Silver Market Reaches a Historic Turning Point! How Should Taiwanese Retail Investors Strategically Allocate Through Silver ETFs?

The Logic Behind Silver Price Reaching New Highs

In 2025, the white silver market is expected to experience explosive growth. On December 9, London spot silver prices officially broke through the key level of $60 per ounce, subsequently climbing to $64.6/oz, setting a new historical record. Over the year, silver prices have increased by over 100%, making it the best-performing asset of 2025. In comparison, gold has risen about 40%, and the Nasdaq Composite Index about 20%. The strength of silver has far exceeded expectations.

This rally is driven by multiple factors: the Fed’s rate cut expectations boosting safe-haven demand, ongoing tight global silver supply, and the US government officially including silver on the list of critical minerals. International investment bank UBS has raised its target price for silver in 2026 to $58–$60 per ounce, with the possibility of further surging to $65/oz.

Faced with this investment boom, many retail investors in Taiwan are beginning to focus on silver investments, and silver ETFs have become the most popular entry point due to their convenience.

Why Choose Silver ETFs Instead of Physical Silver?

There are two main ways to invest in silver: holding physical silver or buying silver ETFs. On the surface, owning physical silver provides a tangible sense of security, but in practice, it involves hidden costs.

Physical silver first faces storage issues. Safe storage requires renting a safe deposit box or entrusting a vaulting service, with annual fees potentially reaching 1–5%, which directly eats into investment returns. Storing at home raises concerns about oxidation, loss, or theft. Buying and selling also requires finding reputable silver shops or precious metals dealers, with bid-ask spreads of 5–6%, plus additional costs for purity testing. The most troublesome aspect is low liquidity; when urgent cash is needed, quick disposal is difficult, and purchase prices at different shops are not very transparent.

In contrast, silver ETFs convert complex physical assets into financial products. Investors can trade them anytime through a brokerage account, just like stocks. There’s no need to worry about storage, transportation, or verification issues. Liquidity far surpasses physical silver, and transaction costs are lower.

How Silver ETFs Work and Redemption Methods

The core goal of silver ETFs is to track the market price of silver. To achieve this, funds typically adopt two approaches: directly holding physical silver bars or using futures contracts and derivatives linked to silver prices.

When silver prices rise, the ETF’s net asset value (NAV) increases accordingly; when prices fall, NAV drops. For example, if silver prices increase by 5%, the fund’s value will also rise by about 5%.

Investors can choose to redeem all or part of their holdings based on their needs. Full redemption is suitable for investors who have reached their investment goals or need urgent cash, selling all holdings at once. Partial redemption allows investors to maintain some positions while flexibly taking profits, which is more suitable for those who want to continue participating in future rallies but also want to lock in gains. Most Taiwanese silver ETFs support these two redemption mechanisms, allowing investors to adjust flexibly based on market judgment.

The Top 7 Mainstream Silver ETFs Compared

Currently, the market has 7 popular silver ETFs, each with its own features:

SLV: The Benchmark for Global Silver Investment

Managed by BlackRock, SLV was launched in April 2006, with assets exceeding $30 billion, making it the most representative silver ETF worldwide. Since 2014, it has tracked the LBMA silver benchmark price, adopting a passive management strategy—buying and selling minimal amounts periodically to cover operational costs, without active trading to capture short-term fluctuations.

Assets are held by JPMorgan Chase on behalf of the fund, ensuring high security. Since it tracks the London spot price, SLV’s performance closely mirrors real silver prices, making it suitable for investors seeking stability and transparency.

AGQ and ZSL: The Double-Edged Sword of Leverage Tools

ProShares launched AGQ in 2008, offering 2x long leverage, aiming to deliver twice the daily performance of the Bloomberg Silver Subindex. ZSL provides 2x inverse leverage (-2x), used for hedging downside risk or profiting from bearish markets.

Both funds use futures, swaps, and derivatives to achieve leverage. Important warning: Due to compounding effects and long-term leverage decay, these funds are only suitable for short-term trading and should not be held long-term.

PSLV: The Choice for Physical Silver Enthusiasts

Launched in 2010, PSLV is a closed-end fund with a fixed number of units, and its trading price is determined by market supply and demand, often trading at a premium or discount. Its key feature is that investors can redeem physical silver, exchanging fund units for actual silver, which is attractive for long-term investors who want to hold physical silver eventually.

With assets around $12 billion, it is one of the largest physical silver-focused closed-end funds globally. Despite risks of premium/discount, its pure physical silver exposure remains attractive to many investors.

