Best Silver ETFs

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Investing in commodities can be a risky business, but it can be a great way to diversify your portfolio — if you go about it carefully. As commodity investments go, precious metals are popular. Along with gold, silver is one of the most frequently traded precious metals.

If you’re thinking about investing in silver, silver exchange-traded funds (ETFs) offer advantages over buying silver stocks or purchasing silver coins or bullion. Not sure where to start? Here are Benzinga’s picks for the best silver ETFs.

5 Best Silver ETFs

Benzinga’s list of ETFs includes standard, inverse and leveraged silver ETFs.

1. abrdn Physical Silver Shares ETF (NYSEARCA: SIVR)

Silver is more volatile than gold, and you might not want to amplify that volatility by investing in an ETF backed by silver futures. 

Since SIVR is backed by physical silver, it’s much easier to trade. It’s also the best-performing ETF at the moment, and it has a reasonable 0.3% expense ratio. SIVR, which has approximately $835.3 million in assets under management, tracks the LBMA Silver Price.

If you aren’t buying and storing bullion yourself, you probably want to verify that an ETF you purchase actually has the silver holdings it claims. SIVR offers unparalleled transparency — on its website, you can find a list of every single silver bar and its unique serial number.

2. iShares Silver Trust (NYSEARCA: SLV)

SLV is another major physically backed silver ETF that tracks the LBMA Silver Price. With $14.37 billion in assets under management — significantly more than SIVR — SLV may be a better choice if you value ETFs with great liquidity options. However, at 0.5%, its expense ratio is slightly higher than that of SIVR.

3. ProShares Ultra Silver (NYSEARCA: AGQ)

If you want to maximize your chances of a decent return when silver is performing well, AGQ is worth looking into. AGQ tracks the Bloomberg Silver Subindex. Using derivatives, it aims to deliver returns double that of the subindex. For example, if the Bloomberg Silver Subindex rises 1%, you can expect a 2% return.

Leveraged ETFs like this one have the potential to deliver generous returns. However, because your losses will also compound, this isn’t an ETF you should hold for long periods of time. AGQ has $399.48 million in assets under management and a 0.95% expense ratio.

4. Global X Silver Miners ETF (NYSEARCA: SIL)

If you want to invest in something other than physically backed ETFs, consider silver mining stocks. As mining operations grow, you may see an increase in returns.

However, if you go this route, avoid investing in single companies. When you do this, you open up your investments to greater risks. SIL avoids that problem by tracking the Solactive Global Silver Miners Total Return Index, which includes stocks from 34 mining companies. 

The fund has $920 million in assets under management and a middle-of-the-road expense ratio of 0.65%.

5. ProShares UltraShort Silver (NYSEARCA: ZSL)

Of all precious metals on the market, silver has historically had the most volatile performance. ZSL takes advantage of that fact by effectively letting investors bet on falling silver prices.

How does it work? Most silver ETFs deliver returns based on rising prices. If the relevant index rises by 1%, returns will be 1%. However, ZSL is a leveraged inverse ETF. This means that as silver prices fall, your returns will increase. ZSL has $22.92 million in assets under management.

ZSL follows the Bloomberg Silver Subindex. If the index falls 2%, ZSL rises 4%. There is a catch, though — as the name indicates, ZSL isn’t designed to be held for long periods of time. It also has a somewhat high expense ratio of 0.95%.

What is a Silver ETF?

A silver ETF is a fund that lets you invest in silver without purchasing actual silver. As the name suggests, shares in silver ETFs can be bought and sold on the stock market. That option grants you considerable liquidity as well as convenience — two major advantages over buying silver bullion.

Like other ETFs, silver ETFs track a particular basket of securities. Each ETF follows an index or a general indicator of how the silver market is doing. When the index does well, you see increased returns. If it’s not doing well, you see lower returns or losses.

Silver is volatile, so some ETFs take advantage of that. Inverse ETFs give you higher returns when the index does poorly. Leveraged silver ETFs multiply your rate of return. For instance, if the index rises by 1%, the ETF might deliver returns of 2% or even more.

Before investing, it’s important to understand taxes and how they may impact your investments. If you hold shares in a silver ETF for more than one year in a taxable account, your capital gains taxes could be higher than you expect. 

Because the IRS considers silver to be a collectible, the tax rate can be up to 31.8%. However, you can avoid that higher rate by holding your shares in an IRA.

Why Invest in Silver ETFs?

The number of investment products available is substantial. But silver ETFs have several attractive features. Here are some advantages to consider.

• Silver investment without the hassle: Purchasing bullion involves broker fees, storage fees and insurance, and physical silver can be a challenge to liquidate.
• Returns whether the market rises or falls: Because you can invest in standard and inverse silver ETFs, you could reap returns regardless of which way the relevant indexes go.
• High liquidity options: Silver ETF shares are generally easy to sell when necessary, particularly if a given fund has more than $50 million in assets under management.
• Spreading of risk: ETFs track indexes and not individual companies, so you don’t need to worry about company-specific risks.
• More flexibility: Traditional stocks have a limited number of available shares, but new ETF shares can be created as needed.
• Secure backing: ETFs backed by physical silver eliminate the uncertainty of futures-backed investments and deliver most of the benefits of owning physical silver.
• Low expense ratios: Most silver ETFs have minimal expense ratios that let you keep more of your returns.
• A hedge against inflation: Unlike paper money, precious metals tend to hold their value even in times of considerable inflation.

There’s a lot to consider before you invest. If you aren’t quite sure if silver ETFs are the best addition to your portfolio, an investment adviser can help you decide.

Best Online Brokers for Investing in Silver ETFs

Once you’ve made the decision to invest in a silver ETF, choosing the right brokerage account will set you up for success. If you aren’t sure where to start, consider some of these Benzinga-vetted brokers.

Transform Your Portfolio with Silver

Putting most of your investment capital into silver would be ill-advised. But when you invest a portion of that capital into silver ETFs, you get closer to maintaining a well-rounded portfolio. Even the best silver ETFs can be volatile, but if you time your investments well and choose the right providers, that volatility could lead to impressive returns.

Frequently Asked Questions