What Is A Silver ETF?

It’s an ETF that’s silver! Right? No? What the heck is an ETF, anyway?

An ETF is an exchange-traded fund. Basically, an ETF tracks something; it represents something. In places like Canada, an ETF is an excellent tool for capturing tax losses. What happens is that some individuals will use an ETF to replace a losing stock they might own; just remember to note this on your TurboTax software when tax season rolls around.

This can be an index, a commodity, or something else. Sometimes, they can be represent a group of things, like a mutual fund, only they have lower costs than mutual funds do. In the case of a silver ETF, it tracks silver. What do you mean, “tracks?” Imagine that you are interested in precious metals, and you have a particular interest in silver stocks.

You have read a lot about silver, and you think that its value will go up over time. You decide to take a speculative position and buy some silver. You actually have two options at this point. You can literally buy some silver, hold it in your hand, and keep it yourself. Keeping it yourself could mean keeping it in your home or depositing it in a safe deposit box at your bank. Either way, you have possession of the silver.

Your second option is to buy silver ETFs (silver and gold ETF is available, along with the other precious metals). With a silver ETF, you do not actually have possession of the silver; a company does. However, your ETF represents a set amount of silver. So, if the silver’s price goes up, then so does your ETF. If it goes down, so does your ETF. There are different types of silver that can be bought; your ETF doesn’t just have to represent bullion silver. It can be made of silver coins, like the Canadian silver ETF. Other silver ETF’s are also available, such as the Barclays silver ETF, leveraged silver ETF, silver miners ETF, zkb silver ETF, and the double silver ETF. They all have their differences, but they all do primarily the same thing: represent silver.

You can look up a silver etf symbol using Yahoo Finance or MSN Money, and you can read more about the company who issues it. Since a financial ETF, inverse ETF, energy ETF, and other kinds of ETFs are traded like stock, many people confuse them with stock. They assume that ETFs are shares of a company. This is not the case. ETFs represent silver, not a company. Therefore, if the company does poorly, but silver goes up in value, a silver ETF will go up in value. If the company does exceptionally well, but the price of silver drops, the value of the silver ETF will go down.

If ETF investing isn’t for you, you might want to consider investing in mutual funds – like a no load mutual fund.


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