Invest in silver ETFs

Find out about silver ETFs, how they're traded and what impacts their prices.

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Fact checked
Silver ETFs are a great way to get exposure to the price of silver without actually owning any. Exchange traded funds are a collection of investments.

The silver market

Silver has long lived in gold’s shadow. It’s less valuable, less globally significant, and the silver price has nevertheless tended to move in lockstep with the gold price. However, there are an increasing number of industrial uses for silver that have shifted the outlook.

This was seen in the recent COVID-19 crisis: as the gold price soared, investors might have expected silver to follow it higher. Instead, investors worried about the declining industry demand and pushed the silver price lower. In this way, silver has become more sensitive to the prevailing economic climate.

What is silver used for?

Other than just being pretty, silver has some key uses. Its main industrial use is in photovoltaics, which is the creation of solar panels. About half of demand comes from industry, with a much smaller share from jewellery, photography, silverware and investment. Supply is split around three-quarters mining and one-quarter recycling.

Investment demand

Investment demand is becoming more important, particularly from the ETF market, which is becoming a more popular way to get exposure to silver. It is estimated that the size of the silver ETF market is $18.95 billion USD.

Invest in silver ETFs

Silver ETFs are a cheap and convenient way to access the silver market. The key advantage is that you don’t need huge amounts of capital to invest. They are traded readily during market hours on an exchange, just like shares. Pricing is transparent and it is relatively cheap to invest – you just pay a broker’s fee and an annual management charge to the ETF provider. That said, these charges aren’t as low as for equity index-based ETFs and may be 0.5%-0.6%.

The two main types of silver ETFS

There are a couple of different types of silver ETFs, we detail the differences below:
Physically-backed silver ETFs
The majority of the silver ETF trading on the UK stock exchange are ‘physically-backed’. This means that they buy silver and store it in a vault to support the price. If you o buy a share of the fund, then you theoretically own a little piece of that silver.

Silver mining company ETFs
There are also a number of popular ETFs that track the performance of a basket of silver mining companies. While the performance of these shares are influenced by the silver price, they will not track it exactly. Other factors such as labour costs, the political situation in the main silver mining regions of Chile, Mexico and Peru, and the success of the companies themselves will make a difference.

List of silver ETFs

  • WisdomTree Physical Silver. This is the largest ETF on the market and was the first to launch. It has built up assets of $1.9m.
  • iShares Physical Silver ETC. This was launched in 2011 and now has $358m in assets under management.
  • Invesco Physical Silver. This launched in 2011 and has $97m in assets.
  • Xtrackers Physical Silver ETC. Launched in 2010 and domiciled in Jersey, this ETF has $38m and a total expense ratio of 0.40%.
  • Silver (EUR Hedged) Xtrackers Physical Silver. This ETF is hedged back to the Euro. It was launched in 2010 and has £151m in assets.

What influences the price of silver?

There are several factors that influences the price of silver.

The price of gold

Gold and silver have historically had a strong relationship. Similar to gold, the price of silver has also tended to do well at times of political turbulence or economic uncertainty, giving them a silver lining. That said, the relationship is not exact and has been changing in recent years. Silver has not tracked the gold price’s significant rally in the wake of the COVID-19 outbreak, for example.

Supply and demand

As with gold, supply of silver is limited; there is only so much that can be mined. If there is any interruption to the mining process, such as labour strikes, it will almost certainly raise the price. Silver mining is concentrated in the more stable countries of South America – Mexico, Chile and Peru – but may still be subject to political disruption. Equally, the price will be influenced by demand for jewellery and, increasingly, from industry. The delicate balance of supply and demand is an important factor in determining the silver price.

New uses

There are a number of new industrial uses for silver. More recently silver demand has risen because of its use in photovoltaics, which are used in solar panels. As demand for solar panels has taken off, it has provided support for silver prices. However, these technologies ebb and flow. For example, silver used to have an important role in photography, but this has declined as a result of the widespread use of smartphones.

Nevertheless, for many industries where it is used, it is often the only product that can be used due to its unique properties. Elsewhere, there are moves to replace silver with cheaper substitutes: aluminium alloys replace silver for some cheap mirrors, for example, while stainless steel replaces traditional silverware for many household items.

A buoyant economy

In good economic times, not only do people spend more on jewellery and silverware, there will be greater industrial demand. In recent years, silver has become more ‘cyclical’ – with its movements based on the health of the global economy. If incomes fall, luxury spending, such as jewellery may be the first to be deferred. This is particularly true for emerging markets, where demand tends to be greater. Recently, this has been a more powerful influence on the silver price than its status as a ‘safe haven’.

Interest rates

Along with all precious metals, silver doesn’t pay an income. That means there is an opportunity cost if investors can get high rates on their cash savings. This can dent demand for silver. As such, silver tends to do better at times when interest rates are lower.

The US Dollar

In common with gold, silver is seen as an inflation hedge and a bulwark against a falling Dollar. 
The US dollar has historically had an inverse relationship with the price of silver. The Dollar’s recent weakness has benefited all precious metals as investors have looked for an alternative store of value.

