For those of you subscribers of the ETFBR, the news are great. As Rob Ivanoff predicted back in May, JP Morgan has just received a green light, to launch the first physical copper ETF in the world. Expect iShares to also get a green light, as they have filed for a similar ETF - but theirs will hold twice the size requested by JP Morgan (still, Mr. Dimon shoots faster than Larry Fink these days). J.P. Morgan’s copper trust is looking to register 6.19 million shares, or 61,800 metric tons, of copper. The trust will hold “grade A” copper in physical form, and hold no copper futures. The copper will be stored in LME -approved warehouses in the Netherlands, Singapore, South Korea, China and the U.S.
Over the past two years, the ETF Business Review published opinions in which we analyzed the pros and cons of all parties on both sides. In one of the opinions we concluded: "The market will embrace a physical-based copper ETF when it arrives. In fact, there will be a room for a number of them, similarly to gold. It is possible that the high cost of storing copper will hurt the fund in the short term, but we must assume that the cost will come down with assets going up. Expect competition in this space to increase from future-based metal ETNs and ETFs, specifically similar ETPs based abroad, which will cut their pricing in order to compete."
To read SEC notice of approval for JP Morgan click here. Below is the conclusion from our report summary, from May 2012.