Both the GlobalX funds are heavy in Canada and the copper fund has a lot of overlap with CU. I wrote about both the First Trust ETFs when they launched with the expectation that they will prove to be more volatile than something like the iShares Global Materials ETF (MXI) which is a broad large cap proxy for the sector and also a holding for some clients.
For now it is too soon for the idea of more volatility to be correct or not but I would expect both the new GlobalX funds to also be more volatile.Candidly I am unlikely to ever need a silver mining ETF, that seems like it would be more of a trading vehicle, but a copper ETF could have utility. Recently the swings in both directions for copper have been bigger than in past cycles, as I recall anyway, but copper and so copper stocks tends to be a good hold earlier in a cycle and the volatility of many of the stocks makes for an easy way to add beta.
As I said the two funds, CU and COPX, seem very similar and I don't necessarily feel the need to spend time picking the better of the two if I am not a buyer right here but I will say that access to copper miners for people who don't want to pick stocks is a good thing.
Also in the ETF news is that Direxion Funds, which amusingly is headquartered five minutes from the house I grew up in, filed for a bunch of funds including 3X Bull Water and 3X Bear Water. Triple short water? I don't know what water index these funds will track but is there really that kind of trading interest in the water theme?
I love this theme, I've held PHO personally and for clients since it first listed and while it has done better than the S&P 500 and the Industrial Sector SPDR (XLI) in that time I've never thought of it, or any water fund, as a trading vehicle. It's just an observation, I'm sure Direxion perceives there is demand to lever up the water theme.
5 comments:
Glad to see a Silver miner ETF in the works. You should consider it, given the interesting developments in silver. As you may know, there has long been suspicion of manipulation in the silver markets and a whistle-blower recently came forward with proof. When the manipulation ends, silver is heading for triple digits. Here's a short story...this is going to make a great movie one day.
http://tinyurl.com/y7byq27
Randall
A question for silver experts. There was a vast amount of above ground silver tied up in the photography world. That has been disipating rapidly on account of digital photography which would cause one to think that although silver may be in greater demand, silver mining might be less attractive due to the amount of "above ground mining" that is taking place. Thoughts?
There's an interesting article in today's WSJ "hidden tax traps inside ETFs." ETFs are touted as being tax friendly, but some aren't. Obviously, for some it is not an issue.
http://bit.ly/d2XI51
Anonymous, The reduction in conventional photography has minimal impact with regard to its impact on supply/demand of silver. About 85% of all the silver used in conventional photography is recycled.
There's not much above-ground silver available for purchase, 500 million ounces at the absolute most, probably closer to 200 million. Think about the ramifications of that for a moment...a single $5 billion silver purchase by a sovereign or hedge fund would wipe out the entire stock of silver. Silver is much, much more rare than gold and has many more industrial uses. If we get a currency crisis where people rush into gold/silver or the naked silver shorts get squeezed, that's going to send silver prices to the moon. Industrial users have to have it, because it's vital and they'll pay whatever price they need to. This is the best set-up for a trade I've ever seen in my life.
Puewater, no doubt you are much more knowledgeable than I so I respect your thoughts.
There are some observations that should be addressed however. Photo silver was recycled but there is a supply there that didn't exist when it was completely recycled. There will be soon very little silver halide photgraphy taking place.
The first folks I knew of that thought silver was the trade of a lifetime were the Hunt brothers and more recently, it was Warren Buffett. It did not pan out for them. There could be an exceptional amount coming out of the luxury jewelery market for example at the right price. Just my two pieces of eight today.
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