How to Buy iShares Silver Trust (SLV) ETF

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Contributor, Benzinga
May 19, 2021

Following the restrictions by Robinhood and other brokerages on buying shares in stocks like GME and AMC on January 28, WallStreetBets seems to have a new target in mind — silver, and more specifically, the iShares Silver Trust (NYSEARCA: SLV), an ETF that tracks the underlying price of silver. SLV physically holds its silver in vaults mostly in London, thus giving investors exposure to the price of spot silver minus the expenses of managing the fund. 

Multiple posts on the r/wallstreetbets page call this the next short squeeze. Want a chance to get in on the action? Here’s how to begin.

$20.99
0.17[0.82%]
Last update: 8:00PM (Delayed 15-Minutes)
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Open20.800Close20.990
Vol / Avg.15.186M / 16.639MMkt Cap-
Day Range20.690 - 21.04052 Wk Range18.380 - 23.940

How to Buy iShares Silver Trust (SLV) ETF

If this is your first time investing, follow these steps to get started.

  1. Pick a Brokerage

    Before buying shares in iShares Silver Trust (SLV), select a brokerage to use in order to place trades. You can find an almost limitless number of brokerage services — each offers a variety of services at different price points. 

    Some factors to focus on when choosing a brokerage include:

    - Whether it charges a commission 
    - The type of investor that typically uses the service
    - Global markets covered
    - Availability of market research tools 

  2. Decide How Many Shares You Want

    After opening and funding your brokerage account, decide how many shares of SLV you want to purchase. Check the daily price SLV and evaluate how much money you’re willing to risk. Any order placed should be filled relatively quickly and close to the market price. Remember, any investment can decrease in value at any time, so define your risk tolerance.

  3. Choose Your Order Type

    Next, decide what type of order to use when making this purchase. Choosing your order type gives you much more control over your risk and the trade overall. Here are some of the more common order types and what they mean.

    Bid
    The highest price that a buyer is willing to pay for a stock or ETF is known as the bid price. This price point is important to keep in mind when evaluating the order type you want to use and how much capital you want to put to work.

    Ask
    The lowest price that a seller is willing to accept for a stock or ETF is known as the ask price. It is crucial to also keep this price point in mind when buying or selling a stock or ETF.

    Spread
    The difference between the ask price and the bid price is known as the spread. Large-cap stocks like Microsoft (MSFT) usually have a low spread, while small-cap stocks like Naked Brand Group Ltd. (NAKD) usually have a wider spread.

    Limit Order
    A limit order tells your broker to buy or sell a stock or ETF at a specific price point or better. For instance, if you place a buy limit order for SLV for $25, the order will only execute if the price is $25 or below.

    Market Order
    A market order tells your broker to buy or sell a stock or ETF immediately at the current market price. A market order executes almost instantaneously but offers no guarantees as to the price you’ll pay. Use this order type when you prefer speed over efficiency.

    Stop-Loss Order
    A stop-loss order tells your broker to sell a stock or ETF if it falls to a certain price. For instance, if you buy 10 shares of SLV for $25 per share, you may set a stop-loss order for $23.94. Therefore, if SLV falls to $23.94, your broker will sell your shares. Placing a stop-loss order helps protect you from downside risk.

    Stop-Limit Order
    A stop-limit order combines the features from a stop order and a limit order. For instance, when using this order type to place a buy order for SLV, you might set a limit price of $25 and a stop price of $25.50. If the price of SLV rises above $25, your stop-limit order will convert to a limit order. Once this happens, your broker will fill the order as long as SLV remains priced at $25.50 or below. If the price of SLV rises above $25.50, your broker will stop filling the order. A stop-limit order gives you far more control over the trade.

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SLV ETF History

The iShares Silver Trust ETF started in 2006 and has over $14 billion in assets under management. A few quick facts: 

  • Silver is used for everything from electronics to jewelry to hedging against inflation.
  • Normally, silver is not a very volatile commodity, with the underlying price remaining between $14 and $28 for much of the last 5 years. 
  • In April of 2011, iShares Silver Trust ETF (SLV) made its all-time high at just over $48.

Pros to Buying SLV

As the influence of Reddit group WallStreetBets continues to sweep throughout the market, iShares Silver Trust (SLV) appears to be another beneficiary. 

One user on the Reddit page posted, “Silver bullion is one of the most manipulated on earth. Any short squeeze in silver paper shorts would be EPIC.” 

Furthermore, precious metal bulls on the street are also taking notice, with Peter Schiff tweeting that “It looks like the #redditraiders have turned their attention to #silverstocks. They're getting smarter. Silver stocks are actually cheap and represent good investment value. The fact that some investors were foolish enough to short these stocks makes their trade even better." 

There’s no telling how far this sentiment can carry SLV.

Cons to Buying SLV 

If you are planning on buying SLV, you’ll take a risk on an ETF that has risen in popularity and price — over 7% on Thursday morning alone. While the interest in SLV can certainly continue to grow with the backing of r/wallstreetbets, there is always a risk to buying these hyped stocks. If the sentiment reverses or shifts into a different area of the market, the price of SLV could decline significantly. With that being said, since this is an exchange-traded fund (ETF) as opposed to a typical stock, it should be less risky than most of the other r/wallstreetbets plays.

Take Care During These Short Squeezes

While you can certainly point to risks in buying iShares Silver Trust (SLV), it may prove to be an excellent way to both take part in the r/wallstreetbets phenomenon while also hedging against inflation. But — a big but — you can’t guarantee anything in the market and you should only invest what you’re willing to lose.