Silver hits new high! Taiwanese investors rush to join the ETF craze, this one is the hottest

London spot silver prices are writing a new chapter in the market driven by multiple positive factors. As expectations for Federal Reserve rate cuts intensify, global supply chains remain tight, and the US officially includes silver in its strategic mineral reserves, silver prices on December 9th surged past the $60 per ounce mark, then stabilized at that level and even reached a historical high of $64.6/ounce.

The rally’s gains are astonishing—silver has increased by over 100% this year, becoming the most outstanding asset performance by 2025. In comparison, gold’s gains are about 60%, and the Nasdaq Composite has risen only around 20%.

UBS’s latest assessment indicates that the target price range for silver in 2026 is $58 to $60 per ounce, with the possibility of further rising to $65/ounce. Such optimistic forecasts have prompted many retail investors to seek entry points. Among them, Silver ETFs have become the preferred tool due to their convenience and low barrier to entry.

Understanding How Silver ETFs Work

A silver ETF is essentially an investment fund that tracks the price movement of silver, allowing investors to share in the silver market’s gains without owning physical silver. The core value of these financial products lies in their net asset value (NAV), which is linked to silver prices and fully reflects market fluctuations. Similar to stock trading, investors can buy and sell at any time during trading days.

Compared to physical silver investments that require proper storage, ETFs offer simplified trading processes and high liquidity. Investors do not need to worry about transportation, theft, or authentication issues, significantly reducing the costs of participating in the silver market.

How does the tracking mechanism of silver ETFs operate?

To accurately replicate silver price performance, ETF funds adopt two main strategies: directly holding physical silver bars or using futures contracts and derivatives to link to silver prices.

When the silver market price rises by 5%, the ETF’s NAV theoretically increases by about 5%; conversely, it decreases when prices fall. This synchronization mechanism allows investors to easily follow silver price movements without delving into the complexities of futures trading.

Physical Silver vs. ETF: Which is Better?

Owning physical silver provides a tangible sense of security, but practical operations hide many cost traps. First, storage costs—renting bank safes or professional vaults can cost 1-5% of assets annually. Storing at home involves oxidation and theft risks.

Buying and selling physical silver is also cumbersome, requiring finding reputable silver shops or precious metals dealers, paying 5-6% spreads and commissions, and covering authentication fees for purity verification. Liquidity is limited when quick liquidation is needed, and purchase prices at different shops lack transparency.

In contrast, silver ETFs open a more efficient and less troublesome channel for Taiwanese investors. Through a securities account, investors can buy and sell as easily as stocks, with no delays, and much higher liquidity than physical silver. Additionally, ETFs hold physical silver or track silver indices, allowing investors to enjoy silver price gains without the burden of transportation and storage.

Overview of Silver ETF Products: Deep Dive into Seven Popular Options

The mainstream silver ETFs each have their characteristics. Here is an analysis of each:

SLV (iShares Silver Trust)

As the most well-known silver ETF globally, SLV was launched on April 21, 2006, by BlackRock, with assets under management exceeding $30 billion. The fund directly holds physical silver, custodied by JPMorgan Chase. Since August 2014, it tracks the LBMA silver benchmark price, with an annual fee of only 0.5%.

Being passively managed, SLV does not actively buy or sell silver to chase price differences; it only sells small amounts of silver when necessary to cover operational costs. This results in minimal tracking error, making it a preferred choice for long-term investors.

AGQ (ProShares Ultra Silver)

Launched in December 2008 by ProShares, this ETF aims for 2x leveraged returns based on the Bloomberg Silver Index through futures contracts. It is designed for traders seeking short-term volatility amplification, using derivatives to magnify silver price fluctuations.

Note that due to compounding decay and rollover costs, AGQ is suitable only for short-term trading; long-term holding may lead to diminished returns.

ZSL (ProShares UltraShort Silver)

Contrary to AGQ, ZSL offers 2x inverse leveraged returns, designed for traders who are bearish on silver or want to hedge arbitrage positions. Due to leverage, ZSL is only suitable for short-term operations and not for long-term allocation.

PSLV (Sprott Physical Silver Trust)

Established in October 2010, this closed-end fund differs from regular ETFs in its creation and redemption mechanism. PSLV issues a fixed number of units, and the trading price is determined by market supply and demand, often resulting in premiums or discounts relative to NAV.

Despite its unique structure, PSLV is favored for its pure physical silver exposure. It currently manages about $12 billion, making it one of the largest silver-focused closed-end funds.

