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Rhodium Trading Thoughts

By Ned W. Schmidt      Printer Friendly Version Bookmark and Share
Jul 15 2011 11:31AM

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.

On a regular basis seems one of the world’s economic leaders reconfirms the wisdom of investing in precious metals. On Wednesday, Chairman Bernanke testified before Congress that if the U.S. economy continued to falter the Federal Reserve would consider further monetary stimulus, a move we would label as QE-Dumb. Fortunately, Rep. Ron Paul  was there to call him to task. That exchange was easily scored: Ron Paul 1    Bernanke 0

On Thursday, Bernanke refined his statement. QE-Dumb is apparently not imminent. So, one day QE-D is possible, and the next day QE-D is not imminent. Little wonder that Gold has risen in value with this kind of monetary leadership. Is the only time the value of our money secure  when these people are asleep?

However, while accepting the wisdom of precious metals in a portfolio, we should never forget the first rule of investing. Diversification  is always appropriate. Those that have been pummeled by The Great Silver Crash of 2011, still in progress, truly understand that notion better today.

Rhodium is attractive as a diversifier of  portfolios for many reasons. Aside f rom being a true rare metal, it has not historically been easily owned by individuals. Perhaps for that reason, individual investors have not been particularly active in Rhodium.

Dealers have in recent years created more investor friendly means of investing in Rhodium. The latest innovation is the Rhodium ETC created by Deutsche Bank, and trading in U.S. dollars in London. While having only a short life, the graph below portrays the size of the ETC over the past few months. The ETC is, and will, slowly taking the slack out of the supply of Rhodium. As that happens the price will be more responsive to demand.  And remember, Rhodium supply is extremely price inelastic.

Rhodium ETC may have created what Rhodium’s value has needed, investor money flows. Rh continues to appear attractively priced, and is now far easier to own. Those with an over concentration in Silver should consider shifting to Rhodium. In particular, those investors now owning Silver at a loss should consider booking that loss for tax purposes, and using some of those proceeds to purchase Rhodium.

Valuations on next page.

Fact sheet on db Rhodium ETC:

$Rh Preliminary Price Valuation Range

US$ Rh Current



Potential % Change













US$ SILVER Valuation

US$Ag Current



Potential % Change


Sell Target




Long-Term Target




Fair Value



Your Eternal Optimist;
Ned W. Schmidt



RHODIUM TRADING THOUGHTS is published presently on an irregular basis, and is available only on selected web sites and at our web site:

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