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Buy Silver Etf BETTER

Between the end of 2018 and the end of 2022, silver gained 52% in price, beating gold by more than 10 percentage points and providing wind beneath the wings of silver ETFs. But given silver's persistent placement in gold's shadow when it comes to financial media coverage, chances are this is the first you've heard about its solid outperformance.

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Granted, silver is far more popular among investors than bronze, but it still doesn't come close to ol' Element 79. Consider that the iShares Silver Trust (SLV (opens in new tab)), the largest silver ETF on the market at roughly $11 billion in assets under management, is just one-fifth of the size of the largest of the gold ETFs: the $55 billion SPDR Gold Shares (GLD (opens in new tab)). And fewer silver funds are vying for those assets, no less.

"While gold tends to get the most attention, silver, along with platinum and palladium, is also an important piece of a precious metals portfolio," says Charles Sizemore, principal of Sizemore Capital Management. "While silver also has more industrial uses, and is thus somewhat sensitive to the economic cycle, it has also been a viable inflation hedge over time."

"The price of silver and precious metals as a whole were suppressed by rising interest rates and a strong USD in 2022. However, silver demand still rose by about 16% from 2021 while supply only increased by 2%," says Stephen Gardner, director of ETF provider ETFMG. "We think this imbalance, which started in 2021, paired with the expectation that the Fed will pause rate hikes later in the year (weakening the U.S. dollar) will be a tailwind for the silver price."

Rather than find someone to buy bars or bullion from, then arrange delivery, then find somewhere safe to store the metal, then deal with the difficulty of finding a buyer when you're ready to unload it, ETFs such as SLV allow you to buy and sell silver with the click of a button in your brokerage account.

Apart from being heavy and difficult to store, physical silver can also trade at a large premium to spot prices. Thus, for exposure to silver, "you might be better off buying an ETF or even playing the futures market," Sizemore says.

The fund, which launched in 2006, currently holds more than 480 million ounces of physical silver in its vaults, located in England and the U.S. Thus, SLV shares are a physically backed representation of the price of silver.

Part of it is iShares' first-mover advantage (SIVR launched three years after SLV). But SLV is also a much more liquid fund, trading 17 million shares daily versus less than 1 million for SIVR. While Abrdn's fund has decent enough liquidity for buy-and-holders, SLV's superior liquidity is much more attractive to agile traders looking to get precise entry and exit prices from the best silver ETFs.

Global X Silver Miners ETF (SIL (opens in new tab), $27.80) isn't like the first two names featured on this list of the best silver ETFs. Rather than investing in the metal itself, it invests in the companies that pull silver out of the ground.

Top holding Wheaton Precious Metals (WPM (opens in new tab), 26% of assets), for instance, currently boasts streaming agreements for 20 operating mines and nine development-stage projects. (Just note that like some of SIL's other holdings, it has exposure to gold, too, so it's not perfect silver-mining exposure.) No. 3 holding Pan American Silver (PAAS (opens in new tab), 9%) is a direct miner with assets throughout the Americas.

Like the SIL, the SLVP does have some interest in companies that mine not just silver, but gold and other metals. However, the fund's tracking index starts each rebalancing by targeting companies that primarily mine silver, then seeks out companies with gold and other metal interests. SLVP then limits the weight of large- and mid-cap gold companies to 5% of their market cap, then caps all issuer weights at 25%, then ensures all issuers with weights above 5% don't combine to exceed 50% of the fund's entire weight.

Junior silver miners help point production companies in the right direction. They're actually tasked with discovering silver deposits, determining how rich their resources are, and sometimes they actually help get mines up and running. But their involvement typically ends there.

Tip: The performance of different silver ETFs will vary considerably from each other and from the base metal itself, depending on the nature of the ETF. Investors should fully understand how a particular ETF tracks the price of silver before investing.

Note: A silver ETF is generally considered to be one that is structured as a grantor trust and that seeks to track the price of silver, less expenses. Other ETFs that provide indirect exposure to the price of silver, such as silver inverse ETFs, silver leveraged ETFs, and silver ETNs, are generally considered to be alternative forms of silver ETFs.

Within the commodities space are silver ETFs, and investors interested in these have many choices. For instance, some ETFs focus solely on physical silver bullion, while others focus on silver futures contracts. Still others focus on the silver-mining market itself.

