What common thread ties together industries as diverse as jewelry, automotive, solar and electronics? The answer is silver, a versatile metal that plays a crucial role across these industries due to its unique combination of properties: electrical conductivity, reflectivity, ductility and malleability.
Silver’s unique ability to conduct electricity makes it indispensable in devices. Its reflectivity is sought after in solar panels and mirrors, while its ductility and malleability allow it to be drawn into thin wires or hammered into sheets, perfect for both industrial applications and exquisite jewelry.
“The silver market is primarily influenced by three key drivers: industrial use, investment demand and supply levels,” says Sean August, CEO of The August Wealth Management Group. “When it comes to industrial use cases, silver is a key input for electronics, solar panels and medical equipment.”
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Robert Minter, director of ETF investment strategy at abrdn, agrees with August, adding: “The automotive demand growth is driven by electric vehicle, or EV, chargers and infrastructure, which is more silver intensive. Regardless of the temporary slump in EV sales growth, every EV sold is a symbol of increased silver demand versus a gasoline vehicle.”
Beyond its industrial uses, silver can also be used as an alternative asset class. In a diversified portfolio, silver can offer a low correlation to traditional investments like stocks and bonds, which means it doesn’t necessarily move in tandem with these assets.
“Looking at the latest decade, silver shows a negative correlation to U.S. interest rates at -0.22 and a low correlation to the S&P 500 at 0.19,” says Roberta Caselli, commodities research associate at Global X ETFs. This characteristic, combined with its historical volatility, positions silver as a potential tool for diversification, providing a hedge against market fluctuations.
However, the logistics of buying and holding physical silver bullion can be complex and costly. Investors must navigate dealer markups and bid-ask spreads, not to mention the logistical challenges of storage, insurance and security risks associated with physical silver.
This is where silver exchange-traded products come into play, offering a more accessible and cost-effective means of gaining exposure to this precious metal.
These products, which can include exchange-traded funds, or ETFs, grantor trusts, and closed-end funds, allow investors to add silver to their portfolios with the same ease as trading stocks, directly from any brokerage account.
“I really like silver exchange-traded funds over other ways to hold silver,” says Anessa Custovic, chief investment officer at Cardinal Retirement Planning Inc. “You get the diversification benefits of holding silver without the headache of trying to purchase and store bullion.”
This accessibility makes silver ETFs and similar products an attractive option for those looking to tap into the benefits of silver without the complexities of handling bullion.
Here are seven of the best silver ETFs and similar exchange-traded products to buy in 2024:
| ETF | Expense ratio |
| abrdn Physical Silver Shares ETF (ticker: SIVR) | 0.3% |
| iShares Silver Trust (SLV) | 0.5% |
| Sprott Physical Silver Trust (PSLV) | 0.59% |
| Sprott Physical Gold and Silver Trust (CEF) | 0.49% |
| Global X Silver Miners ETF (SIL) | 0.65% |
| Amplify Junior Silver Miners ETF (SILJ) | 0.69% |
| ProShares Ultra Silver (AGQ) | 0.95% |
abrdn Physical Silver Shares ETF (SIVR)
“The Silver Institute notes that global silver demand may top 1.2 billion ounces in 2024, which if correct would set a record for annual consumption,” Minter says. “Moreover, the more pervasive the ‘China is uninvestible’ theme gets, the bigger the discount and potential opportunities in silver, which is tied to improving industrial activity in China.” To bet on this tailwind, investors can buy SIVR.
Launched in July 2009, SIVR provides exposure to physically backed silver bullion held in London vaults. The deposits are inspected twice a year, once at random. On SIVR’s webpage, investors can find vault inspection letters and a list of bars held with serial numbers, assay and weight, which provides a high degree of transparency. SIVR charges a 0.3% expense ratio.
iShares Silver Trust (SLV)
“Physically backed silver ETFs offer three significant advantages over other types of silver investments: transparency, liquidity and convenience,” August says. “These ETFs regularly disclose the amount of silver held, are easily traded on major exchanges, and grant exposure to silver prices without the need to store and insure bullion.” Another popular silver fund to watch is SLV.
