Copper is shining as much as gold, with two new physical copper ETFs and a new copper index

We just discussed the Nat Gas ETN trading 10% above its NAV. Here's another proof that commodities are frothing and that the boom is very much exuberant is the number of the new ETFs and instruments that are created, some of which do not really make sense...

Why not making sense in my opinion? Because copper is wildly abundant, and that it very cheap compared to its density. Storing it is going to be extremely expensive if it ever reaches the same size as GLD and doesn't have a lot of value, since most (non ferrous) metals are already stored in approved LME storage locations. As you can see below, neither JPM nor iShares mention the expense ratios applied to their ETFs.

(IndexUniverse, the 24th of October) J.P. Morgan filed with the Securities and Exchange Commission for permission to launch a new physical copper-based fund, the first of its kind in the ETF industry.

(IndexUniverse, the 26th of October) The investment objective of the J.P. Morgan Physical Copper Shares ETF “is for the shares to reflect the performance of the price of Physical Copper Grade A,” less expenses, according to the J.P. Morgan’s filing.

iShares, the world’s biggest exchange-traded fund company, filed papers today with the U.S. Securities and Exchange Commission to market its own physical copper ETF, taking on J.P. Morgan in a space that until a few days ago was unoccupied by any money management firm.

The price of iShares Copper Trust shares will be based on settlement prices of the London Metals Exchange, the filing said. The copper will be stored in warehouses at locations in the United States or in other places if it has approval from the trustee and the sponsor, the paperwork said.

iShares’ filing follows a similar move by J.P. Morgan, which filed to offer a physical copper ETF last Friday. The sudden emergence of two competing funds shows how hot the copper market has become in recent years.

(IndexUniverse, the 8th of November) SummerHaven Index Management, the Stamford, Conn.-based index provider behind the U.S. Commodity Funds’ broad commodities ETF (NYSEArca: USCI), launched an investable copper benchmark that’s designed to minimize contango and maximize backwardation of copper futures contracts.

The SummerHaven Copper Index is made up of Comex high-grade copper futures contracts with maturities of 18 months or less, and maintains positions in liquid portions of the copper futures curve, the company said in a press release. Through use of fundamental signals about the underlying physical copper market, the index weights its composition to closer-to-maturity contracts in backwardated markets and shifts to longer-duration contracts when markets are in contango.