10-K: iShares Silver Trust Reports Annual Results for Fiscal Year 2023

iShares Silver Trust's net asset value decreased by 6.91% in 2023, primarily due to a reduction in outstanding shares and a slight dip in silver prices.

Summary

• The iShares Silver Trust's net asset value decreased from $11,160,084,971 at the end of 2022 to $10,389,177,775 at the end of 2023, representing a 6.91% decrease.
• This decrease was primarily due to a reduction in outstanding shares from 506,550,000 to 477,000,000, as well as a slight decrease in the price of silver.
• The price of silver decreased by 0.67% from $23.95 per ounce at the end of 2022 to $23.79 per ounce at the end of 2023.
• The net asset value per share decreased by 1.13% from $22.03 to $21.78, slightly more than the decrease in silver price due to the sponsor's fees.
• The sponsor's fees for the year totaled $53,561,823, which is 0.50% of the trust's average weighted assets.
• The trust experienced a net decrease in net assets resulting from operations of $128,982,872 for the year ended December 31, 2023.
• This was due to an unrealized loss on investment in silver bullion of $361,918,369, and a net investment loss of $53,561,823, partially offset by realized gains on silver bullion.
• The trust's objective is to reflect the performance of the price of silver, less the trust's expenses and liabilities.

Sentiment

Score: 4

Explanation: The document presents a negative outlook due to the decrease in net asset value, share count, and silver prices. While the trust continues to operate as designed, the overall financial performance is worse than the previous year, leading to a lower sentiment score.

Positives

• The trust continues to operate as a cost-effective way for investors to gain exposure to silver prices.
• The trust's structure allows for easy trading of shares through traditional brokerage accounts.
• The trust's shares are backed by physical silver held by the custodian.
• The trust's custodian has agreed to maintain insurance in support of its custodial obligations.

Negatives

• The trust's net asset value decreased by 6.91% in 2023.
• The number of outstanding shares decreased by 29,550,000 during the year.
• The price of silver decreased slightly by 0.67% during the year.
• The net asset value per share decreased by 1.13% during the year.
• The trust is not actively managed, so it does not attempt to mitigate losses from price decreases.
• The amount of silver represented by each share decreases over time due to the sales of silver to pay the sponsor's fee and other expenses.

Risks

• Disruptions in the processes used to determine the LBMA Silver Price could adversely affect the return on investment.
• Future governmental decisions may have a significant impact on the price of silver.
• The trust's lack of diversification makes it more volatile than a broadly diversified portfolio.
• The demand for silver may temporarily exceed available supply, which could affect the creation of new shares.
• The trading price of the shares can be volatile and may not always reflect the net asset value.
• The trust is exposed to operational risks, including cybersecurity incidents.
• The trust relies on the information and technology systems of its service providers, which could be disrupted.
• The trust may be negatively impacted by the effects of public health emergencies.
• The trust's custodian is only liable for losses under limited circumstances.
• The trust does not insure its silver, and shareholders have limited legal recourse.
• The trust may be required to indemnify the sponsor or custodian, which could reduce the net asset value.
• The trust is a passive investment vehicle and is not actively managed.

Future Outlook

The report includes forward-looking statements regarding future events and performance, but cautions that actual results may differ materially due to various risks and uncertainties. The sponsor does not guarantee the accuracy of these statements and is not under any duty to update them.

Management Comments

• The duly authorized officers of the Sponsor have evaluated the effectiveness of the Trusts disclosure controls and procedures and have concluded that they were effective as of the end of the period covered by this report.
• The Sponsors management concluded that the Trust maintained effective internal control over financial reporting as of December 31, 2023.
• The Sponsor relies on BlackRock's enterprise risk management framework for the Trust's cybersecurity risk management and strategy.

Industry Context

This report reflects the performance of a silver-backed exchange-traded fund (ETF), which is influenced by the price of silver and market conditions. The report highlights the volatility of silver prices and the impact of global events on the trust's performance. The trust competes with other financial vehicles that offer exposure to silver, including direct investments in physical silver and other silver-backed securities.

Comparison to Industry Standards

• The iShares Silver Trust is designed to track the price of silver, similar to other silver-backed ETFs such as the Aberdeen Standard Physical Silver Shares ETF (SIVR) and the Sprott Physical Silver Trust (PSLV).
• The trust's expense ratio of 0.50% is comparable to other similar silver ETFs.
• The trust's reliance on the LBMA Silver Price for valuation is standard practice in the industry.
• The trust's use of a custodian to hold physical silver is also a common practice among silver-backed ETFs.
• The trust's performance is directly tied to the price of silver, which is subject to market fluctuations and global events, similar to other silver investment vehicles.

Corporate Governance

Related Party Transactions

• The sponsor and the trustee are considered related parties to the trust.
• The trustee's fee is paid by the sponsor and is not a separate expense of the trust.

Stakeholder Impact

• Shareholders experienced a decrease in the value of their investment due to the decline in net asset value and silver prices.
• Authorized participants may have experienced changes in their trading activity due to the decrease in outstanding shares.
• The trust's service providers, including the custodian and trustee, continue to perform their duties as outlined in their agreements.

Next Steps

• The trust will continue to operate as a passive investment vehicle, seeking to reflect the performance of the price of silver.
• The trustee will continue to evaluate the silver held by the trust and determine the net asset value on each business day.
• The sponsor will continue to manage the trust and assume certain administrative and marketing expenses.
• The trust will continue to issue and redeem shares in baskets of 50,000 with authorized participants.

Key Dates

Keywords

iShares Silver Trust, Silver, Silver Bullion, LBMA Silver Price, Net Asset Value, SLV, Exchange Traded Fund, Commodity, Investment, Precious Metals