SLV currently has more than $9 billion in assets under management, or AUM, representing around 13,600 tons of silver in trust. The fund itself is very liquid, trading an average of 16 million shares over the past 30 days with a fairly low median bid-ask spread of 0.05%. However, it is quite volatile, with a three-year standard deviation of 25.2%. Investors can expect a 0.5% sponsor fee.
Sprott Physical Silver Trust (PSLV)
PSLV is technically a closed-end fund. Practically, this means that shares of PSLV may on occasion trade at either a premium or discount to its net asset value, or NAV. If PSLV experiences high buying pressure, demand can drive its market price above its NAV. Conversely, high selling pressure can cause the market price of PSLV to dip below its NAV due to excess supply.
Investors should therefore check PSLV for potential discounts or premiums to NAV before buying to ensure they are not overpaying. Right now, the fund trades at a 3.8% discount to NAV. It holds $3.8 billion in AUM, representing just over 170 million ounces of silver, which is held with its custodian, the Royal Canadian Mint. PSLV charges a 0.59% expense ratio.
Sprott Physical Gold and Silver Trust (CEF)
One metric commonly watched by investors is the silver-to-gold ratio, which represents the price of an ounce of gold divided by the price of an ounce of silver. By watching this ratio, investors can see how undervalued or overvalued silver is to gold compared to historical trends. A good way to put this ratio into practice is by buying CEF, which holds both physical gold and silver bullion.
CEF offers investors exposure to the two most prominent precious metals in a single ticker. Currently, its portfolio is 68% gold and 32% silver, representing $2.8 billion and $1.3 billion in AUM, respectively. Right now, CEF is trading at a 5.3% discount to its NAV, which could be good for investors trying to buy at a discount. The fund charges a 0.49% expense ratio.
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Global X Silver Miners ETF (SIL)
“Silver mining stocks can offer indirect exposure to silver prices and tend to be leveraged plays on silver prices, owing to the fixed costs of extracting the metal,” Caselli says. “Unlike investing directly in silver, miners can expand production as profit margins grow, which can benefit their share prices.” Despite not holding silver bullion, silver miner ETFs like SIL still hold a high correlation to the metal’s spot price.
SIL currently tracks the Solactive Global Silver Miners Total Return Index, which holds a fairly concentrated portfolio of 32 globally diversified silver mining and streaming companies. SIL’s portfolio is heavily tilted toward Canadian equities at 62%, which makes sense given the country’s large mining industry. The ETF charges a 0.65% expense ratio and pays a small 30-day SEC yield of 0.4%.
Amplify Junior Silver Miners ETF (SILJ)
Silver mining stocks can vary in terms of risk and potential return. For example, SIL features allocations to larger, more stable silver streaming companies like Wheaton Precious Metals Corp. (WPM). However, investors can also target smaller and riskier junior miners. These companies primarily focus on silver exploration and development by raising capital via debt or equity issuance.
Junior miners can be thought of as the materials sector equivalent of biotech firms: high risk, high reward. If they strike it rich and uncover deposits, investors can pocket large profits. If efforts fail to uncover deposits, the company can go under. Thus, an ETF like SILJ can provide greater diversification when it comes to investing in junior silver miners. SILJ charges a 0.69% expense ratio.
ProShares Ultra Silver (AGQ)
Due to its high volatility, silver is also popular among traders who primarily use futures contracts for exposure. However, futures trading can be complex and open to large losses due to the use of margin. For short-term enhanced exposure to silver prices, retail investors can use leveraged ETFs like AGQ. This ETF targets a daily return two times that of the Bloomberg Silver Subindex.
That being said, leveraged ETFs like AGQ are not suitable for long-term buy-and-hold investors due to high volatility and the unpredictability of compounding returns. It also charges a high expense ratio of 0.95%. For investors looking to place a short-term bet against silver, AGQ has a counterpart, the ProShares UltraShort Silver (ZSL), which provides daily two-times inverse exposure to the Bloomberg Silver Subindex.
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7 Best Silver ETFs to Buy originally appeared on usnews.com
Update 02/07/24: This story was previously published at an earlier date and has been updated with new information.
