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Will Rhodium Ever Repeat Its Four-Year 2,000% Rally?

Few charts are quite as striking as Rhodium for the period 2004 to 2008 - 2,000 percent trough to peak in four years. After seeing lows of $500 in 2004, it rallied to $10,000 per ounce in June 2008, before coming crashing down back to below $500.

Rhodium chart: 1998-2014 - Courtesy FastMarketsClick to enlarge

Not even gold, in all the frenzied buying between 2000 and 2009 comes close to replicating the magnitude of that move. Nope, this is bitcoin-esque territory. Except that we are talking of a commodity, with actual, real-world usage, not a start-up currency.

Rhodium is one of the six platinum group metals, along with ruthenium, palladium, osmium, iridium, and platinum.

And like its better-known cousins platinum and palladium, its main use is as a catalytic element in the autocatalytic converter of internal combustion engines. In short, it is used to clean the fumes emitted by these engines.

And it is really good at it.

But rhodium is one of the rarest materials in the earth's crust - comprising just an estimated one part per billion of the earth's crust - compared with say gold at four parts per billion; platinum at five parts per billion and silver at 75 parts per billion.

And here-in lies the crux of its volatility.

Rhodium's properties make it highly prized by industry, but its rarity means spikes in demand can easily lead to massive increases in price, followed by sharp crashes as demand corrects.

Will we ever see another 2,000 percent rally? No-one knows.

But looking at that chart, you could have quadrupled your money quite a few times, so why not?

And besides, if they find widespread use for this stuff in, say batteries, as they already have for platinum, $10,000 may just look cheap.