Silver expert about Silver-ETFs and their currency tranches

What ZKB Silver ETF should you buy?

Who wants to invest in silver, will sooner or later see the offering of the Zürcher Kantonal­bank (ZKB – Zurich Canton Bank). The precious metal ETFs (exchange traded funds) of the ZKB buy bars from the fund inflows and store them in high-security vaults in Switzerland.

1 ETF, but 5 different ISINs

What ISIN or International Securities Identification Number is the right for you, will be explained in detail by Thorsten Schulte (silberjunge.de) in this video (sadly only in German available):

Silver is a good future investment, because …

Thorsten Schulte explains, why it really makes sense to invest in silver in the second part of the video (so it is worth to watch it to the end!)

Before we are going to talk about the ZKB Silver ETF in detail, you can find a summary in note form here:

  • Silver is a precious metal that is demanded (unlike gold) by the industry.
  • Due to its unique conductivity (best electrical conductor), silver is widely used in modern technologies (from solar panels to eczema clothing).
  • In many applications, silver is “consumed”; therefore, no recycling can take place.
  • Currently less silver than consumed is generated from mines (stocks become empty).
  • Due to the current low price of silver, far too little is invested in the new discovery (exploration) of silver deposits.
  • We are heading to an extreme situation (increase in demand at offering shortage).
  • This can only be adjusted through a significant increase in price (markets can get stuck for longer in a positive or negative evaluation phase – but eventually, the equalization will be found again).
  • The value of silver has to increase in the future (who buys silver today will be richer in the future).

How do I invest in silver best?

This article is intended to introduce the ZKB Silver ETF; however, for the sake of completeness, I want you to get to know more opportunities for silver investment. This way, you can assess better, which method suits you best!

Type of silver investment Advantages Disadvantages
Coins and bars no storage costs or administrative costs (unless you rent a safe deposit box)
direct access
subject to VAT, when buying in Germany, charge and discounts when buying or selling
Investment products with guaranteed storage in Swiss bonded warehouse through financial distribution no VAT, safe storage, insurance high (partly hidden) cost structure, purchase and sale effortful
Certificate of the price of silver low costs, buyable and sellable quickly through a depot doubt of security: Issuer risk (keyword: Lehman-Brothers bankruptcy)
Shares of silver mines direct investment in the producers, low purchase and sale costs through the stock market business risk: investment in a company and not directly in the metal
Silver-ETF with physical deposit relatively low administrative and storage costs
purchase and sale through the stock market
(I really can not think of any, but this can be added through the comments box)

ETF as a cost effective solution

There is a general increase since more than 10 years in the popularity of ETFs investors, because they provide excellent investment results like an autopilot due to the low cost structure.

Fact is: 90 % of the fund managers are unable to beat the market. Partly because of wrong investment decisions, but also due to the system. It will become more difficult, because: investment funds have annual management costs of 1 to 3%. And one has to add the fees for the ongoing purchases and sales.

This is different in ETFs: You have no manager, who makes investment decisions. They are employed once, e.g. at the German Stock Index (DAX30) and buy and sell only when investors deposit money or cash out in the ETF. Exception: when the composition of the 30 DAX stocks change, a reallocation takes place.

This means: the price performance of an ETF corresponds to the one of the selected market, minus lower costs.

The same applies to the silver-ETF

One does not require the management for investment decisions (and must therefore pay none). There are only few tasks for the employees of silver-ETFs, which operate with a 100% physical deposit:

  • Money flows into the ETF: then buy silver bars, proving the authenticity, storage
  • Investors sell the ETF: then outsource silver bars and sell them
  • Regular inventories (through external auditors)

What does the ZKB Silver ETF cost?

The annual administrative fee of all currency tranches of the ZKB Silver ETF is indicated with 0.60%.

Additionally, there are your purchases and, if applicable, your sales expenses at your depository bank. Please note that not all banks offer the silver ETFs of the Zürcher Kantonalbank. Here you can find an overview (German article).

In one of the next articles, I will show you how to buy the ZKB Silver ETF through the DKB Depot (Comdirect Depot, as the order fees are much lower – read more in the article).

Here are the ISINs of the different currency tranches

Currency tranche of
ZKB Silver ETF
hedged not hedged
Euro CH0183136040
WKN: A1JXTL
CH0183135992
WKN: A1JXTG
Swiss Francs CH0183136024
WKN: A1JXTJ
CH0183136024
WKN: A1JXTJ
US-Dollar CH0183136008
WKN: A1JXTH

Which tranche is the right one for you, was explained by Thorsten Schulte in the above video clip. Moreover, it depends on your financial life centre … therefore, a Swiss citizen rather buys the CHF tranche and a German or Austrian citizen the EUR-tranche.

You can see that the performance of the tranches differ, when you compare the price performance. The reason for this is that silver (as almost all commodities) is traded in US dollars. Therefore, the exchange rates play a role in the price performance, however, that also applies to foreign stocks, such as Coca Cola.

Indicator yes, investment recommendation no

In the article, in which I will show you how to buy the ETF through the DKB Depot, I will buy the hedged EUR-tranche. This could be an indicator for you, but is definitely not an investment recommendation. Everyone should decide what to do for oneself.

Since 2009, I am a silver investor and investor at the ZKB Silver ETF (different tranches, depending on the current purchasing situation).

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Who writes here?

Someone who gained experience with more than 100 banks in more than 20 countries during the past 15 years. My name is Gregor and if you click to continue you can find out why I am here and what this site is for ⇒ continue.

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One Response to “What ZKB Silver ETF should you buy?”

  1. Michel Bachand says:

    I’m considering a silver position in my retirement account mostly as a safeguard to a potential market collapse. I could get that position via zkb silver etf or possibly via physical metal purchased via my fidelity brokerage account. I’m trying to figure which option offers the best protection against a market collapse. Your thoughts and reasoning would be appreciated.

    VA:F [1.9.22_1171]
    0

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