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By Kyle Anthony, Benzinga
With over $33.4 billion in assets under management as of September 2024, Sprott Inc., (NYSE: SII) is a recognized asset manager in North America. The firm is focused on continuing to grow its size and stature with ongoing product development and yearly enhancement of its ETF line-up under its Sprott Asset Management division. Recently, Sprott launched a new ETF offering, the Sprott Silver Miners & Physical Silver ETF (NASDAQ: SLVR), which it says is the only1 ETF focused on providing pure-play2 exposure to silver miners and physical silver. This new solution adds to Sprott’s extensive offering of precious metals and critical materials ETFs, which the company says allow investors to have transparent, liquid access to companies potentially poised to benefit from increasing demand for these metals over time.
The Growing Importance Of Silver
Silver's value proposition as an investment is well established, as it can be used as a hedge against inflation and has a low correlation with other asset classes. In 2024, silver was a top-performing commodity, returning 20.58%. However, it should be noted that silver’s importance is growing due to rising industrial demand. Silver has grown in importance as the world moves toward electrification, due to its use in solar panels and electric vehicles. As noted in the Silver Institute’s Silver News December 2024 issue, industrial demand was estimated to rise 7% in 2024 to surpass 700 million ounces for the first time. This gain was mainly from green economy applications. As a result of the growing demand for silver, there was a physical deficit for the fourth consecutive year, which helped push the metal price to $35, albeit momentarily, for the first time since 2012.
Why Sprott Says The Time To Invest In Silver Is Now
Though the growing industrial demand for silver is a top-of-mind rationale for why now is an opportune time to invest in the metal, current macroeconomic developments also support the attractiveness of silver as an investment. As noted in Sprott’s investor presentation for SLVR, the current market environment of lowered interest rates and decelerating inflation have historically been beneficial for silver, as the metal’s price has historically rallied following rate cuts from the U.S. Federal Reserve. As illustrated by Sprott in their presentation, silver and gold have historically rallied during periods of fiat currency debasement, inflation, falling interest rates, economic recoveries and rising geopolitical risks. Sprott notes that in past precious metals bull markets, silver’s rally has been 2x as large as gold, on average.
Investing In Silver With Sprott Silver Miners And Physical Silver ETF
With the rising industrial demand for silver and the current macroeconomic developments, SLVR provides investors with comprehensive exposure to silver miners, the supply-side companies potentially best positioned to benefit from the increased investment in silver necessary to meet the growing demand for the precious metal. As noted in the Silver Institute’s World Silver Survey 2024, 71.7% of annual silver mine supply was produced as a by-product in 2023. While the share of silver produced from gold mines declined year-on-year from 15.5% to 13.7%, the contribution from copper and lead/zinc operations rose from 25.5% to 26.7% and from 30.3% to 30.8%, respectively. The share of production from primary silver mines was unchanged year-on-year, accounting for 28.3% of mine output in 2023.
Given these supply dynamics, increases in the silver price do not necessarily impact the decision to increase production at non-primary silver mines. As such, investors looking to capitalize on the growing demand for silver through investing in silver miners need to take a more targeted approach. The SLVR ETF provides access to a broad universe of silver miners, reflecting the performance of the Nasdaq Sprott Silver Miners™ Index, which is designed to track the performance of a selection of securities in the silver industry, including silver producers, developers and explorers as well as physical silver. Currently, because its index avoids silver-as-a-by-product miners, SLVR provides twice the exposure to silver relative to other silver mining ETF strategies, the company says3.
As the world transitions to a low-carbon economy, investors have an opportunity to participate in innovations that will usher in a new energy ecosystem. Silver could play an increasingly essential role in bringing said innovations to market. SLVR’s exposure to firms focused on producing silver or possessing physical silver could be of interest to investors who believe in the metal’s potential to bring change.
Featured photo by Scottsdale Mint on Unsplash.
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(1) Based on Morningstar’s universe of Precious Metals Sector Equity ETFs as of 14 January 2025.
(2) The term “pure-play” relates directly to the fund’s exposure to the total universe of investable, publicly listed securities in the investment strategy.
(3) As of 14 January 2025, and based on Sprott’s internal analysis of all currently-listed ETFs seeking exposure to silver miners.
IMPORTANT DISCLOSURES & DEFINITIONS
An investor should consider the investment objectives, risks, charges and expenses carefully before investing. To obtain a Sprott Silver Miners & Physical Silver ETF Statutory Prospectus, which contains this and other information, visit https://sprottetfs.com/slvr/prospectus, contact your financial professional or call 1.888.622.1813. Read the Prospectus carefully before investing.
The Sprott Silver Miners & Physical Silver ETF is new and has limited operating history. Investors in the Fund should be willing to accept a high degree of volatility in the price of the Fund’s shares and the possibility of significant losses. The Fund will be concentrated in the silver mining industry. As a result, the Fund will be sensitive to changes in, and its performance will depend to a greater extent on, the overall condition of the silver mining industry, highly dependent on the price of silver bullion. The silver and precious metals industry can be significantly affected by competitive pressures, central bank operations, events relating to international political developments, the success of exploration projects, commodity prices, adverse environmental developments and tax and government regulations. An investment in the Fund involves a substantial degree of risk. The Fund is not suitable for all investors. The Fund is considered non-diversified and can invest a greater portion of assets in securities of individual issuers than a diversified fund. As a result, changes in the market value of a single investment could cause greater fluctuations in share price than would occur in a diversified fund.
Shares are not individually redeemable. Investors buy and sell shares of the Sprott Silver Miners & Physical Silver ETF on a secondary market. Only market makers or “authorized participants” may trade directly with the Fund, typically in blocks of 10,000 shares.
Funds that emphasize investments in small/mid-cap companies will generally experience greater price volatility. Diversification does not eliminate the risk of investment losses. ETFs are considered to have continuous liquidity because they allow an individual to trade throughout the day. A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual Fund operating expenses, affect the Fund’s performance.
The Sprott Silver Miners & Physical Silver ETF seeks to provide investment results that, before fees and expenses, generally correspond to the total return performance of the Nasdaq Sprott Silver Miners™ Index (NSLVR™).
Nasdaq®, Nasdaq Sprott Silver Miners™ Index, and NSLVR™ are registered trademarks of Nasdaq, Inc. (which with its affiliates is referred to as the “Corporations”) and are licensed for use by Sprott Asset Management LP. The Product(s) have not been passed on by the Corporations as to their legality or suitability. The Product(s) are not issued, endorsed, sold, or promoted by the Corporations. THE CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE PRODUCT(S).
Sprott Asset Management USA, Inc. is the Investment Adviser to the Sprott Silver Miners & Physical Silver ETF. ALPS Distributors, Inc. is the Distributor for the Sprott ETFs and is a registered broker-dealer and FINRA Member. ALPS Distributors, Inc. is not affiliated with Sprott Asset Management USA, Inc.
®Registered trademark of Sprott Inc. 2025
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