Silver ETF

Silver ETF – Exchange Traded Fund

Exchange traded funds allow investors to invest in commodities and precious metals such as gold and silver while watching their ETF investments grow as the prices of gold and silver and commodities rise. A silver ETF is one of many ETF Funds that invests primarily in raw silver assets. These assets are held in trusts by a fund manager and they are established as grantor trusts. This means that each share of the ETF corresponds to a certain price to a specific amount of silver that is measured in ounces. The idea behind the silver exchange traded funds is that an investment in certificates backed by silver are traded instead of the actual trading or buying and selling of actual silver. These funds are of course administered by brokers on the ETF market . When the gold ETF was launched it was a big hit and many investors believe that the silver exchange traded fund will follow suit.

Precious metals such as silver and gold are seen by investors to be a hedge against inflation. The silver ETF allows for greater liquidity than buying and holding the actual metal itself and precious metals are also easier to access than the futures markets. In 1980 there was about 2.5 to 3 billion ounces of silver that was mined and today most warehouses are down to 100 million ounces in their inventory, with two thirds of the supply already spoken for. Many believe that for this reason and others there is a potential for a severe silver shortage in years to come. Additionally, there is very little silver that is continuing to be mined while the consumption of silver has surpassed the supply over the past 14 years.

The silver ETF is held in a taxable account and is subject to higher long-term capital gains rate on any holding of more than one year. These gains are considered collectible since they are investment in the raw metal itself and therefore are subject to a 28% long-term capital gains rate. However, silver exchange traded funds that are held in IRAs are not subject to this higher capital gains tax as decided by the Internal Revenue Service (IRS). It is for this reason that many investors opt to simply purchase silver bullions rather than deal with the tax issues involved with the silver ETF. This of course if a matter of preference to the investor and all aspects of investing in exchange traded funds should be explored.

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Please continue your exchange traded funds education and read about the Gold ETF .