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Silver Exchange Traded Funds


Exchange traded funds (ETF’s) can be used to either hedge an exposure to silver, or to speculate on the price of silver or silver mining companies. They are easily traded on a stock exchange, and can be bought to speculate on a rise or fall in the silver price.

Different silver ETF’s allow exposure to different forms of silver.

Silver ETF’s that hold silver products

These types of ETF hold physical silver under the name of the ETF. This allows an investor to directly benefit from the performance of the white metal, without the need to buy and hold the gold himself.

One such fund is the iShares Silver Trust Fund. Created in April 2006, the fund currently holds around $9.75 billion of assets (net). Investors don’t receive a dividend, so its price wholly reflects the price of its assets. This ETF seeks to replicate the daily price movement of silver. It’s a fantastic choice for the investor who wants a direct exposure to silver and expects the price of silver to rise.

Silver ETFs that hold Silver Futures

Another type of ETF, that attempts to replicate the price performance of silver, though this time through holding derivative products within the fund such as futures and options. Again, the cost of holding derivative products is normally far lower than holding physical silver.

The PowerShares DB Silver Fund is designed to track the performance of the Deutsche Bank Liquidity Commodity Index, Optimum Yield Silver Excess Return. This index is composed of futures contracts on silver. The PowerShares DB Silver Fund was created in January 2007, and has a net asset value of around $80 million.

ETFs that follow the Silver Industry

Some investors prefer to invest in the shares of mining companies. The trouble here is that such an investment is very narrow, unless investment in several companies is made, which can be expensive (broker fees, taxes, dealing costs, etc). There are ETFs which themselves invest in companies that operate within the silver industry, and these allow an investor a more diversified exposure, in one easily executed transaction, than buying shares in a single company.

One such fund is the Silver Miners ETF from Global Funds. This fund invests in the securities of a range of silver miners from around the world, from Canada and the USA to South America and Russia.

Multiple Metals ETFs

For many investors, exposure to the price of several metals and minerals is an attractive option. For such investors, there are ETFs that invest in multiple metal products.

PowerShares DB Precious Metals Fund, created in 2007, seeks to track the performance of the Deutsche Bank Liquid Commodity Index – Optimum Yield Precious Metals Excess Return. This index is composed of futures contracts on gold and silver, and is intended to replicate the performance of the precious metals sector. The fund has net assets of around $690 million.

ETFs that short silver

Silver can be a volatile investment. The price moves down as well as up. For investors who believe the short term movement of silver will be negative, or for those who want to hedge a physical silver position, short silver ETFs are designed to profit from a fall, in the price of silver.

ProShares UltraShort Silver ETF is an investment that aims to return twice the opposite performance of silver bullion on a daily basis (before fees and expenses). In other words, when the silver price rises, the price of this fund will fall by twice the rate, and vice versa. It invests in a combination of swaps, futures, and options. It was created in December 2008.

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