Gold and silver investments provide inflation-beating returns, encouraging individuals to purchase them directly or via ETFs.
An ETF (exchange-traded fund) is a mutual fund that tracks the performance of an underlying asset. They’re listed on exchanges, so buyers and sellers can freely trade them like stocks.
iShares Silver Trust
Silver has long held appeal for investors due to its ability to serve as both an effective store of value and industrial application. While purchasing physical silver presents its own risks, ETFs offer an efficient and cost-effective means of accessing it without bearing the burden of buying and storing it themselves.
iShares Silver Trust (SLV) is one of the oldest and largest silver ETFs with more than $9 billion under management, holding physical silver bars stored in vaults owned by JPMorgan Chase (NYSE:JPM) in New York and London. Being transparent allows shareholders to stay up-to-date on its holdings daily.
While the trustee does not actively manage its silver holdings, it does sell silver periodically to cover sponsor fees and expenses not assumed by it. These sales reduce the amount represented by each outstanding share and help calculate its net asset value (NAV), using London Fix pricing methodology established each day at noon by members of London Bullion Market Association. iShares Silver Trust does not use any form of leverage since it operates as a grantor trust.
Market Vectors Gold Miners ETF
The Market Vectors Gold Miners ETF is an exchange-traded fund that tracks an index. The goal of this ETF is to replicate the price and performance of the NYSE Arca Gold Miners Index, designed to track overall gold mining industry performance by market cap weighted representation – meaning larger companies receive greater representation.
ETFs offer investors one way of taking advantage of gold’s hedging power without holding physical gold itself, but selecting gold miner stocks to include in your portfolio may prove more difficult due to mining’s often risky and costly operations; even minor price changes could turn a company from profitability to losses in an instant.
There are also leveraged gold ETFs, which use financial derivatives to increase returns of its investments and are generally designed for short-term trading and can be highly volatile. Furthermore, junior mining company-focused gold ETFs may provide greater upside potential but carry greater risk. When researching these ETFs you should keep expense ratios, performance, liquidity and liquidity in mind so as to choose those best suited for your portfolio.
Market Vectors Silver Miners ETF
Silver ETFs provide investors with an efficient means of diversifying their portfolio with precious metal exposure without purchasing physical silver bars. Traded on major stock exchanges, these ETFs are easily traded vehicles that allow investors to gain exposure. Its features and objectives should align with your personal goals and risk tolerance.
Some silver ETFs track the price of physical silver while others provide more leverage to silver prices by investing in mining companies; this type of fund may present more exposure, yet could introduce risks specific to each mining operation as well.
Market Vectors Silver Miners ETF (SIL B-) invests in companies that mine or process silver. However, this fund may be more risky than others as many miners may still be developing their operations and could face challenges like cost overruns or high debt loads that require significant capital injections to become operational.
Other silver ETFs like the iShares Silver Trust (SLV B-) and ETFS Physical Silver Shares ETF (SIVR B-) provide more traditional trackers of physical silver prices, tracking spot price movements. Both ETFs have transparent trading and lower expense ratios compared to their counterparts. Investors can also consider purchasing shares of silver mining companies which pay dividends as alternatives.
