Monday, January 21, 2008

Silver EFT

Silver EFT or silver exchange traded funds are a relatively new way to invest in silver. They offer a convenience for the busy investor who does not want the hassle of taking delivery of pure silver and the additional problems of storage and security.

Exchange Traded Fund Defined
EFTs are portfolios of securities rather like a mutual fund, that are actively traded on a stock exchange in the same way are shares of common stock).

There are over one hundred ETFs traded on the US Stock Exchange, with many more in other countries. ETFs having gained popularity over the years ever since they were introduced on the US Stock Exchange in the mid 1990s

What are Silver EFTs
Silver EFTs are a special type of exchange traded fund. These types of funds are only track the price of silver much as gold EFTs track the price of gold. Silver exchange traded funds are traded on all the major stock exchanges including London, Paris and New York.

When a person opens a silver exchange trade account they then buy in silver and their holding is an amount of silver represented by their account. The silver is stored in vaults around the world, usually in 1000 ounce silver bullion bars. If one has paid in say, for example, 5000 USD into a silver exchange traded account, one would own that equivalent of silver expressed in ounces less any charges. Usually a commission of 0.4% is charged for trading in silver ETFs and an annual storage fee is also charged as of course one actually owns the silver.

Tax considerations can be a drawback however. In some countries, ETFs may represent a way to avoid the sales tax which would apply to physical silver coins or bars but in the UK be aware that VAT may be charged on even overseas purchases and many countries will have tax considerations to watch for. It is suggested that you discuss with your financial adviser before embarking on any silver exchange traded fund activity.

Silver exchange-traded funds (or ETFs) can be a quick and easy way for an investor to gain exposure to the silver price, without the inconvenience of storing physical bars.

The other viewpoint is that one's silver is more subject to the vagaries of the market when entrusted to others. many people feel more secure holding their own silver and storing it either in bullion bars or silver rounds.

Some silver ETFs are:
iShares Silver Trust (NYSE: SLV), launched in April 2006 by iShares.
Central Fund of Canada (TSX: CEF.NV.A, NYSE: CEF) has 45% of its reserves held in silver with the remainder invested in gold.
In September 2006 ETF Securities launched ETFS Silver (LSE: SLVR) which tracks the DJ-AIG Silver Sub-Index, and later in April 2007 ETFS Physical Silver (LSE: PHAG) which is backed by allocated silver bullion.
There are many others. While silver EFT may be a convenient way of investing in silver there is really nothing quote so satisfying as actually having and handling one's own silver bars and coins.

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