Are Regulators Gearing Up to Examine Precious Metals ETFs?

February 9th at 12:00pm by Tom Lydon

paper-isolated-book-338176-tn Exchange traded funds (ETFs) tracking precious metals such as platinum and palladium have garnered so much in assets that could eventually attract the regulating eye of the Commodity Futures Trading Commission (CFTC).

The glowing success of the new precious metals tracking ETFs – ETFS Physical Palladium (NYSEArca: PALL) and ETFS Physical Platinum (NYSEArca: PPLT) – could catch the eyes of regulators, much the way that natural gas ETFs were scrutinized last year. [The Platinum ETF Draws Much Attention Now.]

Ian Salisbury for The Wall Street Journal reports that the Commodity Futures Trading Commission, the agency that has taken the lead in targeting energy speculators, has suggested it may look into metals in the future. [Commodity ETF 101.]

The key difference in the metals markets versus the energy markets is that the metals ETFs own actual amounts of physical metals, not futures contracts tied to them. This seemingly puts them outside the jurisdiction of the CFTC. Funds that are backed by physical metals have grown large – case in point, SPDR Gold Shares (NYSEArca: GLD) holds about $40 billion. [The CFTC's Proposal for Futures ETFs.]

For more stories about commodity ETFs, visit our commodity ETF category.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.