## Silver Prices Hit Record Highs! How Taiwanese Investors Can Participate in This Market via ETFs

The silver market at the end of 2025 has staged a remarkable rally. Driven by multiple positive factors such as the Fed's rate cut expectations, global supply tightness, and silver being added to the US critical minerals list, London spot silver broke through $70 per ounce on December 23, and subsequently soared to a historic high of **$83.645/oz**.

How fierce is this rally? So far, the annual increase in silver has exceeded **140%**, far surpassing gold (which rose over 60%) and completely outpacing the Nasdaq Composite Index (which increased about 120%).

However, nothing comes for free. To curb excessive silver price surges, CME continuously adjusted margin requirements for silver futures in late December, causing prices to retreat from highs to the $70-75 range. Despite this, market optimism about silver's future remains strong.

## Silver ETFs Become Mainstream for Retail Investors, But Do You Really Understand Them?

Faced with the opportunity of soaring silver prices, many Taiwanese investors are eager to try but feel confused among three options: buy physical silver, trade futures, or choose silver ETFs?

**The core advantage of silver ETFs is simplifying the investment process.** These funds aim to track silver prices, allowing investors to participate in the silver market without physically holding silver bars. Unlike physical silver, silver ETFs are listed on exchanges like stocks, enabling anytime buying and selling, with much higher liquidity than physical silver.

### How Silver ETFs Work

Silver ETFs usually track silver prices via two methods: one is holding physical silver bars directly; the other is using derivatives like silver futures. Regardless of the method, the ETF's value fluctuates in sync with the spot silver price—if silver rises 5%, the ETF value also increases about 5%.

### Physical Silver vs. ETF: Why Are Investors More Inclined Toward ETFs?

Physical silver investment seems straightforward but hides costs. First, storage issues: silver bars require safe deposit box rent or storage fees (annual costs around 1-5%), and storing at home raises concerns about oxidation, theft, or damage. Second, trading inefficiency: dealing with jewelry shops or precious metals dealers often involves 5-6% bid-ask spreads, plus costs for purity testing. Lastly, low liquidity: cashing out quickly in emergencies is difficult, and purchase prices at local shops lack transparency.

In contrast, **silver ETFs solve all these pain points.** Investors only need a brokerage account to buy or sell as easily as stocks. No worries about storage, testing, or transportation. Fees are only about 0.4-0.95% annually, offering clear cost advantages for long-term investors.

## Which Silver ETF Should Taiwanese Investors Choose? An In-Depth Comparison of 7 Popular Options

| Name | Holdings | Annual Fee | Features |
|---------|--------------|----------|--------------------------------------------------------------|
| iShares Silver Trust (SLV) | Physical silver | 0.50% | The world's largest silver ETF, with over $30 billion AUM, managed by BlackRock |
| Invesco DB Silver Fund (DBS) | Silver futures | 0.75% | Tracks COMEX silver futures, suitable for futures exposure seekers |
| ProShares Ultra Silver (AGQ) | Silver futures | 0.95% | 2x leverage, suitable for short-term trading; long-term holding may decay due to compounding |
| ProShares UltraShort Silver (ZSL) | Silver futures | 0.95% | 2x inverse leverage, for bearish traders, only for short-term use |
| Sprott Physical Silver Trust (PSLV) | Physical silver | 0.62% | About $12 billion AUM, closed-end fund, investors can redeem physical silver |
| iShares MSCI Global Silver and Metals Miners (SLVP) | Mining stocks | 0.39% | Invests in leading global silver miners, ~142% annual return but higher volatility |
| TAIEX Silver Futures (00738U) | Silver futures | 1.00% | Local Taiwan option, tracks Dow Jones Silver ER Index, high volatility product |

### SLV: The Most Recognized Silver ETF Globally

Launched in 2006 and managed by BlackRock, SLV is the industry’s "byword." Its net assets exceed $30 billion, with core holdings in physical silver stored by JPMorgan Chase. SLV is passively managed, not actively trading for short-term fluctuations, only periodically selling small amounts of silver for operational costs. Its low turnover results in minimal tracking error, making it suitable for long-term investors.

### AGQ: Leverage Tool for Short-Term Trading

ProShares launched AGQ in 2008 to achieve **2x returns** of the Bloomberg Silver Subindex Daily. It operates via derivatives like futures and swaps, designed to amplify short-term gains. However, investors must be cautious: due to compounding effects and rollover costs, AGQ is only suitable for short-term trading and not for long-term holding. If silver prices stay flat over six months but fluctuate daily, AGQ may underperform silver due to decay.

### ZSL: Hedge Tool for Bearish Silver Positions

ZSL provides **-2x inverse** daily returns of LBMA silver fix prices. In other words, if silver drops 10%, ZSL rises 20%. Mainly used for hedging or short-term bearish bets, it also suffers from long-term decay issues and is not suitable for holding beyond a few weeks.

### PSLV: Unique Physical Redemption Mechanism

Launched in 2010, this product is a **closed-end fund** with a fixed number of units, traded at prices determined by supply and demand, not the automatic creation/redemption mechanism of traditional ETFs. This can cause PSLV's trading price to deviate from its net asset value, sometimes trading at a premium or discount. However, due to its pure physical silver exposure and unique redemption mechanism, PSLV is favored by many long-term investors, with assets around $12 billion.

### SLVP: Indirect Exposure via Mining Stocks

SLVP invests in global publicly listed companies involved in silver exploration or mining, not silver itself. In 2025, it gained about 142%, outperforming silver prices. But note, SLVP is not pure silver exposure; it benefits from leverage via rising silver prices and improved company operations. Its volatility and tracking error are higher, with larger bid-ask spreads.

