If you want to build a diversified portfolio with bonds, shares, commodities and other securities, exchange-traded funds (ETFs) are the perfect vehicles.
With an ETF, you can easily diversify your portfolio at a fraction of the cost it will take you to invest in mutual funds.
After writing about the best ETFs in Canada, I thought it worthwhile to recommend the best silver ETF Canada to my readers.
Silver ETFs could help sustain your portfolio during market volatility and uncertain economic and geopolitical climates.
What is a silver ETF? Is silver ETF a good investment? What are the best silver ETFs in Canada?
Continue reading to find answers to these and lots of other questions.
What Is a Silver ETF?
A silver ETF refers to the ETF that tracks the price and performance of silver assets in the stock market.
As a result, silver ETFs enable each share to acquire a specified amount of silver in ounces.
That said, the goal of silver ETFs is to accurately track the price and performance of silver in the stock market.
So instead of owning actual silver bullions, the best silver ETFs provide greater liquidity for your portfolio by allowing you to trade the ETFs easily.
As a result, investing in silver ETFs enables you to maintain liquidity and safeguard your money when the stock market is more volatile.
How Does a Silver ETF Work?
This type of ETF monitors the prices and performance of silver assets. To achieve this, a custodian or a fund manager invests your funds in underlying silvers that are split across the global market.
As a result, you will gain higher liquidity with a silver ETF than holding physical silver.
Is Silver a Good Investment in 2022?
Yes, silver is a good investment if you invest in the best silver ETFs.
Regardless of the economic uncertainties and stock market volatility on silver ETF, demand for it is higher than it is for other metals.
Furthermore, silver is seen as a safe haven for most investors and business owners because the market has proven stable over the years.
Is it Better to Buy Physical Silver or ETF?
Due to the increasing demand for silver, its prices have become more volatile and reactive to different manufacturing data measurements.
As a result, ETFs that monitor silver prices or futures may be better against physical silver.
Why? Because you can sell silver ETFs easily when prices are too frothy.
What are the Types of Silver ETFs in Canada?
Like other commodities ETFs, there are three major types of silver ETFs in Canada. These are:
- Physical ETF: This refers to a silver ETF that holds an underlying commodity. However, you should be careful about investing in this type of ETF because it doesn’t often produce high-yield on investment.
- Equity ETF: This refers to silver ETFs that provide exposure to silver miners. With this ETF, you can benefit from the increased earnings of small mining companies when the value of precious metals increases.
- Futures ETF: This refers to a silver ETF that uses futures contracts to predict the price movement of silver. This type of ETF is most often available to government and other institutional investors.
Silver ETFs aren’t all created equal. Hence, you need to be careful if you want to invest in a physical silver ETF. Why? Because some options contracts and futures monitor the price of silver.
Even though silver ETFs could yield values similar to the metal itself, they have certain conditions, such as backwardation and contango.
Backwardation refers to a market situation where the futures price in the following delivery month is lower and undermines ETFs returns more than the prices of physical silver ETFs.
In contrast, contango refers to a market situation where the futures price in the following delivery month is higher and undermines ETFs returns more than the prices of physical silver ETFs.
Furthermore, you need to consider ultra shares where securities are leveraged to trade beyond the normal silver price (3 times).
Moreover, to know what underlying assets are used to achieve performance goals, you need to examine the ETF’s investment objectives.
Subsequently, you shall learn about the mix of the three silver ETFs in Canada.
6 Best Silver ETFs in Canada?
As mentioned previously, how good your silver investment depends on the type of silver stock you invest in. Hence, the need to invest only in the best silver ETF.
So what are the best silver ETFs in Canada? Look nowhere!
Here are the best silver ETFs in Canada:
iShares Silver Trust ETF (ARCA:SLV) is among the leading silver ETFs in Canada that tracks the silver price of the London Bullion Market Association.
This ETF is not regulated by the Investment Company Act of 1940, unlike mutual funds.
As a result, the iShares Silver Trust ETF is an ideal portfolio to consider when looking for the best silver ETF Canada.
2. Sprott Physical Silver Trust ETF (TSE:PSLV)
This is a physical silver ETF that offers a real metal exposure, making it one of the most effective means of holding silver in Canada. It is aimed at serving investors who like to hold precious metal ounces physically.
What I like about the Sprott Physical Silver Trust ETF is that it allows investors to convert their units for physical silver.
Thus, you may convert your units each month in return for real silver as an investor holding a dollar worth of its shares.
However, the fund is lacking in total returns. The reason is that it was established in 2010. Due to the financial crisis during this period, silver prices were very high.
Overall, Sprott Physical Silver Trust ETF is ideal for Canadian investors looking to hold physical silver.
3. Horizons Silver Trust ETF (TSX:HUZ)
Horizons make it to my list of the best ETFs providers in Canada and the best silver ETF Canada.
Launched in 2009, Horizons Silver Trust ETF aims to monitor the performance of the Solactive Silver Front Month MD Rolling Futures Index ER.
Because this silver ETF is based on the Canadian dollar, the profits or losses of the US currency due to the ETF’s investment will be hedged against the Canadian dollar.
4. Global X Silver Miners ETF (ARCA:SIL)
Global X Silver Miners ETF gives you exposure to the best silver miners worldwide.
