A must-read for silver investment beginners: How to choose between ETF, physical silver, and futures?

Silver prices surge to new heights! Breaking through the historical high on December 23, 2025, driven by multiple positive factors such as the Fed’s rate cut expectations, tightening global silver supply, and the U.S. officially including silver in the critical minerals list, London spot silver soared past the $70 per ounce mark and later reached a record high of $83.645/oz.

This year, silver has performed remarkably, with a gain of over 140%, far outperforming gold’s rise in the same period and significantly surpassing the Nasdaq Composite’s approximately 120% performance, making it one of the most eye-catching assets of 2025.

However, this rapid rally has also attracted regulatory attention. To cool the overheated market, CME has raised silver futures margin requirements twice in a row, with the latest adjustment announced on December 26 and effective from December 29. For example, the initial margin for the March 2026 contract increased from about $22,000 to $25,000, a total increase of 25%. This intervention caused silver prices to retreat from highs, currently fluctuating in the $70-75 range, but market sentiment remains optimistic about silver’s outlook in 2026.

Comparing Four Ways to Invest in Silver

What options do Taiwanese investors have to participate in this silver rally? Let’s start with the big picture.

There are four main ways to invest in silver: silver ETFs, physical silver bars, silver futures, and silver mining stocks. Each has different risks, entry barriers, and returns—there’s no absolute good or bad, only what suits you.

Silver ETFs’ biggest advantage is “simplicity.” They function like stocks—traded through brokerage accounts—no need for storage or worries about theft or oxidation. In 2025, silver prices rose over 103%, and silver ETFs’ net returns are slightly lower (after deducting annual fees of 0.4-0.75%), but for investors wanting quick market entry and exit, this is the most convenient choice.

Physical Silver Bars are suitable for those who value “ownership.” You can truly hold them, providing a sense of security during crises better than digital assets. But the cost is storage fees every year (1-5%), and buying/selling involves a 5-6% premium and commissions. Liquidity is much lower than ETFs. Despite silver rising over 103% in 2025, after deducting premiums, storage, and selling costs, the actual net return is about 95-100%.

Silver Futures are for experienced traders. They allow controlling large positions with small capital, and high leverage can amplify returns. If you bet correctly in 2025, using 2x leverage could yield over 200%. But losses are equally magnified, which is why futures carry the highest risk and can wipe out your principal overnight.

Silver Mining Stocks (like mining ETFs such as SIL) offer leverage effects. In 2025, mining ETFs rose 142%, outperforming silver’s 103%, because when silver prices go up, miners’ profits grow rapidly. Conversely, if silver prices fall, miners’ losses are also doubled.

What is a Silver ETF? Why Is It So Popular?

A silver ETF is essentially a fund that tracks silver price movements. Investors don’t need to hold physical silver; buying ETF units allows participation in silver market fluctuations. It’s listed on stock exchanges and can be bought or sold anytime like stocks.

The operation is straightforward: it either directly holds physical silver bars or uses derivatives like silver futures to replicate silver price performance. For example, if silver prices increase by 5%, the ETF value also rises about 5%; if prices fall, the ETF declines similarly.

Compared to physical silver, ETFs’ biggest advantages are high liquidity and low costs. No worries about storage, insurance, authenticity checks, or finding trusted precious metals dealers—just a few clicks to buy or sell. This is why, amid the silver rally, silver ETFs have become retail investors’ top choice.

Analyzing Seven Popular Silver ETFs

Taiwanese investors can access seven mainstream silver ETFs, each with its own features:

SLV’s position is unshakable. Launched in April 2006, managed by global asset giant BlackRock, with over $30 billion USD in assets, it’s the most well-known silver ETF worldwide. It directly holds physical silver, stored by JPMorgan Chase. It adopts a passive management approach, rarely trading actively, only selling small amounts of silver when necessary for operational costs. Since August 2014, SLV follows the LBMA silver benchmark price.

AGQ is for advanced traders. Launched in December 2008 by ProShares, it uses futures and derivatives to achieve 2x leverage, aiming to double the daily performance of the Bloomberg Silver Index. Be aware that due to compounding effects and long-term leverage decay, AGQ is only suitable for short-term trading, not long-term holding.

ZSL is the opposite of AGQ. It offers 2x inverse returns. If you expect silver to fall or want to hedge, ZSL profits when silver declines. Like AGQ, it’s only suitable for short-term operations.

PSLV is unique. Launched in October 2010, it’s a “closed-end fund,” unlike typical ETFs that continuously create and redeem units to keep price and NAV aligned. PSLV issues fixed units, and market prices are determined solely by supply and demand, often trading at a premium or discount. Despite this, it’s favored by long-term investors for its pure physical silver exposure, managing about $12 billion USD. It also allows physical redemption, suitable for investors wanting actual silver.

