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Silver, like other precious metals, may be used as an investment. For over four thousand years silver has been regarded as a form of money and store of value.
Exchange traded funds (ETFs) investing in silver have continued to support the price of the metal. Demand for silver is rising for use in jewelry, silverware and industrial applications. Silver is rare, with only 23 silver mines operating around the world. And the silver stockpiles are at a 50-year low.
Global investors are predicting both silver and gold will continue to rise even more than they have in the past year, due to concerns over Iran's nuclear program, weakened dollar, gas and oil prices, and buying of precious metals by world banks.
Note that gains from the silver ETF will be taxed at the collectibles rate of 28% vs. the long-term capital gains rate of 15% (or less). If you're going to invest in this ETF, consider using a tax deferred account.
ETFs that focus on Silver include:
- iShares Silver Trust ETF (SLV): This ETF gives investors direct access to silver and since it's launch, SLV has become the largest single buyer of silver.
The objective of the iShares Silver Trust is for the value of the shares of the iShares Silver Trust to reflect, at any given time, the price of silver owned by the iShares Silver Trust at that time, less the iShares Silver Trust's expenses and liabilities.
- PowerShares DB Silver Fund (DBS): The PowerShares DB Silver Fund is based on the Deutsche Bank Liquid Commodity Index - Optimum Yield Silver Excess Return and managed by DB Commodity Services LLC. The Index is a rules-based index composed of futures contracts on silver and is intended to reflect the performance of silver.
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