BlackRock postulates that there are “unreported copper inventories held by the State Reserve Bureau in China and by other market participants in China,” according to the WSJ story.
The exemptive relief filings with the SEC were meant to assuage concerns that the physically-backed copper funds would somehow affect supply and heighten volatility in a metal intended for industrial purposes.
“The SEC wouldn’t want to have a fund out there to hoard a metal that would otherwise be consumed,” remarked Paul Justice, director of North American ETF research at Morningstar. “The main difference is that copper is typically consumed in industrial purposes and not stored or hoarded [like gold].”
The iPath Dow Jones-UBS Copper Subindex Total Return ETN (NYSEArca: JJC), First Trust ISE Global Copper Index Fund (NYSEArca: CU) and Global X Copper Miners ETF (NYSEArca: COPX) are existing products on the market.
For more information on copper, visit our copper category.
Max Chen contributed to this article.