Silver ETF vs Physical Silver

C

chewchew

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I've been looking at investing a portion of my savings in silver and as far as I can tell the most cost effective way of doing this is to buy EFTs, no storage fees etc.

On the other hand a lot of people say ETFs are not as attractive option as they appear. They argue that because they are basically a pieces of paper that track the price of silver, and that there is no actual physical silver behind that ETF, then if the monetary systems collapses then all you'll have is a worthless piece of paper. Is there anything to that or is it just fantastical doomsday type nonsense? Because if it is then I can't see any advantage of holding physical gold/silver over ETFs, or am I missing something else?
 
There are ETF's that are backed by physical silver. I am familiar with PHAG.L myself, but there may be others.
 
chewchew said:
I've been looking at investing a portion of my savings in silver and as far as I can tell the most cost effective way of doing this is to buy EFTs, no storage fees etc.

On the other hand a lot of people say ETFs are not as attractive option as they appear. They argue that because they are basically a pieces of paper that track the price of silver, and that there is no actual physical silver behind that ETF, then if the monetary systems collapses then all you'll have is a worthless piece of paper. Is there anything to that or is it just fantastical doomsday type nonsense? Because if it is then I can't see any advantage of holding physical gold/silver over ETFs, or am I missing something else?
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This is a very good question and it goes to the nature of all ETFs, not just commodities!!! I would say as a general rule you should always try and go with ETFs that are constructed from holds in the actual underlying assets rather than derivatives.

Having said that, I have to say that I would never invest in anything where the valuation was determined by greed and fear, because there is really no way of verifying the valuation. For instance if one the major providers of ETFs went to the wall, what would happen to the price of silver or any other commodity for that matter, given all the derivatives involved.

Jim.
 
You do have counter party risks when you use ETFs. Another option would be to invest in silver mining companies. If you are more focused on physical silver then maybe look at investing in a safe (Lidl had one the other week for about €70), and then buying some silver coins and bars and storing them yourself. But shop around when it comes to buying coins or bullion as the mark-up can be quite high.
 
chewchew said:
I've been looking at investing a portion of my savings in silver and as far as I can tell the most cost effective way of doing this is to buy EFTs, no storage fees etc.

On the other hand a lot of people say ETFs are not as attractive option as they appear. They argue that because they are basically a pieces of paper that track the price of silver, and that there is no actual physical silver behind that ETF, then if the monetary systems collapses then all you'll have is a worthless piece of paper. Is there anything to that or is it just fantastical doomsday type nonsense? Because if it is then I can't see any advantage of holding physical gold/silver over ETFs, or am I missing something else?
Click to expand...

you can buy silver in cert form without choosing the ETF route , goldcore offer perth mint certificates which are backed by the goverment of western australia , i wouldnt buy silver at the moment , the price of silver reflects the state of the global economy and industrial demand for that metal , its not like gold which is an insurance - refuge - safe haven
 
I wouldn't invest in commodities, full stop. Better cash in the bank at any interest rate higher than inflation.
 
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