Many individuals gravitate towards silver ETFs over silver mutual funds because mutual funds can only be bought or sold at the close of the trading day, while silver ETFs offer more flexibility as they can be traded whenever the stock market is open.

In order to determine which silver ETF will best suit their precious metals needs, investors should examine the options available to them. Here's a brief look at seven of the top silver ETFs by total assets. The first four ETFs track the price of silver, while the last three provide exposure to silver-mining stocks; all numbers were collected on November 3, 2022, using data from ETF Database.

The Aberdeen Standard Physical Silver Shares ETF is also not a typical ETF and is very similar to the iShares Silver Trust. It's geared at investors who want to hold physical ounces of silver. The investment objective of the Aberdeen Standard Physical Silver Shares ETF is for its shares to reflect the performance of the silver price less the expenses of the trust's operations.

The fund's silver metal is held with JPMorgan Chase Bank in London in a secured vault. This ETF reportedly has a good record for correctly tracking the spot price of silver. Its five year average annual return comes in at 10.7 percent.

The Aberdeen Standard Physical Silver Shares ETF's net asset value is determined by the silver ounce price as set by the London Bullion Market Association at approximately 12:00 p.m. London time divided by the number of shares outstanding for the fund at 4:00 p.m. New York time each trading day.

The fund uses derivatives such as futures contracts to invest in silver. ETF Database suggests it may be "a powerful tool for investors with a bullish short-term outlook for silver." The ProShares Ultra Silver ETF has the highest expense ratio by far of the four silver-backed ETFs at 1.5 percent.

The Invesco DB Silver Fund is the smallest silver ETF on this list in terms of total assets and has an expense ratio of 0.76 percent. This ETF offers investors exposure to silver through futures contracts.

ETF Database comments, "DBS may be a good choice for investors seeking futures-based exposure to silver but who wish to avoid the hassle of trading on a futures account." The five year average annual return for DBS comes in at 2.99 percent.

The Global X Silver Miners ETF gives investors access to a basket of silver-mining stocks. It benefits from the fact that those companies can enjoy quick gains when the price of the metal is rising. It also allows investors to avoid the risks associated with individual companies and lets them add geographical diversity to their portfolios.

The ETFMG Prime Junior Silver ETF bills itself as the "first and only ETF to target small cap silver miners." The index provides a benchmark for investors to track public small-cap companies in the silver space.

The ETF has an expense ratio of 0.69 percent and its holdings span Canada, the US and the UK, with key silver companies such as First Majestic at a weight of 13.8 percent, Turquoise Hill Resources (TSX:TRQ,NYSE:TRQ) weighted at 12.39 percent and Hecla Mining Company (NYSE:HL) at 5.09 percent.

The iShares MSCI Global Silver Miners ETF tracks an index composed of global equities of companies primarily engaged in silver exploration or metals mining; however, it skews toward Canadian mining stocks. The ETF has the lowest expense ratio of the three ETFs focused on silver stocks at 0.39 percent.

Exchange-traded funds (ETFs) are investment avenues that invest the pooled fund in various asset categories like commodities, stocks, bonds, etc. Silver ETFs invest their funds in physical silver or silver related instruments. The NAV of silver ETFs is directly dependent on the price of silver.

Silver ETFs track the spot price of silver in the open markets. Fluctuations in the price of silver will change the NAV of these ETFs. Fund managers of a silver ETF purchase silver and store them in secure vaults. SEBI safeguards the rights of the investors by regulating these ETFs. The fund managers must obtain auditor reports on physical verification of the silver stored in vaults at regular intervals.

Investors who allocate their funds to silver exchange-traded funds need not worry about the purity of the metal. The physical silver bought by fund managers are at least 99.99% pure and are stored in secure vaults.

Fund houses must invest at least 95% of the total corpus in silver and silver-related instruments. Exchange-traded commodity derivative is also considered silver-related instruments. So, managers can invest in ETDC as well to meet the requirements.

Precious metals such as silver have long been an alternative to traditional investments such as stocks and bonds. When times get tough or the economy faces severe inflationary pressures, some investors turn to silver to hedge their bets or to invest more defensively. Silver prices spiked in March 2023 following the collapse of Silicon Valley Bank, as concerns were raised about the stability of the financial system. 041b061a72


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