A silver ETF is a special type of exchange traded fund that is designed to track the price of silver. Silver ETFs are open ended mutual funds fully backed by insured physical silver bullions. They are traded on the major stock exchanges including New York and London.
Silver ETFs enable investors to own silver and gain exposure to its price without the inconvenience (and risk) of storing physical silver bars or coins. Each certificate or share entitles the holder an ownership to a specific amount of silver.
Investors can own silver that is insured and kept in a secure vault by buying silver ETFs.
To pay for management fees and also for the storage and insurance of the physical silver, a small amount of silver is sold periodically. Hence, the amount of silver represented by each certificate decline over time.
Silver ETFs currently available include:
- iShares Silver Trust (NYSE: SLV) launched in April 2006
- ETFS Physical Silver (LSE: PHAG) launched by ETF Securities in April 2007
Like all securities, there is a commission (typically around 0.4%) for buying or selling silver ETFs. In some countries, investing in silver ETFs is a way to avoid the sales tax or the VAT which would apply when buying physical silver coins and bars.
How to Start Trading Silver ETFs
To buy or sell silver ETFs, you need to open a trading account with an online stock brokerage such as TD Ameritrade. We recommend TD Ameritrade as they provide a virtual trading platform where beginners can try out stock trading in real market conditions without using real money.