Silver prices hit a record high. How should Taiwanese investors choose the right silver ETF to invest?

In 2025, the white silver market will ignite an investment frenzy. On December 23, spot silver in London broke through the psychological barrier of $70 per ounce, driven by multiple positive factors such as expectations of Federal Reserve rate cuts, global supply tightness, and recognition of the US critical mineral list, reaching a historic high of $83.645/oz. The annual increase has exceeded 140%, making it one of the best-performing assets, outpacing gold by over 80% and the Nasdaq Composite Index by about 120%.

Although CME raised silver futures margin requirements twice in succession (initial margin increased from about $22,000 to $25,000 after December 29, a total increase of 25% within the month) to curb excessive speculation, causing silver prices to retreat to the $70-75 range, market enthusiasm for silver prospects in 2026 remains strong. Amid this wave of investment, Silver ETFs have become the preferred investment tool for retail investors due to their convenience and liquidity.

What are Silver ETFs? Why Should You Pay Attention?

Silver ETFs are investment funds that track the price of silver, allowing investors to participate in price fluctuations and potential gains without physically holding silver. These funds are listed and traded on stock exchanges, enabling investors to buy and sell anytime like stocks, with high liquidity advantages.

The operation of ETFs involves directly holding physical silver bars or using derivatives such as futures contracts to track silver prices. When silver prices rise by 5%, the ETF’s value also increases by approximately 5%; conversely, it decreases similarly. This design allows investors to precisely participate in the performance of the silver market.

Compared to physical silver investment, silver ETFs eliminate the hassle of storage, insurance, and verification, offering lower transaction costs and far greater liquidity than physical silver bars. Physical silver investors face costs such as safe deposit box rentals or professional storage fees, oxidation and loss risks, and high bid-ask spreads of 5-6%. Silver ETFs convert these burdens into straightforward financial products.

Analysis of Seven Major Silver ETF Products

The common silver ETFs on the market each have their characteristics. Investors should choose based on risk tolerance and investment horizon:

Advantages of SLV lie in its large scale and transparent management. Launched in 2006, it adopts a passive management model, with assets held by JPMorgan Chase. It does not actively trade to capture price differences, only periodically sells small amounts of silver to cover operational costs, ensuring accurate tracking.

AGQ is suitable for short-term traders, aiming for double daily performance via futures and derivatives. However, due to compounding effects and rollover costs, long-term holding risks decay, so it’s not recommended for long-term allocation.

ZSL offers -2x inverse returns, mainly for hedging or bearish silver views, and is also unsuitable for long-term holding.

PSLV, as a closed-end fund, issues a fixed number of units, with trading prices determined by supply and demand, often at premiums or discounts. Despite this, its pure physical silver exposure remains attractive for long-term investors.

SLVP covers global silver mining companies, with the lowest management fee (0.39%), but exhibits higher volatility and tracking errors, with wider bid-ask spreads, making it less attractive. Its weighting structure limits individual stocks to no more than 25%, with stocks over 5% each accounting for no more than 50%, and quarterly rebalancing.

Taiwan TAIEX Silver Futures was established in 2018, tracking the Dow Jones Silver Excess Return Index via COMEX silver futures. It is rated as a high-volatility product and does not distribute dividends.

Two Main Purchase Channels for Taiwanese Investors

Via Discretionary Trusts: Mainstream Choice

Invest through domestic brokerages (Fubon, Cathay, Yuanta, Fubon, etc.) with overseas brokers, which is more suitable for beginners. Process: open a discretionary trust account with a domestic broker → choose TWD or foreign currency settlement → place orders via broker’s app by searching the product code (e.g., SLV). Many brokers support regular fixed investments.

Advantages: regulated by the Financial Supervisory Commission, tax handled by the broker, funds stay in Taiwan; Disadvantages: higher fees, limited tradable products.

Open an Overseas Broker Account Directly: Cost-Optimized Option

A more direct way, saving on middleman fees. Process: online account opening with passport, ID, proof of address → transfer funds (TWD to USD via wire transfer) → trade via app.

Advantages: very low fees (many free commissions), diverse products, support advanced tools; Disadvantages: English interface, need to handle remittance and taxes (US withholding tax of 30% on dividends), more complex security and estate planning.

Tax Considerations for Silver ETFs

Tax burdens for Taiwanese investors depend on the ETF’s listing location and income type.

Buying Taiwan-listed silver ETFs is simplest: purchase is tax-free, selling incurs a 0.1% tax.

Overseas-listed silver ETFs are considered overseas property transactions, included in foreign income. If annual foreign income ≤1 million TWD, it’s exempt from minimum tax; exceeding that, the full amount is included in basic income, taxed at 20% after deducting a 7.5 million TWD exemption. Since most silver ETFs are commodity-type and do not pay dividends, US withholding tax issues are minimal.

Overview of Silver Investment Methods

Various ways to invest in silver each have pros and cons:

Silver ETFs: Easy to buy/sell, high liquidity, no storage costs, no theft risk, suitable for beginners. Drawbacks include expense erosion over time and potential tracking errors. In 2025, returns are slightly below silver prices, mainly due to fees.

Physical Silver Bars: Actual ownership, strong crisis protection, high privacy. But storage costs (1-5% annually), theft risks, low liquidity (5-6% bid-ask spreads), transportation and verification hassles. After costs, net return in 2025 is about 95-100%.

Silver Futures: Leverage amplifies potential returns, allows long and short positions. Very high risk, leverage can magnify losses or wipe out principal, with high fees and margin requirements. If correctly managed in 2025, 2x leverage could yield over 200%, but risks are equally amplified.

Silver Mining Stocks: Leverage effect amplifies silver price gains, diversified income, easy trading. But not pure silver exposure, affected by company operational risks, with higher volatility. For example, SIL ETF gained 142%, surpassing silver by 103%.

Silver CFDs: Convenient trading, high liquidity, support for high leverage, two-way trading, low fees. No physical ownership, risk increases with leverage. Returns depend on leverage and correct market direction judgment.

Risks You Must Know About Silver ETF Investment

Price Volatility is the primary risk. Although silver rose 140% in 2025, history shows sharp corrections are common. After the margin adjustment on December 29, international silver prices plunged over 11% intraday, causing many investors to suffer significant losses that day. Suitable for investors with high risk tolerance.

Tracking Error cannot be ignored. Futures-based ETFs may underperform due to rollover costs; physical ETFs are more accurate but incur annual fees of 0.4-0.5%, which erode returns.

Currency Risk for Overseas ETFs: Silver prices are influenced by geopolitical events, industrial demand (solar, electronics), and monetary policies.

Main Silver Holders’ Drawbacks: Some small silver ETFs have limited liquidity in their main market makers, which can lead to large bid-ask spreads, low trading volume, and significant premiums or discounts to NAV during market volatility—hidden costs for retail investors. It’s advisable to prioritize large-scale, reputable products like SLV and PSLV to avoid liquidity risks.

Conclusion

Silver ETFs serve as a convenient and liquid asset allocation tool, eliminating storage hassles of physical silver. However, silver prices are highly sensitive to industrial supply/demand and market speculation, with volatility far exceeding stocks. Different ETFs vary in fees, tracking methods, and leverage settings. Investors should diversify, regularly review market changes and risk positions, and avoid over-concentration in a single product. Based on personal risk tolerance and investment horizon, choose suitable silver ETF products carefully to participate in silver price gains while effectively managing investment risks.