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<p>[QUOTE=&quot;NorthKorea, post: 1304702, member: 29643&quot;]Upside: Higher liquidity. Physical silver is highly illiquid. That&#039;s why it has such high price volatility.</p><p><br /></p><p>Downside: Transaction risk. Because the holdings aren&#039;t actually held (they&#039;re mostly futures and obligations), there are requirements that the ETFs must adhere to with respect to holdings reflecting shares. This causes rolling of contracts to reflect the actual shares outstanding when there are too many ounces and buying when there are too few.</p><p><br /></p><p>Basically, EVERYONE knows when the transactions occur (it&#039;s in the prospectus), as such, the day that the ETF has to purchase, prices go up (since the sellers know legally that the purchase must be made), and on the day that the ETF must sell, prices go down (since the buyers know legally that the sale must be made). It ends up resulting in a loss of around 1.8-2.7% per anum. In highly volatile markets (such as the swings seen in 2009-2011), that number gets as high as 4%.[/QUOTE]</p><p><br /></p>

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