Self Directed Investor Inc
SDI: "Empowering investors with ideas and education"
Symbol Lookup »  
Topics:ChinaETFsEarningsEconomyEnergyForexGoldIncomeLessonsIdeasTrading

  • Other news: News from PR Newswire
| More

Would A Physical Copper ETF Be A Bad Idea?

Thu, Nov 29, 8:15 AM ET, by Michael Johnston

Over the past two years, a number of issuers like iShares and JP Morgan have filed for a physical copper ETF; something investors have been wanting for quite some time. At first glance, it seems like a solid idea; after all, GLD and SLV are two of the most popular ETFs in the world, and each of them offers physical exposure to their respective metals. But despite the popularity of the physical structure, it may not make much sense for this industrial metal to be adopted into such an ETF [for more copper ETF news and analysis subscribe to our free newsletter].

First, investors need to consider the value of the current physically-backed products. For the time being, the only physical ETFs on the market focus on the four precious metals: gold, silver, platinum and palladium. At today’s prices, an ounce of each of these metals is worth approximately $1,745 (gold), $34 (silver), $1,615 (platinum) and $665 (palladium). With these relatively high prices, storing the physical metals allows for a high value with relatively little inventory. Copper, on the other hand, is a different story.

The Cost Equation

The current price for an ounce of copper is about $3.5. That means it would take roughly 10X the amount of copper to match the same value of physical silver, 190X the amount for palladium, 460X the amount for platinum and 500X the amount for gold. And this is likely the biggest issue facing these proposed funds: costs. The amount of money it would cost to store enough copper to create a fund would hit the issuer hard and would likely get passed on to investors through an exorbitant expense ratio [see also The Top 10 Cheapest And Most Expensive ETFs].

With the ETF world heavily focused on cost competition, it seems unlikely that a product that falls on the higher side of total expenses would be competitive. And cost is not the only issue at hand, as a recent study has put up yet another barrier for these products.

Recent Backlash

A recent SEC study stated that there was little connection between the flows of commodity-based securities and the prices of the commodities themselves. But a copper users group, including AmRod Corp, Southwire Co and Encore Wire Corp, have come out against the study. This group, represented by Vandenberg & Feliu, has stated that the proposed funds would disrupt metal supplies as well as increase prices. The group went on to call the SEC study "inaccurate and incomplete" in their opposition to these products [see also Everything You Need To Know About Commodity ETFs].

There is no doubt that there would be high demand for a physically-backed copper ETF, but the question is whether or not it is a truly feasible idea. Would anyone be able to store the metal at reasonable prices without driving up the expense ratio of the proposed funds? Or would a product of this nature disrupt the pricing of one of the most popular industrial metals in the world? That still remains to be seen. For now, investors can only wait and see if this idea will ever come to fruition.

What do you all think, would a physical copper ETF work or is it more trouble than it is worth? Let us know in the comments below.

[For more ETF analysis, make sure to sign up for our free ETF newsletter or try a free seven day trial to ETFdb Pro]

Disclosure: No positions at time of writing.

Click here to read the original article on ETFdb.com.


SDI Glossary: "price" Definition
SDI Glossary: "ETFs" Definition
SDI Glossary: "iShares" Definition
This Article's Word Cloud:   Corp   ETFdb   ETFs   That   also   amount   analysis   backed   come   copper   cost   disrupt   each   free   funds   gold   group   have   high   idea   industrial   investors   issue   like   make   metal   metals   more   newsletter   only   ounce   palladium   physical   platinum   prices   product   products   proposed   seems   silver   store   study   that   there   these   this   time   value   world   would

| More

AES Moves Up In Analyst Rankings, Passing TE Connectivity
Thu, Nov 20, 12:14 PM ET, by ETF Channel

In a study of analyst recommendations at the major brokerages, for the underlying components of ...

AGG: Large Inflows Detected at ETF
Thu, Nov 20, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: AGG Exchange traded funds (ETFs) trade just like stocks, but ...

Vanguard FTSE Developed Markets ETF Experiences Big Inflow
Thu, Nov 20, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: VEA, NSRGY, NVS, TM Exchange traded funds (ETFs) trade just ...

