The two firms first proposed a physical copper ETF back in 2010 when copper prices were touching record highs on surging Chinese demand. Currently, supply is outpacing demand, and prices are down for a second year.
The proposed copper ETFs would be backed by copper stores like similar precious metals ETFs – sponsors would hold physical stores in a warehouse or essentially remove a chunk of global copper supply. Additionally, a copper ETF’s fees may be higher due to the costs associated with storing a large inventory of the red metal.
Investors, though, can still gain exposure to copper futures through the exchange traded note, iPath DJ-UBS Copper TR Sub-Index ETN (NYSEArca: JJC). JJC is up 5.6% over the past three months but is down 12.5% year-to-date.
For more information on copper, visit our copper category.