Guide to Investing in Silver – Chapter 7: Silver in Exchange Traded Funds (ETFs)

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Updated: Mar 5, 2019, 13:14 GMT+00:00

This is chapter number 7 out of 15. Read the rest: Read Guide to Investing in Silver – Chapter 1: IntroductionRead Guide to Investing in Silver – Chapter

Guide to Investing in Silver – Chapter 7: Silver in Exchange Traded Funds (ETFs)

This is chapter number 7 out of 15. Read the rest:

Read Guide to Investing in Silver – Chapter 1: Introduction
Read Guide to Investing in Silver – Chapter 2: Starting out as a Silver Investor
Read Guide to Investing in Silver – Chapter 3: Silver as an Investment Vehicle
Read Guide to Investing in Silver – Chapter 4: Methods of investing in Silver
Read Guide to Investing in Silver – Chapter 5: Investing in Silver Bars
Read Guide to Investing in Silver – Chapter 6: Silver Coinage as an Investment

Silver Exchange traded funds are investment certificates which are backed by silver. They are administered and traded by brokers in lieu of trading in the actual physical silver. It was speculated that Silver ETFs will also be as popular as Gold ETFs when it was first launched.

There was around an estimated 2.5 to 3 billion ounces of silver mined during the 1980s. Today, the above ground stockpiles of refined silver have dropped down to almost zero. Even the warehouse inventories of silver amount only to around 100 million ounces and two thirds of this amount have already been pledged for. Presently, there is a severe dwindling of silver reserves and the stage is set for a critical shortage of silver in the next few years.

Silver as an industrial metal is a necessity for many critical industries. Keyboards, phones, refrigerators and thousands of electrical appliances require silver as one of the key component for their manufacture. Because silver is normally obtained as a by-product of other mining concerns like lead, gold or zinc, there is very little actual mining for silver done. And for the last 14 successive years, the demand for silver has overtaken supply.

Because of this shortage in silver supplies, the launching of Silver ETFs is actually predicted to do well. The deficit in supplies will only seek to boost the values of these Silver ETFs. Regardless of whether you are buying silver bullions or silver coins, silver has always been a good investment. And with the forecasted shortage, silver bullions are expected to further increase in prices.

Although the picture for ETFs seems rosy, one has to remember that there may be tax issues to consider as well unlike if one was buying actual physical silver. In addition, there are also broker fees and other incidental costs related to the transaction of ETFs which are hidden. One cannot deny the fact that actual physical possession is always more attractive than virtual possession. Furthermore, over time, silver coins are likely to improve in numismatic value whereas ETFs are subject to market volatility. As such, one should consider weighing one’s objective in purchasing ETFs. If your intention is short then ETFs may be a good investment vehicle. However, if your objective is using as a store of wealth, then it would be wiser to own the physical silver.