CNN Money’s HelpDesk blog today published a Q&A responding to an inquiry regarding the question How do I purchase silver in physical form?
CNN Money’s response? ETF’s such as SLV or SIVR (notice Sprott’s PSLV is not included), silver certificates- essentially own paper silver in any way or form as long as investors avoid actual physical silver bullion like the plague.
From CNN Money:
First CNN recommends silver ETF’s:
The easiest way to buy silver is to invest in certain exchange-traded funds such as iShares Silver Trust (SLV) and ETFS Silver Trust (SIVR). These funds track the price of silver on the open market, with each share typically backed by a specific amount of physical silver held in trust by the fund manager. Because they can be instantaneously bought and sold on the market, ETFs lend themselves to trading.
Then CNN points out that physical silver trades at a premium to spot, whereas SLV can trade at a discount-
But Rich Checkan, chief operating officer of Asset Strategies International, a Rockville, Md.-based company that deals in precious metals, explains that the coins’ extra liquidity comes at a cost. He notes that silver bars are typically marked up 5% over the spot price of silver, but the more tradable bullion coins are often marked up 16% or more because they are more expensive to fabricate. (Shares in silver ETFs can trade at a premium to, or discount from, the value of the metal backing them up; SLV, for example, recently traded at a premium of 0.13%. The ETF has an annual expense ratio of 0.5% of assets.)
CNN finishes with a grand finale summarizing the ‘drawbacks’ of owning physical silver bullion.
Checkan notes that there are drawbacks of owning physical silver. Many investors don’t want to deal with the added costs and inconvenience of arranging secure storage for the bars or coins and insuring them. To help investors avoid those logistics, some financial institutions offer silver certificates of ownership which entitle the holder to a certain quantity of actual silver stored in a vault. One program worth considering: the Perth Mint Certificate Program (PCMP), the world’s only government-guaranteed bullion storage program.
Strangely, no mention anywhere of rehypothecation or counter party risk with all forms of paper silver.