5 Top Silver ETFs: Everything You Need to Know

See the top silver ETFs and the market outlook for the precious metal.

Investors use silver ETFs for various purposes. Some invest for speculative reasons, hoping to profit from potential increases in silver prices. Others invest in silver as a form of hedging against economic uncertainty, geopolitical turmoil or currency devaluation. 

Learn more about investing in silver and see a list of top ETFs investing in the precious metal. 

What Are Silver ETFs? 

Silver ETFs are exchange-traded funds that provide exposure to the price of silver, a precious metal. These ETFs are designed to track the performance of silver prices, making it easier for investors to gain exposure to the silver market without physically owning and storing the metal itself.  

Silver's unique combination of properties, including its electrical conductivity, thermal conductivity, reflectivity and antibacterial qualities, makes it a valuable material in various industries and applications. 

One of the advantages of investing in silver ETFs is that investors don't need to worry about storing and securing physical silver themselves. The ETF provider takes care of storage and custody in secure vaults, which can be a cost-effective and convenient way to invest in silver. 

Types of Silver ETFs 

There are several types of silver ETFs available to investors, each with its own investment approach and characteristics. Here are some common types of silver ETFs: 

• Physical silver ETFs: These ETFs hold physical silver bullion or coins in secure storage facilities. Each share of the ETF represents ownership of a certain amount of physical silver. Physical silver ETFs aim to closely track the spot price of silver.  
• Silver futures ETFs: These ETFs invest in silver futures contracts rather than physical silver. They can provide exposure to silver price movements without the need for physical storage.  
• Silver miner ETFs: These ETFs invest in companies involved in the mining and production of silver. While not directly linked to the price of silver, the performance of silver miner ETFs is influenced by factors such as production costs, exploration success and overall demand for silver.  
• Leveraged and inverse silver ETFs: These ETFs use derivatives to provide leveraged (e.g., 2x or 3x) or inverse (e.g., -1x) exposure to the daily movements of silver prices. Leveraged ETFs aim to amplify gains or losses, making them suitable for traders looking to capitalize on short-term price movements. 

List of Top Silver ETFs by AUM 

Data as of September 1, 2023 

Pros & Cons of Investing in Silver ETFs 

Investing in silver ETFs can offer various advantages and disadvantages, depending on an investor’s goals, risk tolerance and overall financial strategy. Here are some of the pros and cons of investing in silver ETFs: 

Pros of Investing in Silver ETFs 

• Accessibility: Silver ETFs provide an accessible and convenient way for investors to gain exposure to the price of silver without the need to physically buy, store, or transport the metal. 
• Liquidity: Silver ETFs are traded on stock exchanges, making them highly liquid investments. You can buy and sell shares during regular trading hours, allowing for flexibility in managing your investment. 
• Diversification: Many silver ETFs hold a diversified portfolio of silver assets, which can help spread risk. This diversification can be especially beneficial compared to owning a single silver item or coin. 
• Lower costs: Silver ETFs often have lower expense ratios compared to actively managed funds or owning physical silver. This can result in cost savings for investors over time. 
• Transparency: ETFs provide transparency into their holdings, allowing investors to know exactly what they own within the fund. 
• No storage costs: When you invest in a physical silver ETF, you don't need to worry about storage costs or the security of physical silver, which can be a concern for those who buy and hold physical metals. 

Cons of Investing in Silver ETFs 

• Market risk: The performance of silver ETFs is closely tied to the price of silver, which can be volatile. Economic conditions, industrial demand, currency movements and geopolitical events can all impact silver prices. 
• Tracking error: Silver ETFs aim to track the price of silver, but they may not perfectly mirror the spot price due to factors like tracking error or the use of derivatives. This can result in discrepancies between the ETF's performance and the actual price of silver. 
• Lack of income: Most silver ETFs do not generate income through dividends or interest. Investors rely on capital appreciation driven by silver price movements, which may not provide regular income. 
• Taxation: Silver ETFs are considered to be investments in a precious metal, which means that gains may be taxed as a collectible and are subject to up to a 31.8% long-term capital gains rate. Silver ETFs held in tax-advantaged accounts, such as IRAs, are not subject to this tax. 
• Not a physical asset: While some investors prefer the tangibility of owning physical silver, investing in silver ETFs represents ownership in a financial instrument rather than a physical asset. 

Market Outlook for Silver in 2023 and 2024 

The market outlook for silver in 2023 and 2024 is mixed. Some analysts believe that the price of silver will rise because of increasing demand and other related factors, while other analysts believe that it will fall due to higher inflation and a stronger U.S. dollar. 

Those who believe that the price of silver will rise point to the following factors: 

• Increasing demand: The demand for silver may increase in the coming years, driven by factors such as the growth of the solar and electric vehicle industries, as well as the use of silver in jewelry and industrial applications. 
• Geopolitical risks: Geopolitical risks, such as the war in Ukraine, could also drive up the price of silver, as investors seek a safe haven asset.  
• Economic uncertainty: In recent years, silver has risen in price after economic shocks, such as the onset of the COVID-19 pandemic and after the Silicon Valley Bank crisis. A severe recession could have a similar impact on the price of silver. 

Those who believe that the price of silver will fall point to the following factors: 

• Rising interest rates: Rising interest rates could make silver less attractive to investors, as it is a noninterest-bearing asset. 
• Stronger U.S. dollar: A stronger U.S. dollar could also make silver less attractive to investors, as it would make silver more expensive for buyers in other currencies. 

Bottom Line on Investing in Silver ETFs 

Investing in silver ETFs can be a way to gain exposure to the silver market with ease and liquidity. Silver prices can be influenced by various factors, including economic conditions, industrial demand, currency movements, geopolitical events and investor sentiment. Therefore, investing in silver ETFs carries market risk, and like all investments, it's important to conduct thorough research and consider your investment objectives and risk tolerance before investing in them.