Silver ETF Funds and Alphabet Soup
For many investors, silver ETF funds are an indispensable way to participate in the rewards of silver investing even if they don't have the foggiest idea what a ten ounce silver bar looks like.
Of the silver ETF funds available, perhaps the most popular is SLV.
Though the SLV ticker seems related to SPDR Gold Trust ETF that trades under GLD, SLV is actually the iShares Silver Trust that trades widely on the NYSE.
So, while the iShares Gold Trust (IAU) seems to walk in the shadow GLD, SLV appears to be voted most popular when it comes to silver ETF funds.
I want to be clear that I would never invest in SLV, or any other of the silver ETF funds, but I want to share my insights since they are so popular and people will no doubt continue to pile into them.
And if you plan to join them, you ought to at least look at your options before dumping money into "SLV" because your co-worker is up 18% in 7 weeks.
Just as ETF Securities offers the ETFS Physical Swiss Gold Shares (SGOL), it also brought us the ETFS Silver Trust, which trades on the New York Stock Exchange under SIVR.
SIVR is designed to correlate to the price of silver bullion, with each share equating to one ounce of silver.
SIVR is newer among the silver ETF funds, having begun trading in July of 2009, whereas SLV started trading over three years earlier in 2006.
SIVR is a smaller fund than SLV, and it has a lower average daily trading volume accordingly.
However, the primary difference seems to be with accounting.
Just as ETF Securities offers a more streamlined custodial arrangement for the bullion with its SGOL product relative to something like GLD, as mentioned in my article on Gold ETF Funds, ETF Securities again offers a more reassuring approach with SIVR with compared to the iShares SLV product.
SIVR uses HSBC in London and, while other custodians are allowed, there seems to be more restrictions.
Restrictions on their liberty with the silver undergirding your investment typically translates into better safeguards for you.
As you may expect, the increasing popularity of silver ETF funds, coupled with the ease of use, leads to more and more options.
Thus, you might also make note of the other silver ETF funds out there, like the PowerShares DB Silver Fund (DBS).
Another is the E-TRACS CMCI Silver Total Return (USV).
I mention these as a pair because they both seek to track silver moves through the use of futures contracts.
Stated differently, they do not hold any physical silver bullion to support the overarching investment.
They can be more volatile as a result.
This can give you some leverage to the upside when things go well, but you have exposure down as well.
You need to also know that USV is technically an exchange-traded "note," so it is an ETN rather than an ETF.
This adds the element of credit risk.
The trading volume is also pretty thin, so it may be illiquid.
Just as I stated with respect to gold, if I were to participate in silver ETF funds I would prefer those that tap the leverage of mining companies rather than the silver ETF funds that aim to track spot silver prices.
For instance, you could look at AGQ, which is the ProShares Ultra Silver ETF fund that has a stated goal of achieving returns equal to 200% of what silver bullion does on a daily basis.
There's also the ProShares Ultra Short Silver ETF (ZSL), which aims to pull off twice the inverse of silver bullion's daily performance.
Use of this is really beyond the scope of this article.
There are still others, like SIL, but at the end of the day, and I repeat at the risk of seeming monotonous, you can do better than these vehicles simply by selecting a handful of your own carefully chosen silver miners.
I would only use AGQ and ZSL as trading vehicles at most.
The best approach, as borne out through my own repeated results, is to ditch all the alphabet soup of voluminous silver ETF funds and just hand pick individual stocks for superior returns.
Of the silver ETF funds available, perhaps the most popular is SLV.
Though the SLV ticker seems related to SPDR Gold Trust ETF that trades under GLD, SLV is actually the iShares Silver Trust that trades widely on the NYSE.
So, while the iShares Gold Trust (IAU) seems to walk in the shadow GLD, SLV appears to be voted most popular when it comes to silver ETF funds.
I want to be clear that I would never invest in SLV, or any other of the silver ETF funds, but I want to share my insights since they are so popular and people will no doubt continue to pile into them.
And if you plan to join them, you ought to at least look at your options before dumping money into "SLV" because your co-worker is up 18% in 7 weeks.
Just as ETF Securities offers the ETFS Physical Swiss Gold Shares (SGOL), it also brought us the ETFS Silver Trust, which trades on the New York Stock Exchange under SIVR.
SIVR is designed to correlate to the price of silver bullion, with each share equating to one ounce of silver.
SIVR is newer among the silver ETF funds, having begun trading in July of 2009, whereas SLV started trading over three years earlier in 2006.
SIVR is a smaller fund than SLV, and it has a lower average daily trading volume accordingly.
However, the primary difference seems to be with accounting.
Just as ETF Securities offers a more streamlined custodial arrangement for the bullion with its SGOL product relative to something like GLD, as mentioned in my article on Gold ETF Funds, ETF Securities again offers a more reassuring approach with SIVR with compared to the iShares SLV product.
SIVR uses HSBC in London and, while other custodians are allowed, there seems to be more restrictions.
Restrictions on their liberty with the silver undergirding your investment typically translates into better safeguards for you.
As you may expect, the increasing popularity of silver ETF funds, coupled with the ease of use, leads to more and more options.
Thus, you might also make note of the other silver ETF funds out there, like the PowerShares DB Silver Fund (DBS).
Another is the E-TRACS CMCI Silver Total Return (USV).
I mention these as a pair because they both seek to track silver moves through the use of futures contracts.
Stated differently, they do not hold any physical silver bullion to support the overarching investment.
They can be more volatile as a result.
This can give you some leverage to the upside when things go well, but you have exposure down as well.
You need to also know that USV is technically an exchange-traded "note," so it is an ETN rather than an ETF.
This adds the element of credit risk.
The trading volume is also pretty thin, so it may be illiquid.
Just as I stated with respect to gold, if I were to participate in silver ETF funds I would prefer those that tap the leverage of mining companies rather than the silver ETF funds that aim to track spot silver prices.
For instance, you could look at AGQ, which is the ProShares Ultra Silver ETF fund that has a stated goal of achieving returns equal to 200% of what silver bullion does on a daily basis.
There's also the ProShares Ultra Short Silver ETF (ZSL), which aims to pull off twice the inverse of silver bullion's daily performance.
Use of this is really beyond the scope of this article.
There are still others, like SIL, but at the end of the day, and I repeat at the risk of seeming monotonous, you can do better than these vehicles simply by selecting a handful of your own carefully chosen silver miners.
I would only use AGQ and ZSL as trading vehicles at most.
The best approach, as borne out through my own repeated results, is to ditch all the alphabet soup of voluminous silver ETF funds and just hand pick individual stocks for superior returns.
Source...