I’m still in Cape Town, but I got the news a couple of days ago from a Canadian source, that a major Canadian bank, quite active in mining finance, has publicly announced that it has agreed to undertake (but not underwrite, as far as I know) the raising of $25,000,000 for the purpose of capitalizing an ETF that will offer investment instruments for speculating on rare metals which the new ETF will hold in physical form as collateral for the base value of its instruments. I’m going to guess, for example, that a buyer of a share in the ETF will have a right to the physical delivery of the market value of a unit of a rare metal, at their agreed original contract price. In other words, I assume that the ETF share will be a futures contract.
Before I analyze this venture I can say that I believe that in the long term, $25 million of any rare metal will be worth many times that, so that in theory such physical metal delivery guaranteed collateralized instruments should be quite good investments.
I am however skeptical of such ventures because of events I have seen evolve in the last six months and in the last 50 years. Basically I’ve heard all of this before, many times. Oh, but of course “this time it’s going to be different,” right?
I’ve written up my thoughts on this subject in this month’s special edition of The Jack Lifton Report, which is available to subscribers. If you’re not yet a subscriber and would like a copy of the report – simply fill in your details on the form in the upper right of this Web page, and you’ll have it in no time.