Silver is used in jewelry, technology, and investment portfolios. If you are looking for an investment to hedge against inflation, silver is a popular option.
Historically, this “safe haven” material has provided investment protection against market uncertainty and geopolitical risks.
It is a lot like gold in this way, but there are some big differences. For one, the substance is more volatile than its warmer-hued cousin and that’s not necessarily a bad thing.
“While proven to be statistically more volatile than gold over time, silver is capable of literally rising to the occasion in times of extreme financial stress to exceed returns from gold,” says Nick Barisheff of BMG Group. “For example, from 1970 to 1980, gold rose 2,060%, while silver rose 2,320%. From the start of 2008 to the end of 2010, the silver price doubled with a 97.0% rise, while gold’s value rose 65.6%.
Let’s take a look at some of the top ETFs in the silver and precious metals space.
Pros and Cons of Investing in Silver ETFs
Silver ETFs give you all the benefits of investing in silver without actually buying the commodity or a future.
ETFs are calibrated to reflect the price of the precious metal. You also don’t have to risk investing in a silver company, which may or may not be profitable as an investment regardless of the price of silver.
“It is expensive to buy and sell the physical commodity because of the minimum size requirement, transaction cost, and other storage costs,” says K.C. Ma, the director of the Florida-based Stetson University’s Roland George investments. “Silver is more of cyclical investment where you can find many other similar investment opportunities with less transaction costs.”
However, different ETFs can be structured in different ways. Some are leveraged while others are not.
There is also an issue of expense ratios and other basic characteristics like the commissions and fees that will apply depending on your ETF broker, so make sure you do your research before you invest anything.
Should you Buy iShares Silver Trust (SLV)?
It has total assets in the neighborhood of $4.6 billion. SLV has a 52-week range of $13.11 to $16.64. It is down 16.7% year-to-date.
That might not seem like a reason to be encouraged but investors should remember that silver prices tend to be cyclical.
The downturn combined with the overall expectation that the market will ultimately turn bearish means that now could be a good time to buy in.
Is iShares MSCI Global Silver Miners (SLVP) a Buy or Sell?
The iShares MSCI Global Silver Miners ETF (BATS: SLVP) is much smaller. It has $44.64 million in assets under management, but it is also entirely different.
This ETF includes silver mining companies. “What’s different about miner ETFs, in general, is that they’re an equity play on the commodities themselves,” says Tushar Yadava of BlackRock’s iShares U.S. Investment Strategy team. “So, what you end up getting is one of these traditional 1940-act funds that owns a portfolio of equity positions.”
SLVP has a 52-week range of $7.24 to $11.33. This ETF is down 26.40% in the past year and 31.17% year-to-date but even with those lackluster results, SLVP is still up 9.22% over the past three years.
Is Invesco DB Silver Fund (DBS) A Good Buy?
Invesco DB Silver (NYSEARCA: DBS) has $17.34 million in net assets and is currently trading at $21.90 per share.
Its 52-week range is $21.18 to $27.00. DBS has lost 15.30% in the past year and 18.06% year-to-date.
Over the last three years, Invesco DB Silver has lost 1.41%.
Other Top Silver ETFs
ETFMG Prime Junior Silver (NYSEARCA: SILJ) is another silver ETF.
It is smaller, with $39.77 million in assets, but it also has strong performance.
While the stock is down 27.25% in last year and 32.95% year-to-date, it has returned 12.99% over the last three years.
SILJ has a 52-week average of $7.42 to $12.43.
Also, keep in mind that silver ETFs are not your only option if you want to put your money in an ETF that handles the precious metal.
If you would like to get into ETFs that include futures as well as gold, PowerShares DB Precious Metals (NYSEARCA: DBP) and Invesco Global Gold & Precious Metals ETF (NASDAQ: PSAU) are two choices to consider.
They have higher expense ratios but their performance is also strong. DBP is up 2.36% over the past three years while PSAU is up 11.44% over the same period.
You could also invest in gold mining-ETF iShares MSCI Global Gold Miners (NASDAQ: RING).
This ETF has$175.19 million in net assets. RING has a 52-week range of $13.33 to $20.35.
This ETF is down 17.14% over the past year and 21.23% year-to-date, but it has produced a 12.53% return over the past three years.
Buying Silver ETFs Conclusion
These ETFs are unlikely to net you a large return on their own, but they can be a good way to diversify.
Silver ETFs can be a solid part of a well-hedged portfolio as long as you do your research.
ETFs are not stocks and terms can vary depending on your broker.