SLVP: Amplifier of Mining Leverage Effect

Launched by BlackRock in 2012, SLVP invests in global silver exploration or mining companies, tracking the MSCI index passively. Its management fee is only 0.39%, lower than industry median, offering cost advantages.

However, historical performance shows SLVP is more volatile than directly holding silver ETFs, with larger tracking errors and wider bid-ask spreads. Some years, its performance falls short of expectations, requiring investors to have higher risk tolerance.

Qu Yuan Avenue JQ Silver: A Local Choice for Taiwanese Investors

Established and listed in 2018, Qu Yuan Avenue JQ Silver tracks the Dow Jones Silver Excess Return Index via COMEX silver futures. With an issuance price of NT$20, it is rated as “high volatility,” suitable for experienced investors. The fund does not pay dividends; all returns come from price differences.

Three Purchase Paths for Taiwanese Investors

Option 1: Discretionary Trust (Most Secure)

Using domestic brokers (Fubon, Cathay, Yuanta, Yuanta, etc.) to entrust overseas brokers is the main method for Taiwanese retail investors.

Steps: Open a discretionary trust account with a domestic broker → choose TWD or foreign currency settlement → place orders via app using codes like SLV → many brokers support regular fixed investments.

Advantages: Regulated by the Financial Supervisory Commission, ensuring safety; tax handled by the broker; funds stay in Taiwan.

Disadvantages: Higher fees than international brokers; limited tradable products.

Option 2: Open an Overseas Broker Account Directly (Lowest Cost)

Buy directly through overseas broker platforms, saving middleman fees.

Steps: Online account opening (prepare passport, ID, proof of address) → fund transfer (TWD to USD) → place orders via app.

Advantages: Very low or zero commissions, wide range of trading products, supports advanced trading tools.

Disadvantages: English interface, need to handle US dividend withholding tax (30%) and tax refund procedures, remittance risks, no legal protection in Taiwan.

Option 3: Invest in Taiwan-listed Silver ETFs

Buy silver-related ETFs listed on Taiwan Stock Exchange, such as Qu Yuan Avenue JQ Silver, which is the simplest.

Advantages: Fully Chinese interface, no need to send funds abroad, simplest tax treatment.

Disadvantages: Limited choices, possible tracking errors.

Tax Considerations for Silver ETFs

Tax treatment depends on ETF type and income source. Since most silver ETFs are commodity-based, tracking physical silver or futures, they generally do not distribute dividends, so dividend tax issues are minimal.

Taiwan-listed silver ETFs: Buying is tax-exempt; selling incurs a 0.1% securities transaction tax.

Overseas silver ETFs: Treated as overseas property transaction income, included in overseas income. If total overseas income ≤ NT$1 million annually, exempt from minimum tax; over NT$1 million, fully included in basic income, taxed at 20% after deducting NT$7.5 million exemption.

If overseas ETFs distribute dividends, the US will withhold 30% dividend tax, which must be claimed back via US tax refund procedures.

Comprehensive Comparison of Silver Investment Methods

Five Major Risks in Silver ETF Investment

1. Price Volatility Far Exceeds Expectations: Silver’s volatility is three times that of gold. Although 2025 saw over 100% rise, historical data shows sharp corrections, posing high short-term loss risks.

2. Hidden Costs from Tracking Errors: Futures-based ETFs are affected by roll costs, potentially underperforming spot silver over time; physical ETFs’ annual fees (0.4–0.5%) gradually erode returns.

3. Exchange Rate and Geopolitical Risks: Overseas ETFs face USD exchange rate fluctuations; silver prices are also influenced by geopolitical tensions, industrial demand (solar, chips), and central bank policies.

4. Leverage Funds’ Compound Effect Trap: Leveraged funds like AGQ and ZSL rebalance daily, causing long-term holding to suffer from leverage decay, unsuitable for medium- or long-term investment.

5. Liquidity and Trading Volume Risks: Smaller ETFs with low trading volume can experience slippage during large trades.

Practical Investment Advice for Silver ETF Investors

From an asset allocation perspective, silver ETFs are effective tools for precious metals investment. They avoid the hassles of physical storage, offer liquidity and trading convenience, suitable for those wanting exposure to silver without managing physical assets.

However, be aware: silver prices are highly volatile, affected by industrial supply/demand and market sentiment. Different ETFs vary significantly in management fees, tracking methods, and leverage use. Diversification is recommended to avoid over-concentration in a single product, and investors should regularly review market changes and their positions based on whether they plan to redeem all or part of their holdings. Those with lower risk tolerance should prioritize low-cost physical ETFs (like SLV), while higher-risk investors may allocate some funds to mining stocks or short-term leveraged tools.