Rhodium trading thoughts from the value view Gold report

MINING.COM Staff Writer | July 5, 2010 | 8:12 am

RHODIUM TRADING THOUGHTS is about  timely and profitable trading of precious metals. We do not believe every turn in the market can be called. Our goal is that our recommendations should be profitable.  Profits are the goals, not trades. Do not expect all recommendations to be profitable. No system can achieve that lofty goal.
Our goal is simply to state whether conditions for a metal are favorable or not. Buy signals are issued when appropriate. These signals are generally speaking for day they are issued. If price remains below signal price, buying can be done. Do Not Buy signals are given when market is over bought, and buying is unwise.

Blue triangles indicate an over bought condition. These would not be good times to buy, so they are labeled Do Not Buy. Software is not showing complete legend, for some reason.

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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.

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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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