“Until now, the main people buying physical copper have been the people who use it,” Lina Khan reports in the 12/31/12 issue of The New Republic. In mid-December, however, the SEC “blessed a controversial fund designed by J.P. Morgan Chase that, for the first time, will let investors buy shares backed by physical, warehoused copper, to use as a form of investment.”

The SEC’s decision “may seem arcane,” Khan says. “… But companies that use copper strongly oppose the new fund.” They argue “that allowing investors to hoard the metal will lead to supply shortages, create substantial price volatility, and distort the market,” she writes, going on to quote a protest letter from a group of copper users who describe the implications as “grave for our companies, our industry, and, indeed, for the U.S. economy.”

The new fund “effectively creates a corner on the market,” Marcus Stanley, policy director at Americans for Financial Reform, told Khan. “It means a manufacturer won’t be able to procure copper because the copper will be tied up in somebody’s retirement fund. That’s not what commodity markets were intended for.”