What would you rather buy? Paper silver or physical silver? It goes without saying that physical silver is a superior option when investing in silver. But what if, for whatever reason, you can only buy silver ETF. The reason could be that you think it's inconvenient to store silver physically, or you're a business owner and don't have a safe storage system for investing in physical silver. There are many silver ETF options out there you can choose to put your money in; some are better than others.
Assessing the Silver ETFs
A silver ETF is an exchange-traded fund that tracks silver's price movement. Silver ETFs offer indirect exposure to the price fluctuations of silver without requiring investors to acquire the underlying physical asset. A silver ETF may own physical silver, shares of silver mining firms, or silver futures in order to monitor the price of silver.
The Silver ETFs perform differently from each other and from the actual silver. Before picking an ETF for a portfolio, you may examine the 1 to 10-year return of the ETF versus silver. You need to check the expense ratio of ETFs as well. Generally, the fund with the lowest expense ratio will beat those with more significant expenditures.
A grantor trust is granted when the person who established the trust is the legal owner of the assets and property for tax purposes. Single-commodity exchange-traded funds (ETFs) benefit from grantor trusts since they can invest in silver and no other asset without breaking the laws governing fund diversification.
SLV vs PSLV
Two of the most popular silver ETF are iShare Silver Trust (SLV) and Sprott Physical Silver Trust (PSLV). They both have high liquidity and can be traded easily online with brokers. Both of them are gaining high activity and volume from both retail and institution as the hype of the silver squeeze movement continues. Both ETFs hold silver bullion to track the price of silver, but one is a better trust than the other.
Although the SLV's price movement has typically tracked that of silver, it is not the best ETF option for silver exposure. The biggest red flag is that JPMorgan (JPM) is the custodian of SLV, and the big bank has a history of manipulating the prices of precious metals.
Silver price manipulation by JPMorgan is not a conspiracy theory. This does not necessarily mean that JPMorgan is manipulating the SLV, but they do have a history of spoofing the metal market by placing enormous buy and sell orders with no intention of executing them. Spoofing is illegal in the financial market, and JPMorgan has been fined $1 billion because of it.
Meanwhile, PSLV is managed by Eric Sprott, who is a famous and highly esteemed billionaire investor in precious metals. He has a positive reputation in the metal and silver space and is particularly supportive of the junior mining industry.
When purchasing PSLV, you're essentially purchasing shares in a trust with fully redeemable physical silver bullion. PSLV asserts that they do not buy, sell, or hold any silver derivatives like the futures contracts
Conclusion
When It comes to investing in precious metal, getting your hands on physical bullion is always the best option. But if you ever need to buy a silver ETF, you need to pick the best performing and trustworthy one.