Silver Is Sticky Money

That said, Sprott is one of the most recognized names in precious metals and resource investment management. PSLV does offer advantages over some of its competitors. The silver it owns is fully allocated, meaning it cannot be loaned out or claimed by another entity. Unitholders have the option to redeem their units for physical silver bullion, however, the minimum requirements are quite high. There are potential tax advantages for certain non-corporate U.S. investors, where capital gains may be taxed at a lower rate than for most other precious metals ETFs, coins and bars. Storage of the metals is at the Royal Canadian Mint, which is a Federal Crown Corporation of the Government of Canada. PSLV has almost $2.5 billion in assets and an annual management expense ratio near 0.67%.

But here's the kicker: currently, PSLV trust units trade at a small premium of around 0.75% of their net asset value (NSV). And depending on the market's sentiment, it sometimes trades at a discount to its NAV. So investors can own PSLV and pay very close to spot prices for silver. Once physical silver price premiums return to more normal levels, investors can then switch into physical.

Meanwhile, silver futures prices at such low levels versus physical prices are unsustainable. This gap will undoubtedly close. I think that will happen with futures prices rising to approach physical silver prices, but at considerably higher levels than currently. And it could happen suddenly.

That's why gaining exposure to silver now makes sense. The Silver Institute forecasts robust global silver demand to reach an eight-year high in 2021 at 1.025 billion ounces, thanks to gains in industrial, jewelry, fabrication, and physical investment demand.

In my view, it's physical investment demand that will be the biggest disruptor to the silver market for some time.

Investors need to have exposure to silver. 

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Bill Myers 2 months ago Member's comment

Bravo. This is well-written and a much more balanced article that leads people into the right direction. Go $PSLV.