The iShares Silver Trust Delivers Bigger Five Year Gains Than The iShares Gold Trust

The iShares Gold Trust (NYSEMKT:IAU) and iShares Silver Trust (NYSEMKT:SLV) both offer direct exposure to precious metals, but differ in historical risk, recent returns, and ongoing costs.

Both funds are designed as convenient vehicles for investors seeking to track the price of either gold or silver, rather than owning the physical commodities directly. Comparing IAU and SLV comes down to tradeoffs in cost, volatility, and each metal’s performance profile.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year weekly returns. The 1-yr return represents total return over the trailing 12 months.

SLV’s expense ratio is twice as high as IAU’s, making the gold trust more affordable for long-term holders. Neither fund distributes dividends or yield.

Performance & risk comparison

What's inside

The iShares Silver Trust seeks to mirror the price of silver, offering investors a nearly pure play on the metal itself. With nearly two decades of operating history and $33.4 billion in assets under management (AUM), SLV holds 100% exposure to real estate as classified in sector data, though this likely reflects the underlying commodity rather than traditional property holdings. No underlying companies or traditional equities are held, as the fund is structured for direct silver tracking.

The iShares Gold Trust follows a parallel approach, aiming to match the price of gold. Its $68.3 billion AUM makes it the larger of the two, and it also shows 100% real estate sector exposure in the data, again due to commodity classification. Like SLV, IAU does not hold traditional equities or distribute dividends. Neither fund lists individual holdings, as both are designed to reflect the spot prices of their respective metals.

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What this means for investors

Investors have turned to ETFs like the iShares Gold Trust and iShares Silver Trust amid worries about inflation and the rising amount of sovereign debt globally.

While neither constitutes technical ownership in physical metals, it gives investors an easy way to track the price, which closely mimics the gains and losses one might face if they did own the metals.

Moreover, the performances of both IAU and SLV have exceeded that of the S&P 500’s total return, which means that investors in both have won in a sense. Nonetheless, it is hard to ignore the fact that the silver ETF's performance has significantly exceeded that of IAU’s.

Traditionally, silver has been a more volatile metal than gold. Admittedly, this might work against investors in a bear market. However, in a bull market such as the one investors have seen over the last five years, such a trend plays into the hands of silver investors.

In the end, as long as this bull market in precious metals continues, it is likely SLV will continue to outperform its gold ETF. Investors have turned to ETFs like the iShares Gold Trust and iShares Silver Trust amid worries about inflation and the rising amount of sovereign debt globally.

Glossary

Expense ratio: The annual fee, as a percentage of assets, that a fund charges to cover operating costs.
Assets under management (AUM): The total market value of all assets a fund or manager oversees.
Beta: A measure of an investment's volatility compared to the overall market, typically the S&P 500.
Max drawdown: The largest percentage drop from a fund's peak value to its lowest point over a specific period.
Yield: Income generated by an investment, such as interest or dividends, usually expressed as an annual percentage.
Direct exposure: When a fund’s value tracks the price of an asset itself, not through related companies or derivatives.
Sector exposure: The proportion of a fund’s assets allocated to specific industry sectors.
Spot price: The current market price at which a commodity can be bought or sold for immediate delivery.
Total return: The investment's price change plus all dividends and distributions, assuming those payouts are reinvested.
Commodity classification: How a fund or asset is categorized based on the underlying raw material it tracks, like gold or silver.

Will Healy has positions in iShares Silver Trust. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.