Investment opportunities behind the new high in silver: How global investors are mining profits through ETFs?

Under the influence of the Federal Reserve’s rate cut expectations and ongoing pressures on the global supply chain, the precious metals market has experienced a strong rally. The London spot silver price set a historical high in 2025, breaking through the $70 per ounce mark on December 23 and ultimately reaching a new record high of $83.645/ounce. This surge has brought silver into the spotlight for global investors and sparked increased interest in silver investment tools.

Why Has Silver Become the Brightest Asset in 2025?

So far this year, silver prices have surged by over 140%, making it the top-performing asset class in the past year. This far exceeds gold’s nearly 80% increase and significantly outperforms the Nasdaq Composite Index’s approximately 120%. Silver has been included in the U.S. critical minerals list, with global supply remaining tight. Coupled with central banks around the world shifting towards easing policies, these factors have collectively driven up silver prices.

However, under the intervention of CME’s two consecutive margin hikes for silver futures (the latest announced on December 26), silver has temporarily retreated from its peak to the $70-75 range. For example, the initial margin for the March 2026 contract was raised from about $22,000 to $25,000, a 25% increase. Despite this, market enthusiasm for silver’s future prospects remains strong.

For investors in Australia, Southeast Asia, and Taiwan, silver price movements also need to consider the impact of local currency exchange rates against the US dollar. For instance, fluctuations in the AUD to RMB exchange rate can indirectly affect commodity costs in the Asia-Pacific region and influence investment decisions.

Silver ETFs: From Physical Investment to Financial Instruments

Silver ETFs are investment funds that track silver prices, allowing investors to participate in the silver market without physically holding the metal. Like stocks, silver ETFs are listed on exchanges and can be bought and sold anytime during trading hours, offering liquidity far superior to physical silver.

Compared to the hassle of physical silver investment—paying storage fees, insurance, facing oxidation and theft risks—silver ETFs provide a more straightforward participation route. Investors only need to place orders through their brokerage accounts to track silver price movements, without bearing physical custody costs.

How Do ETFs Track Silver Prices?

Silver ETFs typically achieve this by directly holding physical silver bars or using derivatives such as futures contracts linked to silver prices to replicate market returns. If silver prices rise by 5%, ETF values will generally increase by about 5%; likewise for declines. This tracking mechanism allows investors to stay closely aligned with real-time silver market trends.

Physical Silver vs. Silver ETFs

Physical silver offers tangible asset security but involves high operational costs. Buying and selling require finding reputable dealers or traders, facing bid-ask spreads and commissions of 5-6%; storage costs 1-5% annually; authenticity verification incurs additional expenses. Its low liquidity makes quick liquidation difficult during urgent needs, and purchase prices vary across regions with limited transparency.

Silver ETFs eliminate these hassles, enabling investors to enter and exit the market via familiar securities platforms, significantly reducing costs and barriers.

Overview of Seven Mainstream Silver ETFs

Main ETF Details

SLV—The Premier Choice for Global Silver Investment

Launched by BlackRock in April 2006, it is the most well-known silver ETF worldwide, with assets exceeding $30 billion. Since 2014, it has tracked the LBMA silver benchmark price, with JPMorgan Chase acting as custodian for physical silver. It employs a passive management approach, not actively trading silver bars but periodically selling small amounts to cover operational costs. This design allows investors to benefit purely from silver price appreciation.

AGQ—A Leverage Trading Tool

ProShares launched in December 2008, offering 2x leverage aiming to double the daily performance of the Bloomberg Silver Subindex. It uses derivatives like futures and swaps to achieve leverage. Note that due to compounding decay and long-term erosion, it is suitable only for short-term trading and not for long-term holding.

ZSL—A Shorting Inverse Tool for Silver

Provides 2x inverse exposure to the LBMA silver fixing price (-2x). Mainly used by traders seeking to hedge against silver declines or profit from falling prices. Similarly, only suitable for short-term operations.

PSLV—A Unique Closed-End Fund

Launched in October 2010, it issues a fixed number of units, with trading prices determined by supply and demand, often trading at a premium or discount. Despite structural differences, investors favor its pure physical silver exposure, with an AUM of about $12 billion, making it one of the largest silver-focused closed-end funds.

