Silver ETF (2x and 3x Leveraged Silver ETF + Inverse ETFs)

There are a number of exchange traded fund options for investors looking to allocate a portion of portfolio to Silver. Silver ETFs like other precious metal ETF such as Gold ETF and 2x Gold ETF allow investors to exposure to Silver at a controlled size.

Unlike futures, commodity ETFs allow investors to increase and decrease exposure in incrementals that are more manageable. This is because commodity futures are fixed value contracts. Also note that these funds track the changes in Silver prices only, it does not own any equity exposure to precious commodity miners like ETF gold miners.

For example the Silver future contract traded on the CME is a fixed value contract of 5000 ounces. Smaller investors has no option in purchasing a mini contract or fractional of face value.

Silver ETFs enable investors exposure to the commodity while at the same time able to manage the risk of owning the commodity which are more volatile than stocks. The upside of higher volatility is greater potential returns.

Silver ETF List

Symbol Name Type
SLV Silver Trust Silver ETF
AGQ Ultra Silver 2x Silver ETF
SIVR Physical Silver Shares Physical Silver ETF
USLV 3x Long Silver ETN 3x Silver ETF
ZSL UltraShort Silver 2x Short Silver ETF


Silver Trust (SLV) and Physical Silver Shares (SIVR) are both physical silver funds. These are non leveraged silver exchange traded funds which allows investor direct exposure to silver.Best Silver ETF

The underlying assets of the funds are physical silver held in the vaults of London and New York. 90% of SLV silver are held in London and the remaining 10% in New York. SIVR Silver holdings are all held in London.

One advantage SIVR has over SLV is that its expense ratio on the asset under management is 0.30% vs 0.50% for SLV. The offset of this is that SLV is much more liquid where it has 10x the AUM of of SIVR.

12 Month Silver ETF Performance

Naturally the performance of Silver ETF is dependent on the price of silver. Chart of Silver ETF performance shows it broadly tracks the movement in silver price excluding ETF expenses.

SLV Chart

 

 

5 Year Silver Price Performance

Leveraged Silver ETF – 2x Silver ETF and 3x Silver ETF

Investors looking to use leverage to magnify the return of potential moves in Silver (and risks) can use Ultra Silver (AGQ) and 3x Long Silver ETF (USLV). Evidently, both Silver ETFs seek to return 2x and 3x the daily change in the price of silver.

The primary difference between physical Silver ETFs to Leveraged Silver ETFs the leverage etfs does not hold physical silver. Like natural gas ETFs, the funds under management are held in a combination of cash and silver future contracts to mirror 2x or 3x change in the silver price.

One thing investors in these ETF should note that by holding future contracts. It introduces the additional component of roll, yield and spread risk. Even the contracts held in both ETFs are different. AGQ owns Silver forward contracts traded in London while USLV owns comex silver futures traded on the CME.

It might not be the most appropriate vehicle for long term investors of SIlver. But by mirroring 2x or 3x the movements in the silver price. It is the perfect short term trading vehicle.

Inverse Silver ETF

Ultrashort Silver (ZSL) can be used by bearish investors that are looking to bet against silver. ZSL trades exactly like other inverse ETFs which moves the opposite of the underlying target asset. It is a 2x Silver ETF tracking 2x the daily move in silver prices.

Chart below highlight the 12 month return of ZSL which should mirror the SLV chart above but at 2x magnify movements.

ZSL Chart