The Fundamental Difference
Both PSLV and SLV are designed to track the price of silver—but they do it very differently. The key distinction is how the silver is held and whether it can be used by others while you own shares.
PSLV is a closed-end trust that holds fully allocated silver bars at the Royal Canadian Mint. Each bar is serialized and audited. The silver cannot be leased out. Large shareholders can even redeem for physical metal.
SLV is an open-end ETF using a custodian model with JPMorgan. While it holds physical silver, the prospectus allows for silver leasing to shorts and authorized participants. There's no retail redemption option.
Side-by-Side Comparison
| Feature | PSLV (Sprott) | SLV (iShares) |
|---|---|---|
| Fund Type | Closed-End Trust | Open-End ETF |
| Custodian | Royal Canadian Mint | JPMorgan Chase |
| Silver Allocation | Fully allocated, serialized | Allocated (custodian model) |
| Silver Leasing | Not permitted | Permitted per prospectus |
| Physical Redemption | Yes (min. ~10,000 oz) | No (APs only) |
| Expense Ratio | 0.61% | 0.50% |
| AUM | ~$4 billion | ~$10 billion |
| Average Spread | 0.10-0.20% | 0.01-0.02% |
| Tax Treatment | PFIC (complex for US) | Grantor trust (collectibles) |
Why Silver Stackers Prefer PSLV
In the silver stacking community, PSLV is often the preferred choice. Here's why:
PSLV Advantages
- True removal: Silver can't be leased to shorts
- Redemption option: Large holders can take physical
- Government mint: RCM is sovereign storage
- Closed-end: Buying forces Sprott to buy silver
SLV Advantages
- Lower cost: 0.50% vs 0.61% expense ratio
- Higher liquidity: Tighter spreads, more volume
- Options market: More active options trading
- Simpler tax: Easier US tax treatment
The Silver Squeeze Argument
During the 2021 "Silver Squeeze" movement, PSLV saw massive inflows as retail investors specifically chose it over SLV. The reasoning:
- When you buy SLV, the silver can potentially be leased to shorts
- SLV's authorized participant system allows arbitrage that may not require physical buying
- PSLV's closed-end structure means Sprott must buy physical silver when trading at premium
- PSLV silver cannot be rehypothecated or used against silver bulls
Important Note
Both PSLV and SLV are paper silver—you don't own physical metal, you own shares in a trust. For true ownership of silver in a retirement account, you need a Precious Metals IRA that holds actual bullion at an approved depository.
Which Should You Choose?
Choose PSLV If:
- You want strongest physical backing
- You're concerned about silver leasing
- You believe in silver squeeze dynamics
- You might want physical redemption someday
Choose SLV If:
- You prioritize lowest costs
- You need maximum liquidity
- You trade options on silver
- You want simpler US tax reporting
Cost Analysis: 10-Year Holding
Let's compare the costs of holding $100,000 in each ETF for 10 years:
| Cost Factor | PSLV | SLV |
|---|---|---|
| Expense Ratio (10 yr) | ~$6,100 | ~$5,000 |
| Bid-Ask Spread (round trip) | ~$150 | ~$20 |
| Premium/Discount Risk | Can be +/-3% | Minimal |
| Total Explicit Cost | ~$6,250 | ~$5,020 |
The ~$1,200 difference over 10 years may be worth it for the additional physical backing of PSLV— or may not, depending on your priorities.