Recently, the hype around silver has been really intense. In the first half of the year, the silver price broke through $95 USD per ounce, hitting a record high, with an increase of over 140%, far outperforming gold during the same period. I’ve noticed many retail investors starting to pay attention to this rally, but quite a few actually don’t understand how to get involved.

Honestly, buying physical silver directly is a huge hassle. You have to worry about storage, insurance, authenticity verification, and when buying or selling, you often face a 5-6% premium. It’s also difficult to quickly liquidate when you need cash. In comparison, silver ETFs are much simpler. They’re like stocks—you can buy and sell them anytime within your brokerage account. You don’t need to handle physical silver, so you can participate in the silver price rally easily. That’s why so many people have been choosing silver ETFs recently.

The principle behind silver ETFs isn’t complicated. Fund companies hold physical silver or silver futures on your behalf and then securitize it. When the silver price goes up 5%, the ETF roughly increases by 5% as well. They also have high liquidity and lower costs compared to physical silver.

Taiwanese investors mainly have two ways to buy silver ETFs. One is through domestic securities firms via cross-trading, like Fubon, Cathay, Yuanta, and E.SUN, which offer this service. The advantages are a Chinese interface, funds stay in Taiwan, and tax handling is convenient. The downside is higher transaction fees. The second way is to open an overseas brokerage account, which has lower costs and more options, but requires handling remittances and taxes yourself, and the English interface might be a barrier.

Regarding specific products, the most well-known is SLV, managed by BlackRock, with assets over $30 billion USD. It directly holds physical silver and tracks the London Silver Fixing price. If you want leverage, AGQ offers 2x leverage but is only suitable for short-term trading. For inverse trading, there’s ZSL. PSLV has the feature of allowing physical redemption, making it suitable for long-term investors. SLVP invests in silver mining companies, which tend to be more volatile than pure silver ETFs but also offer higher potential returns. Taiwan’s local futures ETF, Yuan Da Avenue Silver (期元大道瓊白銀), is also an option, with a 1% fee and tracks futures indices.

Each of these silver ETFs has its pros and cons. Physical silver ETFs like SLV have less tracking error, but an annual fee of about 0.4-0.5% gradually eats into returns. Futures-based ETFs (like DBS, AGQ) have lower costs but require attention to rollover costs. Leveraged ETFs, while offering high return potential, also carry amplified risks and are not suitable for beginners.

Tax considerations are also important. Buying Taiwan-listed silver ETFs is taxed as Taiwan stocks, with a 0.1% transaction tax upon sale. For US silver ETFs, it’s considered foreign income; if annual gains exceed 1 million TWD, it’s subject to the minimum tax regime, taxed at 20%.

But honestly, silver prices are very volatile. Although the gains in 2025 are impressive, history shows sharp pullbacks. After the margin increase in December last year, there was even an 11% intraday flash crash. This indicates that silver ETFs are more suitable for investors with high risk tolerance. Also, different ETFs track silver differently—some use futures, some hold physical silver, some leverage—so it’s crucial to understand exactly what you’re buying.

From an asset allocation perspective, silver ETFs are indeed convenient tools to participate in this rally. They save the trouble of handling physical silver and offer higher liquidity. But remember, silver prices are heavily influenced by geopolitical events, industrial demand, and monetary policies, leading to significant price fluctuations. It’s advisable to diversify your portfolio, avoid over-concentration, regularly review market changes, and choose silver ETF products that match your risk appetite.