Not all that glitters is gold. Theres another family of metals that are precious for their industrial uses, most notably, copper, for which demand will once again exceed supply this year for the third consecutive year, due largely to demand from China. The International Copper Study Group (ICSG), in its annual forecast issued in April, is projecting a global shortage of about 240,000 metric tons over the next twelve months.
And investors in the U.S. might soon have a new way of playing the copper market if several proposed ETFs backed by the physical metal stored in warehouses are approved by the SEC. The concept is not completely new. There are physical metal ETFs for the four precious metals gold, silver, platinum, and palladium. But copper could be the first physical industrial metal in the ETF market in the U.S.
The industry is betting that J.P. Morgan Commodity ETF Services, which was the first to file for a physical copper ETF with the SEC in 2010, will also be the first to hit the market, possibly by June. Neither J.P. Morgan nor the NYSE will comment, but in early April, the NYSE made its own filing with the SEC, to list the new ETF on its Arca electronic trading platform, fueling speculation that SEC approval was near.
This is a big move, says Morningstar ETF analyst Abe Bailin in Chicago. Its not just another frivolous, me too type of product. For the first time in the U.S. market, investors are going to be able to get exposure to physical copper, and thats a ground-breaking thing, he says, noting that it wont be just accredited investors, but Joe Six-Pack as well.....