Physical commodity ETFs (and their cousins closed-end funds) are investment vehicles that buy and store commodities like gold, silver, or uranium.
There are a lot of reasons to like them:
Mining is risky for a whole host of reasons. A physical ETF not only eliminates those risks but actually benefits from them to the extent that trouble in the mining business lowers production and raises prices.
Physical ETFs require minimal research. Just decide that you like silver or whatever, buy the ETF, and you’re in.
When a physical ETF buys and stores a commodity, it takes supply off the market, which, other things being equal, raises the price, thus creating a self-fulfilling prophecy: The better the ETF does, the more capital it attracts and the more commodities it can buy, raising the price further, and so on.
There are some ethical issues here (is it good for the economy as a whole for prices to be elevated in this way?), but from an investor’s standpoint, the concept is appealing.
For more, see:
Five-Stock Portfolio #1: Physical ETFs
How You Store It, Part 2: Physical ETFs
Geopolitical Risk and the Case For Physical ETFs
Finally, Copper
As you can see, I’ve been recommending physical ETFs as one of the best ways to invest in commodities — while lamenting the fact that copper, arguably the most interesting commodities story, wasn’t represented, probably because copper is relatively cheap, which means an ETF would need massive storage facilities to house a reasonable amount.
But that’s about to change,