One aspect of Rhodium makes it of special interest, which arises from being the rarest metal. No one seems to be looking for it. If, when looking for something else, Rhodium is found, it is harvested. The rarity of the metal apparently precludes it from existing in sufficient quantity to justify the quest for it. The Rhodium play you are seeking is Rhodium itself.
Our first observation is that Rh has traded down in excessive fashion during this period of fear over economic growth due to the EU debt problems. It has moved to a price where it has found support twice before this year. Is this a price where the metal is attractive to users?
At this time, Rh demonstrates two favorable technical conditions. In the top chart Rh has moved through the down trend line drawn on the absolute price of the metal. Alone that event would be encouraging. That means the down trend is no longer dominant, and that somewhere out there buyers exist.
In the second chart it is doing the same on a measure of relative strength. That chart is of the ratio of price of $Rh to $Au. That ratio has moved through the down trend line.
So, we have favorable technical developments on both an absolute and relative basis. Given that situation and the likelihood that Rh is under valued, investors should consider diversifying their precious metal holdings with Rh. If you have a substantial investment in Au, now is perhaps the time to add some Rh.
$Rh Preliminary Price Valuation Range |
|||
Rh Current |
Valuation |
$Valuation |
Potential % Change |
$2,430 |
Over |
$7,500 |
209% |
$2,430 |
Fair |
$6,000 |
147% |
$2,430 |
Under |
$4,500 |
85% |
Next publication date: 13 July 2010
Your Eternal Optimist;
Ned W. Schmidt,CFA,CEBS
Click to email me: [email protected]
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