Silver - $15.90 - 16.20 (+2%)
  • Platinum - $1220 - 1245 (+2%)
  • Palladium - $240 - 250 (+5%)
  • Rhodium - $1225 - 1300 (+5%)
Now is any of this significant? In my opinion, no. The recent bullish gold, though, having jumped nearly $50 in a few weeks, is, I think, quite significant though. Silver has jumped nearly 20% in the past month or so. Now I really do think that's something to take notice of! Keep your eyes on platinum too. It's inching up slowly.

Investment Strategies: Metals vs Metals

1. Selling gold and buying silver - If you do this now, personally, I think you'll break even. Gold's high was around $1000, and at that time, silver was $22 max. However, remember how when gold was $1000 in 1988 that silver was $50 per ounce. So, what would you rather hold now, gold or silver? Yeah, I think silver. However, I'm not selling any gold to buy silver. Should I? Maybe. But I'm not.
2. Selling gold or silver and buying palladium, buying platinum, buying rhodium - If you look at charts from last year and compare them to today, you'll see that silver and gold are near their 2008 highs, yet platinum and palladium are around half of what they were in 2008. Rhodium is at 12% of it's 2008 high. Should you sell gold and silver to buy platinum, buy rhodium, or buy palladium? Maybe. It would not be guaranteed to pay off soon, but I certainly don't think gold and silver will move up any further without at least platinum moving upwards.
3. Selling palladium, selling rhodium, selling platinum to buy gold or buy silver - I would think this would be the worst gold investing strategy. However, who knows. I'd be pretty shocked if gold hit $1200 and silver $22 and platinum and palladium didn't move at similar percentages.

Best Choice

Of the above, I would say #2 is by far your best choice if you're trading metal for metal. But why not just do this: take spare cash, buy rhodium, palladium, or platinum, and hold it, without touching your gold? That's what I would do. I've most recently bought palladium and silver and don't have much cash to invest now, but when I do, if prices remain how they are, I'll buy into the industrial metals Pd, Pt, and Rh.

Monday, June 1, 2009

GM Bankruptcy, Gold $1000? (New GM, General Motors Bankrupt, Gold Price)

Will GM Bankruptcy Affect Gold Price? Gold $1000?

The pending announcement of GM's bankruptcy will definitely affect the price of gold, silver, and the industrial metals palladium, platinum, and rhodium. The question is how much, and in which direction! This ariticle will:
  1. First give a very brief overview of the announcement of the GM bankruptcy.
  2. Then we give a quick overview of how our five favorite precious metals have all risen in the past week or two.
  3. And finally, we'll give a few guesses of what might happen and how this might affect your investment strategy

GM Bankruptcy General Motors Bankrupt Overview

On June 1 General Motors is expected to file for bankruptcy. This move stemming from the GM bankruptcy will give the company an expected $30 billion in taxpayer dollars, a third of which will be lent to the auto-maker from the Canadian government.

GM will close around a dozen factories and again lay off workers. This time as many as 50,000 people will lose their jobs at GM. The United Auto Workers (UAW) auto-workers' union is scheduled to receive $20 billion from now bankrupt GM. In exchange, the new union will then own a 10% interest in the new GM in exchange for what GM owes its past and current workers.

The Obama administration reported that GM would continue to sell only Chevy, GMC Truck, Cadillac, and Buick. Smaller names such as Hummer and Saturn would expected to be scooped up and purchased by investing companies, however, they will likely suspend production.

(Photo on left is the new 2010 GM Chevrolet Camaro which hit car lots late May, 2009)

Gold Rising, Silver Rising, Palladium Rising

How is the General Motors bankrupt going to effect the gold prices and silver prices, and the prices of the industrial metals rhodium prices, palladium prices, and platinum prices? My speculations are in the next section

In the week leading up to the GM and the Obama administration announcing the bankruptcy GM, all precious metals metals have risen:
  • Gold price - Gold up from around $950 a week ago to darn near $1000 an ounce. It's $988 as I write this. Gold was $920 an ounce on May 19th. GM will announce its bankruptcy at 8 am Eastern time. It's 4:30 now
  • Silver price - Silver up similarly to gold. Silver was $13.70 an ounce on May 19th, $14.70 a week ago, and darn near $16 June 1.
  • Palladium price - Palladium up, but hasn't been on a steady increase like gold and silver. It was $220 on the 19th of May, jumped up to $230, dropped back to $220 a week later, and again today is up over $230.
  • Platinum price - Platinum up. Its chart looks similar to that of gold/silver mixed with that of palladium! On May 18th it was around $1110 per ounce. Then, it $1150 for a week, then dropped again, but unlike palladium, it didn't drop back to its May 19th price, it only dropped to $1125 or so. However, you'll notice above that I said the 18th, not the 19th. On the 19th platinum was up to $1125. Somewhat odd behavior, but both investors as well as industry affects the platinum price more than any other metal so its erratic volatility can be expected. Today: $1220.
  • Rhodium Price - Rhodium up! Rhodium may move daily in small increments as other precious metals do, however, it isn't quoted as moving until it makes a $50 or more move. Rhodium went up mid-May to around $1300 per ounce, and just a day or two ago it dropped to $1225 bid price. Now, it's back to $1300. Remember, rhodium is very industrial.

How a Bankrupt General Motors Might Affect the Gold Price, Silver Price, Platinum Price, Rhodium Price, Palladium Price

June 1 Precious Metals Prices
  • Gold - $988
  • Silver - $15.90
  • Platinum - $1220
  • Palladium - $240
  • Rhodium - $1225

Author's Gold Price Predictions

How do we think these prices will be affected? Personally, I don't think we'll see a huge change. I do think gold will hit $1000 an ounce again, but I don't think it will hit $1025. Then, in less than a month, I think it will drop back to $950. I think silver won't reach $18. I don't even think it will reach $17, actually. I think it will go back down to $13 per ounce or even less. However, I wouldn't be surprised if it were to remain in the $14-15 range for the next few months. I don't think palladium, platinum, and rhodium will move very much all.

There you go. Don't you like how I'm NOT telling what WILL happen? Whenever I read an investment site I see "GM Bankrupt, Gold to Rise" or "Stocks Bullish, Commodities to Drop" and someone's prediction stated as fact on a financial website. If all people follow these ideas, then won't that make the market move in the exact opposite direction?

Here's a fact: 80 or 90 percent of people who invest in stocks and commodities lose money. These guys get "tips of the day" of how to invest. Do I do that? Well, look at my predictions above. I don't think the GM Bankruptcy will affect any metal by more than 10%. That 10% IS enough to make money on your investment, but I'm not a day trader and not going to sell/buy until it moves a good 30-50%. Why? The truth: I'm lazy! It's not that it's risky, it's that you have to really ALL the news and factor in many, MANY things. I don't want to do that, for one. And two, if I do, I'm bound to make a mistake, thus I create my own risk. My final prediction to you is that the current trend will be small movements upwards then small movements down.

Do I hope I'm wrong? Heck yeah! Let's see $2000 gold and $1000 palladium! Let's keep rhodium low because I haven't bought any yet! Silver, hmmm, I don't own much, so let's see that low until I sell some gold to buy silver. Good plan?

Good luck in your investing. I don't think the market will be rocky, but others might, so you might be able to sell your metals for more than spot in the next week or so. If you're not in need of cash, though, I'd keep it. Have a fun week!
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