### TAIEX Silver Futures: Local Taiwan Option

Established in 2018, this Taiwan ETF tracks the Dow Jones Silver Excess Return Index via COMEX silver futures. With a 1% annual fee, slightly higher than international peers, it is rated as a "high volatility" product. Taiwanese investors choosing this do not face overseas remittance or international tax issues, but liquidity and component differences should be considered.

## Two Main Ways for Taiwanese Investors to Enter the Market

### Path 1: Discretionary Trust — Safe but Costlier

Most common for Taiwanese investors. Set up a discretionary trust account with domestic brokers (Fubon, Cathay, Yuanta, Fubon, etc.), and delegate trading of overseas silver ETFs.

**Steps:**
- Open a discretionary trust account online or in person, prepare ID, passport, and bank info
- Choose TWD or foreign currency settlement
- Search ETF code (e.g., SLV), place orders, and set up regular purchases

**Advantages:** Regulated by Financial Supervisory Commission, tax handled by broker, funds stay in Taiwan, interface in Traditional Chinese

**Disadvantages:** Higher fees than regular stock trading, limited tradable products, higher FX costs

### Path 2: Direct Account with Overseas Broker — Lower Cost but Self-Managed

Open an account directly on international platforms (e.g., IB, Fidelity), saving intermediary fees.

**Steps:**
- Prepare passport, ID, proof of address, bank info, complete online verification
- Convert TWD to USD and wire to broker account (set up designated account)
- Use app or website to search and buy silver ETFs directly

**Advantages:** Very low fees (many zero-commission or low fixed), wide product selection, supports advanced tools like options and margin trading

**Disadvantages:** Mostly English interface, self-responsible for taxes and remittance, handling issues if funds are transferred out of Taiwan

## Do You Pay Taxes on Silver ETFs? Key Tax Points for Taiwanese Investors

Taxation depends on ETF type and income source. Fortunately, most silver ETFs are commodity funds tracking physical silver or futures, with little or no dividends, so dividend tax issues are minimal.

### Taiwan-listed silver ETFs (e.g., 00738U)

Trading on Taiwan’s stock exchange treats silver ETFs like stocks: **buying is tax-exempt, selling incurs 0.1% tax**. The simplest case.

### Overseas-listed silver ETFs (e.g., SLV, PSLV)

Special attention is needed for **overseas income exemption** rules. When Taiwanese investors buy US silver ETFs, any capital gains (selling price difference) are considered **overseas property transaction income** and included in overseas income.

**Key exemption thresholds:**
- Total overseas income ≤ **1 million TWD** annually: no tax
- Total overseas income > **1 million TWD**: excess is included in basic income

**Tax calculation:**
- Basic income = all overseas income – 7.5 million TWD exemption
- If basic income exceeds zero, taxed at **20%**

Example: If an investor gains 2 million TWD profit from overseas silver ETF in 2025, with no other overseas income:
- Excess over 1 million TWD exemption is 1 million TWD
- Basic income = 2 million – 7.5 million = negative (no basic tax)

If including dividends or interest, and total exceeds 7.5 million, then 20% tax applies on the excess.

## Silver ETF vs. Other Silver Investment Methods: Risks and Returns

To help investors choose the best option, here is a comparison of silver ETFs, physical silver, silver futures, and mining stocks:

| Investment Type | Advantages | Disadvantages | 2025 Return Rate |
|------------------|--------------|----------------|------------------|
| **Silver ETF** | High liquidity, easy to buy/sell, no storage risk, low fees, suitable for beginners | Fees erode long-term returns, tracking error, no physical ownership | ~140% (slightly below silver price after fees) |
| **Physical Silver** | Actual ownership, no counterparty risk, high privacy | Storage costs 1-5% annually, bid-ask spreads 5-6%, low liquidity | ~95-100% (after costs) |
| **Silver Futures** | High leverage, small capital controls large positions, long/short | Very high risk, complex, no physical, margin requirements | 200%+ (if leverage correct) or loss of principal |
| **Mining Stocks** | Leverage effect, diversification, dividends, easy trading | Not pure silver exposure, company risk, higher volatility | ~142% (outperforms silver but riskier) |

## Three Major Risks Investors Must Face with Silver ETFs

Despite low barriers and high liquidity, investors should be aware of these risks:

### 1. Silver Price Volatility Exceeds Expectations

Silver prices are far more volatile than gold and stocks. Although 2025 saw a 140% rise, historical sharp corrections are common. After CME raised margin requirements on December 29, silver plunged over 11% intraday, causing significant losses for many.

### 2. Tracking Error Erodes Long-Term Returns

Futures-based ETFs are affected by rollover costs, potentially underperforming spot silver over time; physical ETFs have better tracking but incur annual fees of 0.4-0.5%, which continuously erode returns.

### 3. Overseas ETF Currency and Tax Risks

USD fluctuations directly impact TWD returns; tax-wise, exceeding 1 million TWD in overseas income triggers inclusion in basic income, taxed at 20%. Additionally, silver prices are heavily influenced by geopolitical events, industrial demand (solar, electronics), and central bank policies.

## Conclusion: Is Silver ETF Right for You?

From an asset allocation perspective, **silver ETFs are effective tools to participate in precious metals markets**. They eliminate the hassle of storing physical silver, offer high liquidity and trading convenience, and are especially suitable for investors wanting to benefit from silver price increases without the costs of physical management.

However, investors must recognize that silver prices are highly volatile, affected by industrial demand and speculative sentiment. Different silver ETFs vary in management fees, tracking methods (leverage or physical holdings). Diversification and regular review of market conditions and personal positions are recommended to navigate this wave of silver market enthusiasm steadily.