Recently, which asset has surged the most? It must be silver.

From $28 per ounce at the beginning of the year, it skyrocketed to $66, doubling in value. Such a rally would be considered crazy in any market. And the LOF funds tracking silver are even more outrageous, with a year-to-date increase of 165%, outperforming the spot silver performance.

But today I want to talk not about whether silver itself can continue to rise, but about the arbitrage opportunities present within this market trend for certain LOF funds. Simply put, it’s about leveraging the difference between the secondary market price and the fund’s net asset value (NAV) to make steady profits.

**The logic of premium arbitrage is very simple**

Taking a certain silver LOF as an example, the current on-market price is 2.341 yuan, but the fund’s NAV is only 1.7614 yuan. There’s a gap of 0.58 yuan between the two, which is our profit margin. Based on this premium, executing a small operation each day can easily earn 20 to 30 yuan—quite a good deal.

The key is, this money comes in steadily. No need to predict whether silver will continue to rise; just take advantage of the pricing mechanism differences of the fund.

**How to operate specifically?**

First, you need a securities account. The process is straightforward: find the LOF fund’s purchase option, select a Shenzhen shareholder account, then click to purchase. When purchasing, you buy at the fund’s NAV, which is 1.7614.

Currently, there’s a limit on purchase amounts—up to 100 yuan per day, but starting next week, it will be relaxed to 500 yuan. After the purchase, the fund shares will automatically transfer to your on-market account. At this point, you sell them on the market at the high price of 2.341, and the difference goes into your pocket.

For example, based on my own situation, after purchasing and waiting two days for the shares to arrive, I sold them on the market for a profit of 32 yuan. It doesn’t seem like much, but this is a pure risk-free profit—what more could you ask for?

**Never do the opposite**

A special reminder here: never try to buy this fund directly on the market. Because the premium is too huge, equivalent to a 35% tax. That is, for something costing 100 yuan, you need to pay 135 yuan to buy it. The moment you buy in, you’re already at a loss—completely counterproductive.

The core of arbitrage is: buy low, sell high. Doing the opposite would only lead to losses.

**Why does this opportunity exist?**

Ultimately, it’s because the market’s view on silver is highly divided. On-market investors are optimistic about silver’s prospects and willing to pay a premium; meanwhile, the fund’s NAV updates relatively slowly, creating this price gap. When this difference will disappear depends on when the market reaches consensus.

Anyway, during this period of discrepancy, perceptive investors can enjoy this dividend. Financial markets are always seeking balance, and before that balance arrives, some will profit from the imbalance.