If exchange traded fund (ETF) providers launch a physically-backed aluminum fund, it could have a big impact on prices in an upward direction, according to one analyst.
According to Citigroup (NYSE: C), the price of aluminum could soar by as much as $500 a metric ton if plans to introduce aluminum-backed ETF go through. Thus far, an ETN focused on aluminum is the only focused and trading product available for investors who want exposure to the metal. Many investors have been hotly anticipating a physically-backed fund, which could unleash a storm of pent-up demand. [The State of Aluminum and Other Metals.]
A bevy of aluminum companies would be set to benefit and increased aluminum companies would also support the futures. The Citigroup analyst suggests that such a fund could impact prices by as much as 24%, reports Commodity Surge. That’s the amount global consumers use in about two weeks. [A Total Guide to Investing in Metals.]
At this point, three ETFs are “technically ready” to be offered, according to Rusal, the world’s largest aluminum producer. Rusal is in discussion to supply the metal to banks for such a fund, reports TheStreet.
For more stories about aluminum, visit our aluminum category.
- iPath DJ-AIG Aluminum ETN (NYSEArca: JJU)
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.