How do Taiwanese people invest in silver? A comprehensive guide to silver ETFs from the ground up

Silver prices continue to hit new highs, prompting many Taiwanese investors to pay attention to this investment opportunity. For those interested in participating in silver but unsure how to start, understanding different investment channels, cost considerations, and risk management is especially important. This guide will help Taiwanese investors clarify how to invest in silver in the most suitable way for themselves.

Three Ways to Invest in Silver: ETF, Physical Silver, Futures — Which to Choose?

Taiwanese investors have multiple options for investing in silver, each with its advantages and disadvantages.

Silver ETFs are the most popular choice among retail investors in Taiwan. They allow you to buy and sell on the stock exchange through a brokerage account without holding physical silver, just like stocks. The ETF’s value fluctuates with the silver price; if silver rises 5%, the ETF’s value usually increases about 5%. This method offers high liquidity and convenient trading, suitable for investors who want flexibility in and out of the market.

Physical Silver provides a tangible sense of security—“see and touch” your assets. However, handling physical silver is quite complicated—you need to pay for safe storage, such as vault rental or professional storage fees. Storing at home raises concerns about oxidation, loss, or theft. When trading, you must find reputable silver shops or precious metals dealers, pay higher bid-ask spreads, and may need to verify purity yourself. Physical silver has lower liquidity and is difficult to sell quickly in urgent cash needs.

Silver Futures are suitable for experienced investors with high risk tolerance. Futures offer high leverage, allowing small capital to control large positions. If your judgment is correct, you can earn substantial profits in a short period. However, risks are amplified—mistakes can wipe out your principal. Futures also require close monitoring of contract expiry, rolling over positions regularly, making operations more complex than ETFs.

Additionally, Silver CFDs are an option for beginners. They combine the trading convenience of ETFs with the leverage of futures, require less capital, and have lower transaction costs, making them suitable for investors who want quick entry and exit while accepting moderate risk.

Key Data Background for Silver Investment

To understand current silver investment opportunities, let’s look at market data: last year, silver prices surged nearly 150%, outperforming gold’s approximately 12% increase in the same period. Since the start of this year, silver remains strong; despite a brief correction early in the year, it quickly rebounded and continued climbing, showing strong upward momentum.

Multiple factors drive silver prices upward—expanding global supply-demand gaps, inclusion of silver in the U.S. critical minerals list, and geopolitical tensions increasing safe-haven demand. These factors provide strong support for silver’s rally.

Two Main Channels for Taiwanese Investors to Buy Silver ETFs

If you decide to invest in silver ETFs, Taiwanese investors have two main ways to purchase:

First: Discretionary Trust (Dingyue)

This is the most common method among Taiwanese investors. You don’t need to travel abroad—just open an account with a domestic broker (such as Fubon, Cathay, Yuanta, Mega, etc.) and authorize them to execute overseas trades on your behalf.

The process is straightforward: open an account online or in person, prepare ID and bank passbook, choose settlement in TWD or foreign currency, then use the broker’s app or website to search for the ETF code (e.g., SLV) and place an order. Many brokers also support regular fixed investments, allowing you to spread out costs over time.

Advantages: High security—regulated by Taiwan’s Financial Supervisory Commission; your funds stay within Taiwan, and tax matters are handled by the broker.
Disadvantages: Higher transaction fees and limited selection of ETFs.

Second: Opening an Overseas Broker Account

This method is slightly more complex but offers lower costs. You open an account directly with an overseas broker platform, prepare passport, ID, proof of address, and bank info; then transfer funds (TWD to USD). After funding, you can search for the ETF code and place orders via their app or website.

Advantages: Very low transaction fees (many brokers waive commissions or charge fixed low fees), access to a wide range of global ETFs, and support for advanced tools like options and margin trading.
Disadvantages: Most overseas brokers operate in English, and some tax obligations (like 30% withholding tax on U.S. dividends) are your responsibility. Handling fund transfers or inheritance issues can be complex, with less legal protection under Taiwanese law.

Seven Popular Silver ETF Products

Among many silver ETFs, these seven are most watched by Taiwanese investors:

Brief Descriptions:

• SLV: The most well-known global silver ETF, managed by BlackRock since 2006, with over US$30 billion assets. It holds physical silver stored by JPMorgan Chase, tracking LBMA silver prices. Suitable for long-term, passive holding.

• AGQ: Offers 2x leverage on silver price movements, suitable for advanced traders aiming for higher short-term gains but with doubled risk.

