From Canaccord Wealth Management’s “Morning Coffee” word of a brand new ETF:The first of its kind…This week, Deutsche Bank announced a Physical Rhodium ETF (XRHO: LN). The product is 100% backed by physical rhodium and is designed to track the U.S. dollar spot price less fees. A note from the bank indicates that this ETF allows investors to directly access rhodium spot returns in a “simple, secured and liquid manner.” The ETF is linked to the rhodium spot price and is back by allocated rhodium. The global rhodium market in only 750,000 oz of demand per year – or $1.5 billion. Therefore, with the new ETF opening up the relatively illiquid market to speculators, a significant rise in the price of rhodium could be just around the corner. Rhodium is primarily used (80% of demand) in three-way catalysts (for engines), and some are speculating that since the announcement of the rhodium ETF the automobile producers have likely been in the market buying as much rhodium as they can – explaining the recent uptick in the rhodium price. In relation to producers, rhodium accounts for approximately 10% of PGM production and even more on a revenue basis due to the rhodium price being higher than the PGM basket price. A spike in the rhodium price could be a material boost to earnings for PGM producers.
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