In summary

Like gold, silver used to be a safe haven in troubled times. However, as its industrial uses have grown, it has come to be seen as a more economically sensitive asset – rising when industrial demand is high and people have cash in their pockets to buy jewellery. Aspiring silver investors will need to be alert to these shifting trends. Silver mining company ETFs can offer an alternative approach than those ETFs linked to the spot price of silver for different economic climates.

Compare investment services

Table: sorted by promoted deals first
Data indicated here is updated regularly
Name Product Price per trade Frequent trader rate Platform fees Brand description
Fineco
£2.95
£2.95
Zero platform fee
Your first 50 trades are free with Fineco, until 31/12/2020. T&Cs apply.
Fineco Bank is good for share traders and investors looking for a complete platform and wide offer. Capital at risk.
IG
0% commission on US shares, and £3 on UK shares
From £5
£0 - £24 per quarter
IG is good for experienced traders, and offers learning resources for beginners, all with wide access to shares, ETFs and funds. Capital at risk.
eToro Free Stocks
0% commission, no markup, no ticket fee, no management fee
N/A
Withdrawal fee & GDP to USD deposit conversion
Capital at risk. 0% commission but other fees may apply.
Hargreaves Lansdown Fund and Share Account
£11.95
£5.95
No fees
Hargreaves Lansdown is the UK's number one platform for private investors, with the depth of features you'd expect from an established platform. Capital at risk.
Interactive Investor
From £7.99 on the Investor Service Plan
From £7.99 on the Investor Service Plan
No transfer fees or exit fees. £9.99 a month on the Investor Service Plan
Open an ISA, Trading Account or SIPP you will get £100 of free trades to buy or sell any investment (new customers only).
Interactive Investor offers everything most investors need. Its flat fees makes it pricey for small portfolios, but cheap for big ones. Capital at risk.
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Compare up to 4 providers

Data indicated here is updated regularly
Name Product Minimum deposit Maximum annual fee Price per trade Brand description
Moneyfarm stocks and shares ISA
£1500
0.75%
£0
Hargreaves Lansdown stocks and shares ISA
£100
0.45%
£11.95
Hargreaves Lansdown is the UK's biggest wealth manager. It's got everything you'll need, from beginners to experienced investors. Capital at risk.
Interactive Investor stocks and shares ISA
Any lump sum or £25 a month
£119.88
£7.99
Interactive Investor offers everything most investors need. Its flat fees makes it pricey for small portfolios, but cheap for big ones. Capital at risk.
Saxo Markets stocks and shares ISA
No minimum deposit requirement
0.12%
£8.00
Saxo Markets offers a wide access to a range of stocks, ETFs and funds. Capital at risk.
AJ Bell stocks and shares ISA
£500
0.25%
£9.95
AJ Bell is a good all-rounder for people who to choose between shares, funds, ISAs and pensions. Capital at risk.
Fidelity stocks and shares ISA
£1000 or a regular savings plan from £50
0.35%
£10.00
Fidelity is another good all-rounder, offering a good package at a decent price. Not suited for trading shares. Capital at risk.
Nutmeg stocks and shares ISA
£100
0.75%
£0
Nutmeg offers three types of portfolios. Choose the one that goes with your investment style. Capital at risk.
Legal & General stocks and shares ISA
Legal & General stocks and shares ISA
£100 or £20 a month
0.61%
N/A
Legal & General is a big financial services company which offers insurance, lifetime mortgage, pensions and stocks and shares ISAs. Capital at risk.
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Data indicated here is updated regularly
Name Product Minimum investment Choose from Annual fee Brand description
Moneyfarm Pension
£1,500 (initial investment)
7 funds
0.35%-0.75%
Moneyfarm has pensions that are matched against your risk appetite, goals and planned retirement date. Capital at risk.
AJ Bell Pension
£1,000
Over 2,000 funds
0.05-0.25%
AJ Bell has two different pension options, a self managed pension and one that is managed for you. Capital at risk.
PensionBee Pension
No minimum
7 funds
0.5% - 0.95%
Pension Bee is a newbie in the pension market. It helps consolidate your pension plans into one place. Capital at risk.
Hargreaves Lansdown Pension
£100 or £25 a month
2,500 funds
0-0.45%
Hargreaves Lansdown is the UK's biggest wealth manager. It's got three different retirement options. Capital at risk.
Interactive Investor Pension
Any lump sum or £25 a month
Over 3,000 funds
£10/month
interactive investor is a flat-fee platform, which makes it cost effective for larger portfolios. Capital at risk.
Saxo Markets Pension
Saxo Markets Pension
£10
Over 11,000 funds
No annual fee
Saxo Markets gives flexibility and control over your investment strategy. Capital at risk.
Moneybox Pension
£1
3 funds
0.15% - 0.45% charged monthly
Manage your money with an easy-to-use Moneybox app. Capital at risk.
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All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Capital is at risk.

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