Gold and silver ETFs may provide an effective hedge against inflation or market instability; but selecting the most suitable one may prove challenging. How can you select one suitable to your portfolio?
Physical silver is heavy and difficult to store, not to mention expensive to purchase and sell. Exchange-traded funds (ETFs) provide an alternative with lower fees and easier trading, offering reduced hassle when it comes to trading silver.
iShares Silver Trust (SLV)
The iShares Silver Trust provides an efficient way for investors to gain exposure to silver prices at a minimal cost. The fund is designed to mirror generally the performance of physical silver markets, providing investors with an alternative investment approach without incurring expensive and difficult storage fees or worrying about inflation risk. Furthermore, diversifying portfolios with physical silver can be costly; diversifying against inflation should also be an option with this versatile solution.
Investing in the iShares Silver Trust involves risks that could compromise its value and could include loss of principal. Since it’s not registered as an investment company, investing may involve potential downside risk that could impact its performance.
As part of its operation, the trustee will periodically sell silver to cover expenses not assumed by its sponsor as well as liabilities such as sponsors’ fees and sponsor payments owed to it and other liabilities, thus decreasing the net asset value per iShares Silver Trust share.
Global X Silver Miners ETF (SIL)
The Global X Silver Miners ETF (SIL) invests in securities from companies involved in silver mining worldwide. The fund seeks investment results which approximate, on an ongoing basis, price and yield performance, prior to fees and expenses of Solactive Global Silver Miners Total Return Index. As it is non-diversified it seeks a similar outcome.
Mining is a risky yet rewarding business, where traditional miners specialize in extracting silver from the ground while junior miners act as advisors to production companies. Wheaton Precious Metals – one of SIL’s top holdings – currently has streaming agreements for 20 operating mines and nine development-stage projects.
ETFs like SLV offer convenient exposure to physical precious metals without their associated hassles of storage and selling at premiums compared to spot prices. Although still considered collectibles by tax authorities, ETFs like this one should ideally be held within tax-advantaged accounts if possible.
iShares Silver Miners ETF (SLVP)
Silver investors who wish to diversify their holdings with exposure to mining companies will also appreciate the iShares Silver Miners ETF, issued by BlackRock and managed by JPMorgan Chase – both being well-recognized names in financial services.
SLVP stands out from its counterparts by holding physical silver bullion in vaults – something many other precious metals funds don’t do – making this fund ideal for investors looking to avoid storage and insurance fees while its expense ratio remains lower than others of its kind.
GLD stands out as being a silver fund that invests across multiple mining companies that produce precious metals other than silver, providing diversification of assets and reduced exposure to price volatility in silver prices. With an excellent track record and trading capabilities all day long, this fund makes for an easy way to gain exposure to this precious metal. Additionally, trading takes place anytime the stock market is open!
Abrdn Silver Miners ETF (SIVR)
Investors looking for an easy way to diversify exposure can turn to sector ETFs as an easy solution. Be sure that they only include high-quality mining companies; otherwise, any one poor performer in the sector could greatly diminish your returns.
As is true of many commodity ETFs that hold physical metal, SLVP suffers the same drawback as directly owning silver: gains are taxed as collectibles rather than at the preferred long-term capital gains rate – a problem if held in non-tax-advantaged accounts such as regular brokerage accounts.
Abrdn’s sector ETF, created in 2009, stores silver bullion approved by the London Bullion Market Association in London vaults and only pays expenses when assets appreciate or depreciate in value – making this 26 basis points cheaper than Global X’s ETF, making it worth consideration by some investors.