DIA, V, GS, IBM: Large Inflows Detected at ETF
Thu, Nov 20, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: DIA, V, GS, IBM Exchange traded funds (ETFs) trade just ...

EDZ Crosses Above Key Moving Average Level
Wed, Nov 19, 3:54 PM ET, by ETF Channel

In trading on Wednesday, shares of the Daily Emerging Markets Bear 3x Shares ETF (EDZ) ...

ConocoPhillips Takes Over #116 Spot From Mallinckrodt
Wed, Nov 19, 11:54 AM ET, by ETF Channel

In a study of analyst recommendations at the major brokerages, for the underlying components of ...

SMB Crosses Below Key Moving Average Level
Wed, Nov 19, 11:24 AM ET, by ETF Channel

In trading on Wednesday, shares of the Short Municipal Index ETF (SMB) crossed below their ...

SPDR Barclays Long Term Corporate Bond (LWC) Shares Cross Below 200 DMA
Wed, Nov 19, 11:24 AM ET, by ETF Channel

In trading on Wednesday, shares of the SPDR Barclays Long Term Corporate Bond ETF (LWC) ...

IYLD Makes Notable Cross Below Critical Moving Average
Wed, Nov 19, 11:14 AM ET, by ETF Channel

In trading on Wednesday, shares of the iShares Morningstar Multi-Asset Income ETF (IYLD) crossed below ...

AAXJ Makes Notable Cross Below Critical Moving Average
Wed, Nov 19, 11:14 AM ET, by ETF Channel

In trading on Wednesday, shares of the iShares MSCI All Country Asia ex Japan ETF ...

KRE, WAL, MBFI, ONB: Large Outflows Detected at ETF
Wed, Nov 19, 10:54 AM ET, by ETF Channel

Symbols mentioned in this story: KRE, WAL, MBFI, ONB Exchange traded funds (ETFs) trade just ...

PGX: Large Inflows Detected at ETF
Wed, Nov 19, 10:54 AM ET, by ETF Channel

Symbols mentioned in this story: PGX Exchange traded funds (ETFs) trade just like stocks, but ...

PPA, LMT, NOC, RTN: Large Inflows Detected at ETF
Wed, Nov 19, 10:54 AM ET, by ETF Channel

Symbols mentioned in this story: PPA, LMT, NOC, RTN Exchange traded funds (ETFs) trade just ...

FXG, STZ, HAIN, PPC: ETF Inflow Alert
Wed, Nov 19, 10:54 AM ET, by ETF Channel

Symbols mentioned in this story: FXG, STZ, HAIN, PPC Exchange traded funds (ETFs) trade just ...

ILF, ITUB, BBD, PBR.A: ETF Outflow Alert
Wed, Nov 19, 10:54 AM ET, by ETF Channel

Symbols mentioned in this story: ILF, ITUB, BBD, PBR.A Exchange traded funds (ETFs) trade just ...

13.1% of XBI Holdings Seeing Recent Insider Buys
Wed, Nov 19, 9:54 AM ET, by ETF Channel

A look at the weighted underlying holdings of the SPDR S&P Biotech ETF (XBI) shows ...

Shares of IGHG Now Oversold
Tue, Nov 18, 4:14 PM ET, by ETF Channel

In trading on Tuesday, shares of the Proshares Investment GradeInterest Rate Hedged ETF (IGHG) entered ...

AMPS Crosses Below Key Moving Average Level
Tue, Nov 18, 4:14 PM ET, by ETF Channel

In trading on Tuesday, shares of the iShares Utilities Bond ETF (AMPS) crossed below their ...

EEV Makes Notable Cross Below Critical Moving Average
Tue, Nov 18, 4:14 PM ET, by ETF Channel

In trading on Tuesday, shares of the Proshares UltraShort MSCI Emerging Markets ETF (EEV) crossed ...

MONY Crosses Above Key Moving Average Level
Tue, Nov 18, 4:14 PM ET, by ETF Channel

In trading on Tuesday, shares of the iShares Financials Bond ETF (MONY) crossed above their ...

Newfield Exploration Moves Up In Analyst Rankings, Passing Avago Technologies
Tue, Nov 18, 12:14 PM ET, by ETF Channel

In a study of analyst recommendations at the major brokerages, for the underlying components of ...