In Canada, there are only a few silver ETFs focusing on miners. As a result, you must go south of the border to get significant exposure.
Nevertheless, the Global X Silver Miners ETF is among the best players in Canadian silver mining, holding more Canadian miners.
However, volatility is one thing you should consider here. This ETF is vulnerable to major price changes, which makes it fall out annually.
Furthermore, the bad performance of the underlying commodity results in the poor performance of the ETF.
In a bull market, miners tend to perform more than the underlying commodity. But in a bear market, miners perform below the commodity.
Thus, you should consider investing in this ETF if you think it will rise going forward.
5. ETFMG Prime Junior Silver Miners ETF (ARCA:SILJ)
If you have high-risk tolerance and are looking for big rewards, you may want to invest in the ETFMG Prime Junior Silver Miners ETF (ARCA:SILJ).
This is because it is a young silver mining stock consisting of smaller businesses focusing on silver mining.
That said, Investors interested in monitoring a worldwide, diversified portfolio of small companies with minor market capitalization will find this silver ETF Canada ideal.
Furthermore, this ETF aims to reflect the Prime Junior Silver Miners & Explorers Index price and yield performance before fees and costs.
However, junior silver mining ETFs are prone to large price fluctuations.
Nevertheless, the ETFMG Prime Junior Silver Miners ETF (ARCA:SILJ) is one of Canada’s most active silver ETFs.
As a result, you will not find it challenging to purchase and sell shares through this silver ETF.
Interestingly, due to the impact of the COVID-19 market collapse on junior miners, the ETF has underperformed silver prices.
Finally, investments in this ETF cover Canada, United States and the United Kingdom.
6. Global X Silver Miners ETF (ARCA:SIL)
This silver ETF Canada gives investors exposure to global silver mining companies.
Thus, it provides you with a major degree of security as opposed to the ownership of individual companies’ shares.
As a result, you can build your portfolio with geographically diversified silver ETFs.
Due to the growing value of safe-haven assets, this ETF may be ideal to invest in times of severe market volatility.
When the value of the precious metal increases, this ETF benefits from the increased earnings of silver mining firms.
3 Things to Consider Before Buying Canadian Silver ETF
To avoid costly errors in the future, consider the following tips before buying a silver ETF in Canada:
1. Consider Your Budget
Before investing in any of the above silver ETFs in Canada, it’s essential to know your budget.
After that, consider the silver index that suits your budget with different companies manufacturing precious metals.
The index displays the price levels in the silver sector, which helps you understand the present condition of the market.
2. Set Your Price
Now that you know your budget and the company you want to invest in, establish a price level you can afford per stock share.
Before contacting a broker or buying the silver ETF Canada, ensure you set a limit order to specify the price of specific silver ETFs you would want to buy.
3. Know Your Investment Options
Knowing your investment options will help you know which silver ETF Canada is suitable for you.
As a result, you need to familiarize yourself with some of Canada’s growth-based and high-yield silver companies to make the best investment choices.
How Do I Buy Silver Stock in Canada?
Now that you know what it takes to buy the silver ETF Canada let’s examine the process of buying the stock.
When it comes to buying silver stock in Canada, you have three options.
First, you can buy a physical silver ETF at your local precious metal store. Secondly, search for high-yield silver ETFs in stores. Thirdly, you can buy silver ETF Canada through a discount brokerage such as Wealthsimple.
However, I will not advise you to buy a physical silver ETF Canada because it doesn’t often produce high-yield on investment.
On the other hand, with discount brokers like Wealthsimple, you can buy and sell your silver ETFs without fees.
But before buying silver ETF Canada on Wealthsimple, read this Wealthsimple review.
Verdict on the Best Silver Stocks in Canada
From the above discussion of the best silver stocks in Canada, it’s obvious to see that you can invest in silver without holding it physically.
However, not every silver ETF is ideal for every investor. The best silver ETF Canada provides broad mental exposure.
Thus, before purchasing any silver ETF, ensure that it meets your budget, price tag and investment options.
As mentioned earlier, when buying silver ETFs in Canada, Wealthsimple is the best because it’s a zero-commission brokerage.
Finally, if you think there are other best silver ETFs in Canada that I missed, kindly let me know in the comment section.
FAQs on Canadian Silver ETFs
Is there a Silver ETF on the TSX?
Yes. Horizons Silver ETF is traded on the Toronto Stock Exchange (TSE) with the ticker TSX:HUZ.
What is the Best Silver ETF?
Here are the best silver ETFs in Canada:
- IShares Silver Trust ETF (ARCA:SLV)
- Sprott Physical Silver Trust ETF (TSE:PSLV)
- Horizons Silver Trust ETF (TSX:HUZ)
- Global X Silver Miners ETF (ARCA:SIL)
- ETFMG Prime Junior Silver Miners ETF (ARCA:SILJ)
- Global X Silver Miners ETF (ARCA:SIL)
However, the best silver ETF Canada depends on your investment objective and risk tolerance. As a result, you may find a physical silver ETF or an equity ETF the best.
Is Silver ETF Safe?
It depends on the type of silver ETF you invest, how much you invest and when you invest. Thus, you need to invest only in the best ETFs that suit your investment objective and risk tolerance.
However, silver is seen as a safe haven because the market has proven stable over the years.
If you have more questions about the best silver ETF Canada, let me know in the comment section.