An ETF is an Exchange Traded Fund, which is something that is traded over an exchange and deals in a raw commodity. Essentially, they are funds that deal exclusively in silver, buying large quantities of silver assets, and investors looking to get involved with this precious metal can simply sink their money into one of these funds, as opposed to physical or “virtual” silver.
ETFs are traded all over the world and they come in many forms, with silver being just one of them, and the one we will focus on in this article.
Silver ETF Basics
Silver ETFs are said to have a big impact on the spot price of silver, and are prized by investors around the world, but they constitute a fairly new invention. The first such fund was launched as recently as 2006, by Barclays Global Investors. Known as the iShares Silver Trust, this trust kick-started a trend that has flourished to this day, providing investors (both individual and institutional) with a viable way of investing in this particular precious metal.
The impact of these ETFs was so powerful that they played a big role in the dramatic valuation increase that silver saw in the four years between 2007 and 2011. Other things have lowered the price of silver since then, but Silver ETFs still do their part in ensuring this precious metal is prized around the world.
Benefits of a Silver ETF
If you wanted to invest in the future of a precious metal without investing in the metal itself in the past, you may have been restricted to buying shares in mining companies. While these companies rely on the success of a particular precious metal to succeed, they are also much more volatile than the valuation of the metal itself. ETFs provide a much more viable option, allowing investors of all types to get involved. This means that you can bank on all of the benefits of precious metal investment, which includes guarding against inflation and economic collapse, without needing to store any of the metal yourself.
Silver ETFs also have greater liquidity than pure silver, which means they are far easier to sell. There will also be someone waiting to buy a Silver ETF from you and you can sell in any amount, whereas selling actual silver, especially in large quantities, is not such an easy task.
Where to Trade Silver ETFs
Silver ETFs are traded on most of the world’s biggest stock exchanges, with the vast majority of the daily trades taking place in the financial hubs that are the London Stock Exchange and the New York Stock Exchange. This means that whether you have direct access to these exchanges or whether you use a trading platform that can access these exchange and others, you should have no issue buying and selling Silver ETFs.
What to Know About Silver ETFs
Although you are not purchasing physical silver as such, you will still need to pay capital gains tax on any profits you make from selling silver ETFs. That’s because they are still classified as a “collectible”, and are therefore subject to the same taxes and laws that affect physical silver. In some countries, the United States included, you can also expect to pay more capital gains tax on Silver ETFs that you have held for more than a year, as the tax rate changes on all collectibles and investments that extend beyond this threshold.
The Best ETFs
If you’re looking to get your money into a silver ETF, then check out one of the following. All of these are listed on the New York Stock Exchange.
Physic Silver Shares
iShares Silver Trust
iShares MSCI (Silver Miners Fund)
Global X Silver Miners (Silver Miners Fund)
Powershares DB Silver Fund ETF
ETRACS CMCI Silver
ProShares Ultra Silver
VelocityShares 3x Long Silver
VelocityShares 3x Inverse Silver