• ZSL: The inverse 2x ETF, profiting from falling silver prices, also for short-term use.

• PSLV: A closed-end fund issuing fixed units, often trading at premiums or discounts. Investors can convert units into physical silver. It’s a large-scale product (~US$12 billion) for long-term physical exposure.

• SLVP: Invests in global silver mining companies, providing leverage to silver prices. It has delivered 142% gains by 2025, but with higher volatility and company-specific risks.

• DBS: Tracks silver via COMEX futures, with a fee of 0.75%. Suitable for those seeking futures exposure without direct contract trading.

• 00738U: A Taiwan-listed silver futures ETF, launched in 2018, tracking the Dow Jones Silver Excess Return Index. It avoids currency risk but is classified as high volatility.

Costs and Taxation: What Taiwanese Investors Need to Know

Total costs for investing in silver ETFs include not only purchase price but also hidden fees.

For Taiwan-listed ETFs (like 00738U):

• Buying is tax-free.
• Selling incurs a 0.1% transaction tax.
• Simple tax situation.

For overseas ETFs (like SLV, PSLV):

• Profits are considered overseas property gains, taxed as foreign income.
• If total overseas income ≤ NT$1 million annually, no additional tax; above that, the excess is taxed at 20% after deductions.
• Dividends are usually subject to about 30% withholding tax in the U.S., which may be difficult to reclaim.

Cost erosion:

• Physical silver ETFs (~0.5-0.6% annual fee).
• Futures ETFs (~0.75-0.95%).
• Over time, these fees reduce net returns; e.g., a 10% annual silver increase minus 1% fee yields about 9% net.

Comparing Different Investment Methods

To help Taiwanese investors decide, here’s a comparison:

• Silver ETF: Most convenient, highly liquid, no storage costs, ideal for beginners and small capital. Disadvantage: no physical ownership, and long-term returns slightly lower due to fees. Expected 2025 return: about 95-110% after costs.

• Physical Silver: Provides asset ownership and no counterparty risk, but storage costs (1-5% annually), low liquidity, large bid-ask spreads (~5-6%), and verification/tracking costs. After costs, net returns are roughly 95-100%, generally less attractive than ETFs.

• Futures: Highest potential returns (e.g., 200%+ with 2x leverage if correctly timed), but with enormous risk—mistakes can wipe out your capital. Requires active management, understanding expiry, margin, and costs. Suitable only for experienced traders.

• CFD: Combines ease of trading with leverage, lower costs than futures, suitable for quick trades. Risks are magnified if market moves against your position.

• Mining Stocks (e.g., SLVP): Offer leverage to silver prices (~142% gains by 2025), but are affected by company-specific factors, operational risks, and market volatility.

Five Major Risks and Countermeasures

Investing in silver involves risks:

1. Extreme Price Volatility: Silver is much more volatile than gold or stocks. It can have sudden 10%+ drops, causing significant losses. High risk tolerance is necessary.

2. Tracking Errors: ETF tracking may deviate from actual silver prices due to costs and operational factors. Long-term, these can erode returns.

3. Currency Risk: For USD-denominated ETFs, fluctuations in TWD/USD affect returns. Silver price rises may be offset by USD depreciation.

4. Tax Complexity: Overseas ETF profits are taxed as foreign income, with complicated calculations and potential penalties if misreported.

5. Market Risks: Silver prices are influenced by industrial demand, geopolitical events, monetary policy, and speculative activity. Major shifts can cause sharp declines.

Countermeasures:

• Diversify assets; don’t concentrate solely on silver.
• Choose products aligned with your risk profile (e.g., SLV for beginners, AGQ for experienced traders).
• Regularly review your positions and avoid emotional reactions to market swings.

Investment Decision Framework for Taiwanese Investors

There’s no one-size-fits-all answer; it depends on your situation.

• Beginners with limited funds (NT$30,000–50,000): Silver ETFs like SLV or 00738U are practical—simple, liquid, and manageable.

• Experienced with higher risk capacity: Futures-based ETFs or direct futures trading can offer higher returns but require expertise.

• Want to avoid currency risk and prefer local operation: 00738U, listed in Taiwan, simplifies procedures despite higher costs.

• Long-term investors: Combining physical silver with ETFs can diversify holdings, but remember physical silver involves storage costs that can eat into returns.

Whatever your choice, understand costs, assess risks, diversify, and adjust your portfolio as market conditions change. Silver investment offers opportunities but also challenges—doing thorough research, choosing appropriate tools, and managing risks will help you participate confidently in this silver rush.