John nadler of KITCO explains in an interview linked above ( click on the heading)
Platinum group metals, as a niche (and as opposed to gold), are endowed with decent fundamentals. They've got a tenuous supply of metal, coming primarily out of South Africa and Russia, and decent demand from their primary usage in autocatalysts. These make sense as part of the global economic recovery story. You're talking about a sector (automotive applications) that nobody has figured out substitutions or new technologies for. If the crisis doesn't completely throw the world into a second recessionary dip, then the fundamentals argue that these metals have not only been neglected, but also underpriced.
With rhodium, we looked at even more of a tight market. It's a tiny market of 900,000 ounces per annum, and one where carmakers can't substitute with cheaper metal, because it is the only such noble metal that can remove the nitrous oxide from tailpipe emissions. When you add that together, you get a good picture, especially as the U.S. and European carmakers come out of their "car recessions." And then there's China and India, who are in the driver's seat in the recovery of auto sales.
It's also a market that doesn't have futures or options trading available at the moment. But because of that, it's a bit thinner and a bit more volatile, and the spreads are wider. But it doesn't mean that an individual investor cannot participate in it. Our situation was that we had pool accounts in rhodium for years, but we saw increasing interest from investors for this in the longer- to medium-term trade, three to five years. So since it's really costly and difficult to create 1 ounce coins, we decided to take the really basic refined material (called "sponge"—a gray powder, really) that the refiners use and literally bottle it, seal it and put it into safekeeping with a custodian.
It's not for everyone, by any means. You should definitely understand the market and where the supply and the demand come from. But as a recovery play, and as a medium-term speculative play, I think it deserves a closer look.
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