SLVP (iShares MSCI Global Silver and Metals Miners)

Launched by BlackRock in January 2012, this ETF invests in global silver miners and metal mining companies, not tracking spot silver prices directly but rather stocks of mining firms. With about $600 million in assets and an annual fee of only 0.39%, it is cost-effective.

However, SLVP exhibits higher volatility, noticeable tracking errors, frequent component adjustments, and wider bid-ask spreads, which can lead to returns slightly below expectations.

Taiwan Gold Silver Futures (00738U)

A local product in Taiwan, established in May 2018 and listed in June, with an issuance price of NT$20. It tracks the Dow Jones Silver Excess Return Index via investment in COMEX futures contracts, with an annual fee of 1% and a “high volatility” risk level.

How Taiwanese Investors Can Purchase Silver ETFs

Through Securities Firms (Mainstream Choice in Taiwan)

Using domestic brokers (Fubon, Cathay, Yuanta, Fubon, etc.) to place orders with overseas brokers is the main method for Taiwanese investors, especially suitable for beginners.

Process: open an account with a domestic broker (online or in person) → choose TWD or USD settlement → place orders via app or website → search ETF code and trade, many brokers support regular fixed investments.

Advantages include regulatory protection, tax assistance, and funds staying within Taiwan; disadvantages are higher transaction fees and limited tradable products.

Direct Overseas Account Opening: Cost-Effective Option

Investors can open accounts directly with overseas brokers online, uploading passport, ID, proof of address, and bank info. After approval, they can transfer funds and trade.

Benefits include very low or zero commissions, a wide range of products, and support for advanced tools. Drawbacks are interfaces mostly in English, the need for self-managed tax reporting (e.g., 30% US dividend withholding tax), and complex handling if funds encounter issues abroad.

Tax Planning: Prevent Tax Erosion of Returns

Taiwan-listed Silver ETFs

Taxed similarly to stocks: no tax on purchase, 0.1% transaction tax on sales, simple to calculate.

Overseas-listed Silver ETFs

Regarded as overseas property transaction income, included in overseas income. If annual overseas income is ≤ NT$1 million, no basic tax; if > NT$1 million, the full amount is added to basic income and taxed at 20% (after deducting NT$7.5 million exemption). Note that monthly dividend funds, if classified as overseas products, often do not pay dividends but still require tax planning.

Silver Investment Options: A Comparative Overview

Different silver investment tools have unique features, with asymmetric risks and returns:

Silver ETFs offer flexible trading, low costs, no storage burden, and high liquidity, making them ideal for beginners. The 2025 return is slightly below silver prices (after fees), but with lower risk.

Physical Silver Bars provide tangible assets but involve high storage costs (1-5% annually), spreads of 5-6%, poor liquidity, and an annual net return of about 95-100% (silver price appreciation of 103% minus costs).

Silver Futures offer high leverage and potential for amplified gains but also proportionally increased risks, including total loss. In 2025, if correctly predicted, returns could exceed 200%, but operation complexity is high.

Silver Mining Stocks ETF (e.g., SIL) can outperform due to leverage effects, with a 2025 increase of 142%, surpassing silver price gains, though operational risks are higher.

Risks of Investing in Silver ETFs

Silver, as a hybrid of industrial and precious metals, exhibits price volatility far exceeding gold and stocks. Despite over 100% gains in 2025, historical sharp pullbacks are common, making it unsuitable for low-risk investors.

Tracking errors are significant: futures-based ETFs suffer rollover costs that can reduce long-term returns; physical ETFs, though more accurate, still incur annual fees of 0.4-0.5%. Overseas ETFs face exchange rate risks and complex tax issues. Silver prices are influenced by geopolitical events, industrial demand (solar, electronics), and central bank policies, requiring investors to monitor these variables closely.

Monthly dividend funds also pose risks—dividends often come from principal distribution rather than investment income, leading to reduced compound growth or even erosion of principal over time, which is unfavorable for wealth accumulation.

Conclusion and Recommendations

Silver ETFs provide a convenient and liquid way to allocate precious metals. Compared to physical silver’s cumbersome procedures, ETFs allow quick entry and exit via securities markets, eliminating storage concerns.

However, it is crucial to remember that silver prices are highly volatile, affected by industrial demand and market sentiment. Different silver ETFs vary in fees, tracking mechanisms, and leverage structures. Investors should diversify their holdings, avoid over-concentration, and regularly review market conditions and positions to seize silver price rallies while effectively managing downside risks.