SLVP follows the “mining company” route. Launched by BlackRock in January 2012, with about $600 million USD in assets, it tracks the MSCI Global Silver Miners Index, investing in listed companies involved in silver exploration or mining worldwide. Its annual fee is only 0.39%, lower than industry median, but it’s more volatile than pure silver ETFs, with noticeable tracking errors, frequent component adjustments, and wider bid-ask spreads.

TAIEX Silver Futures is a Taiwan option. Established in May 2018 and listed in June, it tracks the Dow Jones Silver Excess Return Index via COMEX futures. Issued at NT$20, it’s rated as “high volatility” and does not pay dividends.

Two Ways for Taiwanese Investors to Buy Silver ETFs

Route 1: Indirect via Discretionary Trust — The Safest Choice

Using domestic brokers (Fubon, Cathay, Yuanta, Fubon, etc.) to trade through overseas brokers is the mainstream method for Taiwanese investors to buy international ETFs.

Steps:

1. Open a discretionary trust account with a domestic broker (online or in person)
2. Prepare necessary ID and bank info
3. Choose TWD or foreign currency settlement
4. Use broker’s app or website to place orders with codes like SLV
5. Many brokers support regular savings plans

Advantages: Well-regulated by Taiwan’s Financial Supervisory Commission, high security, dividend withholding tax handled by the broker, no need to transfer funds abroad, Chinese interface friendly for beginners.

Disadvantages: Higher handling fees than direct overseas accounts, limited product choices.

Route 2: Directly Opening Overseas Accounts — Lowest Cost

Opening accounts directly with overseas brokers reduces middleman fees, lowering costs and increasing options.

Steps:

1. Open an account online with brokers like Interactive Brokers, Firstrade, etc.
2. Prepare passport, ID, proof of address, bank info
3. Transfer TWD to USD via wire transfer (set up designated accounts)
4. Use app or website to place orders directly

Advantages: Very low or zero commissions, trade any global ETF, support options, margin trading, fast execution.

Considerations: Some interfaces are in English, need to handle US dividend withholding tax (30%), dealing with fund transfer security and estate issues, no legal protection from Taiwan.

How Much Tax Do You Pay on Silver ETF Investments?

Tax obligations depend on where the ETF is listed and the source of income.

Buying Taiwan-listed Silver ETF

Treated like Taiwan stocks, buying is tax-free, selling incurs 0.1% tax, easiest.

Buying Overseas-listed Silver ETF

Counts as overseas property transaction income. Tax thresholds are important:

• Total overseas income ≤ NT$1 million/year: no tax, exempted
• Total overseas income > NT$1 million/year: fully included in taxable income

Calculation: taxable income minus NT$7.5 million interest exemption, taxed at 20% on the excess.

In simple terms, if your total overseas investment income (dividends, interest, trading gains) in a year does not exceed NT$1 million, you pay no tax. If it exceeds NT$1 million, the excess is taxed at 20%. This is friendly for small investors.

Five Major Risks and Precautions in Silver Investment

While silver ETFs are convenient, risks must be taken seriously.

1. Silver price volatility far exceeds gold and stocks. This year’s 140% surge is crazy, but history shows sharp corrections are common. After margin hikes on December 29, silver dropped over 11% in one day, causing heavy losses for many investors. Only those with high risk tolerance should consider.

2. Tracking errors are unavoidable. Futures-based ETFs suffer from roll-over costs (costs of maintaining futures positions), leading to long-term returns below spot silver prices; physical ETFs have lower tracking error but annual fees of 0.4-0.75% erode returns over time.

3. Currency risk for overseas ETFs. Silver prices are in USD; TWD appreciation erodes returns, while TWD depreciation benefits.

4. Silver is sensitive to external factors. Geopolitical tensions, industrial demand (solar, electronics), central bank policies—all can shake the market.

5. Picking the wrong product can lead to big losses. Leveraged ETFs (AGQ, ZSL) are only suitable for short-term trading; long-term holding causes decay. Mining ETFs are more volatile, and small investors risk being shaken out.

No Perfect Silver Investment—Choose What Fits You

Silver ETFs are indeed the easiest way to participate in the silver market, with light tax burdens (overseas income under NT$1 million tax-free). But no investment is perfect—only what suits you best.

If you’re a beginner, with limited funds, and want easy trading, silver ETFs (like SLV or TAIEX Silver Futures) are ideal. If you prefer physical assets for security, consider PSLV or physical silver bars, accepting high storage costs. If you’re a trader seeking leverage, futures or leveraged ETFs can meet your needs, but with higher risks.

Regardless of your choice, diversify your holdings instead of putting all chips into one product. Regularly review market changes and your positions, especially in such volatile environments.