EIDO Makes Bullish Cross Above Critical Moving Average
Tue, Nov 18, 11:14 AM ET, by ETF Channel

In trading on Tuesday, shares of the iShares MSCI Indonesia ETF (EIDO) crossed above their ...

CBND Crosses Below Key Moving Average Level
Tue, Nov 18, 11:14 AM ET, by ETF Channel

In trading on Tuesday, shares of the SPDR Barclays Issuer Scored Corporate Bond ETF (CBND) ...

SPLV, CB, TRV, ACE: ETF Inflow Alert
Tue, Nov 18, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: SPLV, CB, TRV, ACE Exchange traded funds (ETFs) trade just ...

IVW, UNP, MMM, ABBV: Large Inflows Detected at ETF
Tue, Nov 18, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: IVW, UNP, MMM, ABBV Exchange traded funds (ETFs) trade just ...

IDV: ETF Inflow Alert
Tue, Nov 18, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: IDV Exchange traded funds (ETFs) trade just like stocks, but ...

iShares U.S. Medical Devices ETF Experiences Big Outflow
Tue, Nov 18, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: IHI, TMO, COV, BAX Exchange traded funds (ETFs) trade just ...

10.2% of IESM Holdings Seeing Recent Insider Buys
Tue, Nov 18, 9:44 AM ET, by ETF Channel

A look at the weighted underlying holdings of the iShares Enhanced U.S. Small-Cap ETF (IESM) ...

16.2% of DIV Holdings Seeing Recent Insider Buys
Tue, Nov 18, 9:44 AM ET, by ETF Channel

A look at the weighted underlying holdings of the SuperDividend U.S. ETF (DIV) shows an ...

WisdomTree China Dividend ex-Financials Fund (CHXF) Shares Cross Below 200 DMA
Mon, Nov 17, 4:14 PM ET, by ETF Channel

In trading on Monday, shares of the WisdomTree China Dividend ex-Financials Fund ETF (CHXF) crossed ...

USMV, PEP, ABC, BDX: Large Inflows Detected at ETF
Mon, Nov 17, 11:34 AM ET, by ETF Channel

Symbols mentioned in this story: USMV, PEP, ABC, BDX Exchange traded funds (ETFs) trade just ...

IWN, RLJ, PB, LHO: ETF Inflow Alert
Mon, Nov 17, 11:34 AM ET, by ETF Channel

Symbols mentioned in this story: IWN, RLJ, PB, LHO Exchange traded funds (ETFs) trade just ...

Coca-Cola a Top Ranked SAFE Dividend Stock With 2.9% Yield (KO)
Mon, Nov 17, 8:14 AM ET, by ETF Channel

Coca-Cola Co (KO) has been named to the Dividend Channel ''S.A.F.E. 25'' list, signifying a ...

MRO Named A Top Socially Responsible Dividend Stock
Mon, Nov 17, 8:14 AM ET, by ETF Channel

Marathon Oil Corp. (MRO) has been named a Top Socially Responsible Dividend Stock by Dividend ...

YANG Crosses Critical Technical Indicator
Fri, Nov 14, 4:14 PM ET, by ETF Channel

In trading on Friday, shares of the Daily FTSE China Bear 3x Shares ETF (YANG) ...

Ryder System Achieves #83 Analyst Rank, Surpassing Express Scripts Holding
Fri, Nov 14, 11:54 AM ET, by ETF Channel

In a study of analyst recommendations at the major brokerages, for the underlying components of ...

See How Coca-Cola Ranks Among Analysts' Top Dow 30 Picks
Fri, Nov 14, 11:54 AM ET, by ETF Channel

A study of analyst recommendations at the major brokerages shows that Coca-Cola Co (KO) is ...

LQD Crosses Below Key Moving Average Level
Fri, Nov 14, 11:14 AM ET, by ETF Channel

In trading on Friday, shares of the iShares iBoxx $ Investment Grade Corporate Bond ETF ...

IWO, ISIS, PBYI, WEX: ETF Inflow Alert
Fri, Nov 14, 10:54 AM ET, by ETF Channel

Symbols mentioned in this story: IWO, ISIS, PBYI, WEX Exchange traded funds (ETFs) trade just ...