SLVP—An Option for Mining Stocks

BlackRock launched in January 2012, tracking the MSCI ACWI Select Silver Miners Investable Market Index, with assets around $600 million. Expense ratio is 0.39%, below industry median, with semi-annual dividends. No single stock exceeds 25% weight to ensure diversification. However, historical performance shows higher volatility and tracking errors, with wider bid-ask spreads, making it less attractive for return-focused investors.

期元大道瓊白銀—Taiwan Local Choice

Established in May 2018, it tracks the Dow Jones Silver Excess Return Index via COMEX futures. Issue price is NT$20, with a “high volatility” risk level.

How Taiwanese Investors Can Participate

Method 1: Discretionary Trust—A Safe and Reliable Choice

Using domestic brokers (Fubon, Cathay, Yuanta, Yuanta, etc.) to place orders with overseas brokers is the mainstream approach for retail investors.

Process:

• Open a discretionary trust account with a domestic broker (online or in person), prepare ID and bank account
• Choose TWD or foreign currency settlement
• Use broker app to search for silver ETF codes (e.g., SLV) and place orders; many support regular investment plans

Advantages: Regulated by the Financial Supervisory Commission, safe; dividends withheld by broker; funds stay in Taiwan, no international remittance needed

Disadvantages: Higher transaction fees; limited available products

Method 2: Direct Account Opening with Overseas Brokers—Cost-Effective Approach

Trade directly via overseas platforms, saving intermediary fees, with lower costs and faster execution.

Process:

• Open an account online with an overseas broker, prepare passport, ID, proof of address, bank info
• Transfer funds (TWD to USD via wire transfer, set up designated account)
• Place orders via app or website

Advantages: Very low or zero commissions; wide range of products; supports advanced tools

Disadvantages: Mostly English interfaces; need to handle 30% US dividend withholding tax; remittance security and estate issues

Tax Considerations and Filing Obligations

Taiwan-listed Silver ETFs

Treated like Taiwan stocks, buying is tax-exempt, selling incurs 0.1% tax, making it simple for tax purposes.

Overseas-listed Silver ETFs

Counted as overseas property transaction income, included in overseas income. Threshold: total overseas income ≤ NT$1 million annually is tax-exempt; exceeding NT$1 million is fully included in taxable income. The taxable amount after deducting NT$7.5 million exemption is taxed at 20%.

Comparative Overview of Silver Investment Methods

From the above, silver futures have the highest potential return in 2025 but also the highest risk. Silver ETFs, while not outperforming other methods, offer no storage burden and relatively controlled risk, making them more suitable for risk-averse investors.

Risks to Consider When Investing in Silver ETFs

1. Price Volatility

Silver is far more volatile than gold and equities. Although it surged over 140% in 2025, historical data shows frequent sharp corrections. After margin requirements took effect on December 29, silver prices experienced an intraday plunge of over 11%, causing significant losses for many investors. This characteristic makes silver ETFs more suitable for high-risk tolerance.

2. Tracking Errors

Futures-based ETFs are affected by roll costs, potentially underperforming spot prices over the long term; physical silver ETFs have more accurate tracking but incur annual fees of 0.4-0.5%, gradually eroding returns.

3. Currency and Geopolitical Risks

Overseas ETFs face currency exchange and tax complexities. Silver prices are also influenced by geopolitical events, industrial demand (solar, electronics, 5G), and global central bank policies. Fluctuations in regional exchange rates like AUD to RMB can indirectly impact costs for Asia-Pacific investors.

Conclusion and Investment Recommendations

Silver ETFs serve as a precious metals asset allocation tool, offering the convenience of securities trading without physical management hassles, combined with high liquidity and ease of trading. For investors wanting to participate in silver’s rise without the costs of physical storage, they are an ideal choice.

However, note that silver is highly volatile, sensitive to industrial demand and market sentiment. Different silver ETFs vary significantly in fees, tracking methods, and leverage use. A diversified approach is recommended, regularly reviewing positions and market changes to achieve stable returns amid this wave of precious metals rally.