Silver ETF - Overview & Comparisons Of Silver
The proliferation of the ETF market coincided with a bull market in commodities including gold and silver. Silver
ETFs that track the physical commodity as well as silver stocks have gained popularity as investors want a cost
effective way to own silver. A Silver ETF is much more practical for most people than buying, insuring and storing
physical silver especially when you consider the dealer spread. If you are expecting financial armeagedon and are
storing up silver for survival then an ETF is not your answer, however if you are looking to hedge against
inflation (devaluation of fiat currency) or just looking to trade the metals a good Silver ETF is a great
Before we look at all the different investment options available for investing and trading silver, please note
that silver is historically a very volatile commodity and is not suited for all investors. As you move along the
risk curve toward silver miners and leveraged Silver ETFs the volatility can be much higher than most stock
investors are comfortable with. Always make sure you understand the risks and read the prospectus before investing
in an ETF.
One Tax Note: Under U.S. tax law an investment in a Silver ETF is treated as if you
actually invested in silver and is subject to the same capital gains treatment as a collectible, not as other
stocks. So capital gains would be calculated accordingly, please consult your tax advisor for more detailed
SLV - iShares Silver Trust
ETF was the first Silver ETF to come to market and is by far the
most liquid of the Silver ETFs. Due to it's market dominating position we will use it as the benchmark for
comparisons of the other available products. Since it's inception on 4/21/06 the price performance of SLV has quite
accurately reflected the performance of the Silver market less associated fees and expenses.
Each share of SLV represents approximately an ounce of silver and the
expense ratio for SLV is .50% (50 basis points) per year which is slightly higher than similar Gold
The trust is sponsored by BlackRock Asset Management with Bank Of
NY Mellon as trustee and JP Morgan Chase as the custodian. According to the prospectus, SLV is backed
by silver, identified on the custodian’s books in allocated and unallocated accounts on behalf of the trust
and held by the custodian in England and other locations that may be authorized in the
As with other ETF products this is not a good substitute for physical
silver if you want to use it as protection against a financial meltdown. However, if your objective is to use
precious metals to diversify your portfolio or protect against inflation SLV is a good choice. ETFs are
especially valuable if you wish to gain exposure to silver or gold in a retirement account which normally don't
allow futures, options or physical bullion purchases.
SLV Performance Since
This monthly chart begins on the first trading day for SLV .
SIVR - Physical Swiss Silver Shares ETF began
trading on 7/24/09 and were intended to provide a higher degree of transparency into the actual metal backing the
trust. According to the prospectus, each silver bar is properly segregated, recorded and the serial number is
published daily on their web site. It seems they have gone the extra mile to address the transparency issue, there
probably isn't much more that could be done without actually delivering the silver to the end customer.
SIVR is sponsored by ETF Securities USA LLC, Bank Of NY Mellon is the trustee and HSBC Bank USA is the
custodian. The physical silver is held in London England on behalf of the trust. Each SIVR share represents
approximately 1 Ounce of silver and the annual management fee is .49% (49 basis points).
SIVR is very small compared to SLV and has a fraction of the trading volume, however the liquidity is still well
above what is needed for actively trading or investing. Volume has grown steadily in the past year for all silver
etfs including this one.
As you can see on the following chart the performance of SIVR has mirrored that of SLV. The primary reasons to
choose SIVR over SLV would be the belief that there is greater transparency of silver ownership and the reduced
annual expense ratio which is currently 20 basis points lower than SLV.
SIVR VS SLV Since Inception
Monthly chart begins on SIVR inception date 7/24/09.
DBS - PowerShares DB Silver Fund ETF according to
the PowerShares website DBS is based on the Deutsche Bank Liquid Commodity Index - Optimum Yield Silver Excess
Return™ (the DB Silver Index) and is managed by DB Commodity Services LLC. The Index is a rules-based index
composed of futures contracts on silver and is intended to reflect the performance of
Since this is an index based fund it is priced different than SLV
it is not based on 1 share equaling an ounce of silver. The annual management fee is .75% (75 basis points) with an
estimated Futures Brokerage Commissions fee of an additional 4 basis points.
As you can see form the chart below DBS appears to have
significantly underperformed SLV since inception. Even if DBS performance equals SLV in the future, there is little incentive
to purchase DBS considering the annual fees are higher, physical ownership is generally preferred to futures
and DBS is much less liquid than the other two etfs.
DBS VS SLV Since Inception
Monthly chart begins on IAU inception date 1/21/05.
USV - E-TRACS Silver ETN is another unleveraged product
designed to track the performance of Silver.
According to the web site it seeks to track the price and performance yield, before fees and expenses, of the UBS
Bloomberg CMCI Silver Total Return index. The fund is designed to be representative of the entire liquid
forward curve of the silver contracts. The index measures the collateralized returns from a basket of silver
futures contracts. It is comprised of the silver futures contracts included in the CMCI with five target
maturities. The annual expense is lower than DBS at .40% (40 Basis Points)
As you can see from the chart below USV performance has been consistant with the performance of SLV. However
there is very little trading volume (around 1000 shares per day) making this an illiquid investment option compared
to the other products.
USV Performance Since Inception VS SLV
Chart shows performance of USV since inception.
Here for the latest updates regarding unleveraged Silver
SLV | SIVR
| DBS | USV
| AGQ | ZSL | SIL