Email of the day (3)
Comment of the Day

August 22 2011

Commentary by Eoin Treacy

Email of the day (3)

on ETFs holding physical industrial metals:
"Etfsecurities.com have launched a variety of physical industrial metal ETF's volume is a bit thin, but that may change as time pulls on.

'Physical Industrial Metal securities are backed by physical metal stored at London Metal Exchange (LME) Warehouses, the ownership of which is evidenced by LME Warrants (LME regulated warehouse receipts) or warehouse receipts held by the Issuer. All Physical Metal is held in LME approved warehouses and confirms to LME standards'.

Aluminium (phal), Copper (phcu), Lead (phpb), Nickel (phni), Tin (phsn), Zinc (phzn)

"Keep up the great work. I hope you enjoy a fun weekend."

Eoin Treacy's view Thank you for this informative email. All of the above funds have been added to the Chart Library. As you mention these funds are thinly traded. In addition, the metals they represent are characteristically volatile. This raises relevant questions about whether they are currently fit for purpose. Commodities are capable of large swings both up and down. At inflexion points, liquidity becomes a primary concern. Considering how little volume is generated in these funds I question whether an investor would be able to sell at a reasonable level during a period of heightened volatility.

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