Investing in Silver ETF

D

Dman35

Registered User
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Hey Folks,

Just looking for a bit of advice before I make an investment.

I'm currently looking at purchasing a Silver ETF.
I've identified the one I'd like to invest in, but I've read on this site and others people advising you to purchase actual physical sliver rather than an ETF which tracks the price of phyiscal silver.

As I see it the ETF is a much cheaper way for my level of investment (3k - 5k) to purchase and to hold an investment in the commodity that is silver companed to say buying actual pyhiscal silver via goldmoney etc.

Is there something or missing or risks I'm not aware of?

Any advice would be greatly appericated.
 
The risk is that the company providing the ETF doesn't actually owned the silver you think you are buying. The important thing is to check the credibility of the ETF provider and their auditing.
Physical possession is the best way to know that you own the actual silver, but it comes at a price and you also need to store it safely and possibly list it for house insurance purposes.
 
Hello,

Personally, I have gained exposure to silver by selling out of the money puts on the SLV ETF.

For example, I sold a put option to buy SLV at $28 in January 2012. Each contract is worth 100 hundred shares of the stock. For agreeing to take on that stock at the time, I received $251 per contract.

The actual amount of money that I put at risk was $2549 per contract, because for every $2800 I agreed to pay for silver, I had received $251.

This works out at a 11.25% annualised return, if SLV does not fall below $25.49 by 2012.

[FONT=&quot]( [/FONT][FONT=&quot]Return = 2.51/25.49 = 9.8% or an annualized 11.25%[/FONT] )

By now, SLV is trading at $36.39, so I am making money. However, if this went wrong and I wanted to get out of this contract, I simply buy the put option back. (Of course, I could set up a stop loss to do this automatically for me.)

In essence, I am;

(a) getting exposure to the SLV option
(b) keeping the liquid cash in my account until required to buy the stock
(c) making a return on that cash while waiting for the time value to expire from the contract

Hope this gives you another insight into how to answer your question!

Susan Hayes
 
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