iShares is a grouping of exchange traded funds (ETFs) managed by BlackRock Inc. of New York, the world’s largest asset manager with some $5.4 trillion of assets under its purview in 100 countries. The iShares Silver Trust was launched in April 2006 and, within 5 years, became the largest silver ETF on the market with well over 300 million troy ounces (10+ tons) of silver in storage worth more than $5 billion. Such a trust offers investors the opportunity to “own” the commodity, the price of which is tracked on a constant basis. The Trust owns the silver bullion but does not buy or sell it in response to market changes. It holds it on behalf of shareholders at JP Morgan Chase Bank, generating an average annual return of 2.29%. It is listed as SLV on the New York Stock Exchange.
Suitability and Recommendations
Silver is a highly desirable commodity due to its immense versatility and widespread usage in industrial applications, medicine, electronics, photography, household items from mirrors to silverware, and of course its indispensable roles in the life of the world through coinage and jewelry.
Investing in iShares Silver Trust is a convenient path to ownership of this precious metal, as one simply buys SLV shares on NYSE just like any other stock. But it does not come without risk. Economic adversity (higher interest rates, inflation, crises, etc.) not only decreases the industrial production that silver serves, but discretionary spending also tends to fall, meaning less jewelry is purchased. These exert downward pressure on the price of silver and, consequently, the value of an SLV share. This was indeed reflected in the years before and after the financial crisis of 2009, when the five-year annual average return slipped to a negative 3.61%.
The upside of investing in iShares Silver Trust is that you will actually hold this valuable commodity in your portfolio, without actually having to buy and store silver bullion. It should be regarded as a speculative trading opportunity … with the power of the largest asset manager in the world on your side.
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