Physical Copper ETFs May Soon Be Reality
December 28th 2010 at 11:00am by Tom Lydon
Copper prices have entered new territory, so you can bet that investors are salivating at the increasingly close prospect of physically-backed exchange traded funds (ETFs) that own the booming metal.
iShares has filed with the Securities and Exchange Commission to launch its own physical copper ETF, competing with J.P. Morgan‘s copper ETF, writes Olivier Ludwig for IndexUniverse. The physical copper will be stored in U.S. warehouses or other approved locations. [Coming Soon: Physical Copper ETFs.]
According to CNBC, the new ETFs would account for 8% of the physical copper market, similar to how physically-backed gold ETFs operate, and would create a spike in copper prices.
Copper is commonly used in cable, wire and electrical products for electrical and building industries. Greater demand from the emerging markets has been driving up copper prices this year.
Today, copper prices soared to records despite any concerns about China’s possible interest rate hikes, says The Wall Street Journal. Next year could bring more gains, since many analysts think supplies will get even tighter. Add an ETF to the mix, and things could go gangbusters.
Currently, you’ve got three options to play copper through the exchange traded note (ETN) iPath Dow Jones-UBS Copper ETN (NYSEArca: JJC), a debt instrument that tracks copper futures, or invest in copper-mining ETFs, like the Global X Copper Miners ETF (NYSEArca: COPX) and First Trust ISE Global Copper Index Fund (NASDAQ: CU). You can also get a little copper futures exposure in PowerShares DB Base Metals (NYSEArca: DBB), along with aluminum and zinc. [Copper ETFs Move to All-Time Highs.]
For more information on copper, visit our copper category.
Max Chen contributed to this article.
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.