IYR, SPG, AMT, CCI: Large Inflows Detected at ETF
Fri, Nov 14, 10:54 AM ET, by ETF Channel

Symbols mentioned in this story: IYR, SPG, AMT, CCI Exchange traded funds (ETFs) trade just ...

COBO Makes Bullish Cross Above Critical Moving Average
Thu, Nov 13, 3:54 PM ET, by ETF Channel

In trading on Thursday, shares of the Proshares USD Covered Bond ETF (COBO) crossed above ...

GSG Crosses Critical Technical Indicator
Thu, Nov 13, 3:54 PM ET, by ETF Channel

In trading on Thursday, shares of the iShares S&P GSCI Commodity-Indexed Trust ETF (GSG) entered ...

MonsantoTakes Over #35 Spot From McKesson
Thu, Nov 13, 12:14 PM ET, by ETF Channel

In a study of analyst recommendations at the major brokerages, for the underlying components of ...

XBI, AGIO, RCPT, INCY: Large Outflows Detected at ETF
Thu, Nov 13, 11:24 AM ET, by ETF Channel

Symbols mentioned in this story: XBI, AGIO, RCPT, INCY Exchange traded funds (ETFs) trade just ...

XHB, LEN, LEG, WHR: Large Outflows Detected at ETF
Thu, Nov 13, 11:24 AM ET, by ETF Channel

Symbols mentioned in this story: XHB, LEN, LEG, WHR Exchange traded funds (ETFs) trade just ...

PPH, GSK, NVO, SNY: Large Outflows Detected at ETF
Thu, Nov 13, 11:24 AM ET, by ETF Channel

Symbols mentioned in this story: PPH, GSK, NVO, SNY Exchange traded funds (ETFs) trade just ...

OEF, QCOM, UTX, BA: ETF Inflow Alert
Thu, Nov 13, 11:24 AM ET, by ETF Channel

Symbols mentioned in this story: OEF, QCOM, UTX, BA Exchange traded funds (ETFs) trade just ...

XLK, ADP, GLW, TEL: Large Outflows Detected at ETF
Thu, Nov 13, 11:24 AM ET, by ETF Channel

Symbols mentioned in this story: XLK, ADP, GLW, TEL Exchange traded funds (ETFs) trade just ...

MSCI Colombia Getting Very Oversold
Thu, Nov 13, 11:14 AM ET, by ETF Channel

In trading on Thursday, shares of the MSCI Colombia ETF (GXG) entered into oversold territory, ...

MSCI Nigeria (NGE) Enters Oversold Territory
Thu, Nov 13, 11:14 AM ET, by ETF Channel

In trading on Thursday, shares of the MSCI Nigeria ETF (NGE) entered into oversold territory, ...

Related videos | all videos »
  More articles:  1 2 3 4 5 6 7 next »

ABOUT US »   ADVERTISE »   CONTACT US »   TERMS OF USE & PRIVACY POLICY »

Would A Physical Copper ETF Be A Bad Idea? | Self Directed Investor | Copyright © 2008 - 2014, All Rights Reserved

Any ideas and opinions presented in Self Directed Investor content are for informational and educational purposes only, and do not reflect the opinions of BNK Invest, Inc. or any of its affiliates, subsidiaries or partners. In no way should any content contained herein be interpreted to represent trading or investment advice. None of the information contained herein constitutes a recommendation that any particular security, portfolio, transaction, or investment strategy is suitable for any specific person. All site visitors agree that under no circumstances will BNK Invest, Inc,. its subsidiaries, partners, officers, employees, affiliates, or agents be held liable for any loss or damage caused by your reliance on information obtained. Read Full Disclaimer.

SDI is associated with: ValueForum.com -- a subscription-based online social networking forum of over 1000 individual investors. | MarketNewsVideo.com -- videos appearing on SDI are produced by Market News Video. | TickerTech.com -- stock quote content appearing on SDI is at least 20 minutes delayed and is powered by Ticker Technologies. | GoldStockStrategist.com -- Edited by Scott V. Nystrom, PhD, Gold Stock Strategist provides analysis on gold mining companies.