The iShares Silver Trust was established in 2006 as a silver-backed and exchange-traded fund. The trust is sponsored by Barclays Global Investors International which is an affiliate of Barclays Global Investors. The sponsor has been tasked to establish the trust, register its shares for public offering, and list them on the NYSE Arca. The Bank of New York is acting as the trustee of the fund. The England branch of JP Morgan Chase Bank functions as the custodian of the trust. The custodian holds the assets of the trust on his behalf. This also means that the securities of the trust are backed by a physical stock of silver. At present, the custodian holds more than 264 million ounces of silver. As of 2006, iShares Silver Trust trades on the American Stock Exchange. Its shares are listed under the symbol SLV. The primary objective of the trust is to reflect the price of silver owned by iShares minus the expenses and liabilities.
The trust does not perform any activities to gain profit from the fluctuations in the price of silver. Investment in the trust involves risk because the price of silver and hence, the market price of the shares is unpredictable. Moreover, the shares are sold at market price rather than in view of the net asset value per iShare. Several factors may cause a decline in the value of shares. Economic downturn may decrease the demand for silver and result in reduced price of the trusts shares. Secondly, investors and speculators may take little interest in sliver and related commodities causing a decline in the price of shares. Thirdly, shares will lose value if mining companies decide to hedge their silver.
The net asset value of the fund increased to $2.355597 in 2008, following a significant increase of outstanding shares. The number of shares rose from 152.000 to 220.000. Investors may purchase shares via brokerage accounts. The purchase of iShares is similar to the investment in silver. However, the expenses of the trust are covered by the sale of silver.