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Silver commodity futures have been the subject of enormous speculation since the beginning of February 2021 and have been incredibly volatile as a result. This means that investing in them or ETFs that hold them is substantially riskier than usual. The returns of these 3 ETFs may differ from the returns listed below due to the large price swings in the commodity futures they hold. Please be careful when investing in this area and be wary that the current large price swings are likely not indicative of underlying market conditions.
Precious metals such as gold, silver, and platinum are valued by many investors as a hedge against inflation or a safe haven in times of economic turmoil. They also are valued for their rarity and their use in a broad range of industrial applications. Precious metals exchange-traded funds (ETFs) are a popular way to invest in these metals, either through physical or futures-based exposure. ETFs can offer a more liquid and easier approach to investing in precious metals than buying futures contracts, purchasing bullion, or buying stock in publicly traded companies involved in the exploration or production of these metals.
Key Takeaways
- The precious metals sector has dramatically outperformed the broader market over the past year.
- The ETFs with the best 1-year trailing total return are SIVR, SLV, and BAR.
- Two of the top precious metals ETFs hold silver while the third is invested in gold.
The universe of precious metals ETFs that trade in the U.S. is comprised of 13 funds, excluding inverse and leveraged ETFs, as well as funds with less than $50 million in assets under management (AUM). These ETFs are invested in physical precious metals rather than the shares of precious metals mining companies. The S&P GSCI Precious Metals Index has outperformed the broader market with a total return of 22.9% over the past 12 months compared to the S&P 500’s total return of 14.0% The top precious metals ETF, based on performance over the past year is the Aberdeen Standard Physical Silver Shares ETF (SIVR). We examine the top 3 best precious metals ETFs below. All numbers in this story are as of November 4, 2020.
- Performance over 1-Year: 48.9%
- Expense Ratio: 0.30%
- Annual Dividend Yield: N/A
- 3-Month Average Daily Volume: 1,171,714
- Assets Under Management: $782.2 million
- Inception Date: July 24, 2009
- Issuer: Aberdeen Standard Investments
SIVR is structured as a grantor trust, offering investors a certain degree of tax protection. The ETF’s holdings are 100% silver bullion and it tracks the price of silver without any of the potential complications associated with silver futures contracts, such as contango or backwardation. As such, the ETF offers investors a simple way to invest in silver without having to worry about the storage or insurance costs of holding physical metal, or with the complexities involved in trading futures contracts. SIVR’s silver bullion is stored in a vault in London, United Kingdom, and its holdings are inspected twice per year by a third-party firm.
- Performance over 1-Year: 48.7%
- Expense Ratio: 0.50%
- Annual Dividend Yield: N/A
- 3-Month Average Daily Volume: 44,423,016
- Assets Under Management: $13.5 billion
- Inception Date: April 28, 2006
- Issuer: iShares
Like SIVR, SLV also is structured as a grantor trust, providing some tax protection for investors. The fund is 100% physically-backed by silver bullion and seeks to track the price of silver. Its physical silver is held by its custodion, JP Morgan Chase & Co. (JPM), at vaults located in London and New York. SLV enables investors to benefit from the appreciation in the price of silver without the costs associated with holding the physical metal and without being concerned with the complexities of investing in silver futures. While it is similar in many ways to SIVR, it has a much higher expense ratio.
- Performance over 1-Year: 32.8%
- Expense Ratio: 0.17%
- Annual Dividend Yield: N/A
- 3-Month Average Daily Volume: 448,500
- Assets Under Management: $1.3 billion
- Inception Date: August 31, 2017
- Issuer: GraniteShares
BAR is a grantor trust and tracks the spot price of gold bullion. The price is determined in the 24-hour global over-the-counter (OTC) market for gold, focused on physical gold. BAR holds physical bullion rather than investing in precious metals indirectly through futures contracts. BAR’s gold bullion is stored by its custodian, ICBC Standard Bank Plc, at its vault in London. The bullion is independently inspected twice per year, with one of these inspections being held at random.
The comments, opinions and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described on our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.