abrdn Silver ETF Trust 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations This information should be read in conjunction with the financial statements and notes to the financial statements included in Item 1 of Part 1 of this Form 10-Q. The discussion and analysis that follows may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and within the Private Securities Litigation Reform Act of 1995, as amended. These forward-looking statements may relate to the Trust’s financial condition, operations, future performance and business. These statements can be identified by the use of the words “may”, “should”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or similar words and phrases. These statements are based upon certain assumptions and analyses the Sponsor has made based on its perception of historical trends, current conditions and expected future developments. Neither the Trust nor the Sponsor is under a duty to update any of the forward-looking statements, to conform such statements to actual results or to reflect a change in management’s expectations or predictions. Introduction The Trust is a common law trust, formed under the laws of the state of New York on July 20, 2009. The Trust is not managed like a corporation or an active investment vehicle. It does not have any officers, directors, or employees and is administered by the Trustee pursuant to the Trust Agreement. The Trust is not registered as an investment company under the Investment Company Act of 1940 and is not required to register under such act. It does not hold or trade in commodity futures contracts, nor is it a commodity pool, or subject to regulation as a commodity pool operator or a commodity trading adviser in connection with issuing Shares. The Trust holds silver and is expected to issue Baskets in exchange for deposits of silver and to distribute silver in connection with redemptions of Baskets. Shares issued by the Trust represent units of undivided beneficial interest in and ownership of the Trust. The investment objective of the Trust is for the Shares to reflect the performance of the price of silver, less the Trust’s expenses. The Sponsor believes that, for many investors, the Shares will represent a cost effective investment relative to traditional means of investing in silver. The Trust issues and redeems Shares only with Authorized Participants in exchange for silver and only in one or more Baskets (a Basket equals a Block of 50,000 Shares). A list of current Authorized Participants is available from the Sponsor or the Trustee. Shares of the Trust trade on the New York Stock Exchange (the “NYSE”) Arca under the symbol “SIVR”. Valuation of Silver and Computation of Net Asset Value On each day that the NYSE Arca is open for regular trading, as promptly as practicable after 4:00 p.m. New York time on such day (the “Evaluation Time”), the Trustee evaluates the silver held by the Trust and determine both the ANAV and the NAV of the Trust. At the Evaluation Time, the Trustee values the Trust’s silver on the basis of that day’s LBMA Silver Price (the daily price of an ounce of silver as set at approximately 12:00 noon London, England time by LBMA-authorized bullion banks or market makers in an electronic, over-the-counter auction conducted by the ICE Benchmark Administration (“IBA”) and disseminated by major market vendors, or, if no LBMA Silver Price is made on such day or has not been announced by the Evaluation Time, the next most recent LBMA Silver Price determined prior to the Evaluation Time is used, unless the Sponsor determines that such price is inappropriate as a basis for evaluation. In the event the Sponsor determines that the LBMA Silver Price or such other publicly available price as the Sponsor may deem fairly represents the commercial value of the Trust’s silver is not an appropriate basis for evaluation of the Trust’s silver, it shall identify an alternative basis for such evaluation to be employed by the Trustee. Once the value of the silver has been determined, the Trustee subtracts all estimated accrued but unpaid fees. The resulting figure is the adjusted net asset value (the “ANAV”) of the Trust. The ANAV of the Trust is used to compute the Sponsor’s Fee. 12 The Trustee then subtracts from ANAV the amount of the accrued Sponsor's Fee computed for such day to determine the NAV of the Trust. The Trustee also determines the NAV per Share by dividing the NAV of the Trust by the number of Shares outstanding as of the close of trading on the NYSE Arca. The NAV of the Trust is obtained by subtracting the Trust’s liabilities on any day from the value of the gold owned and receivable by the Trust on that day; the NAV per Share is obtained by dividing the NAV of the Trust on a given day by the number of Shares outstanding on that day. The Quarter Ended March 31, 2021 The Trust’s NAV increased from $863,664,235 at December 31, 2020 to $886,323,207 at March 31, 2021, a 2.62% increase for the quarter. The increase in the Trust’s NAV resulted primarily from an increase in outstanding Shares, which rose from 33,750,000 Shares at December 31, 2020 to 38,250,000 Shares at March 31, 2021, as a result of 6,200,000 Shares (124 Baskets) being created and 1,700,000 Shares (34 Baskets) being redeemed. There was a decrease in the price per ounce of silver, which dropped 9.40% from $26.49 at December 31, 2020 to $24.00 at March 31, 2021. The NAV per Share decreased 9.46% from $25.59 at December 31, 2020 to $23.17 at March 31, 2021. The Trust’s NAV per Share decreased slightly more than the price per ounce of silver on a percentage basis due to the Sponsor’s Fee, net of waiver, which was $681,313 for the quarter, or 0.30% of the Trust’s ANAV on an annualized basis. The NAV per Share of $28.58 at February 1, 2021 was the highest during the quarter, compared with a low of $23.17 at March 31, 2021. The decrease in net assets from operations for the quarter ended March 31, 2021 was $92,706,485 resulting from a realized gain of $184,148 on the transfer of silver to pay expenses and a realized gain of $13,010,676 on silver distributed for the redemption of Shares, offset by a change in unrealized loss on investment in silver of $105,219,996 and the Sponsor’s Fee of $681,313. Other than the Sponsor’s Fee, the Trust had no expenses during the quarter ended March 31, 2021. The Quarter Ended March 31, 2020 The Trust’s NAV decreased from $407,463,630 at December 31, 2019 to $335,219,380 at March 31, 2020, a 17.73% decrease for the quarter. The decrease in the Trust’s NAV resulted primarily from a decrease in the price per ounce of silver, which fell 22.80% from $18.05 at December 31, 2019 to $13.93 at March 31, 2020 and an increase in outstanding Shares, which rose from 23,300,000 Shares at December 31, 2019 to 24,850,000 Shares at March 31, 2020, a result of 1,650,000 Shares (33 Baskets) being created and 100,000 Shares (2 Baskets) being redeemed during the quarter. The NAV per Share decreased 22.87% from $17.49 at December 31, 2019 to $13.49 at March 31, 2020. The Trust’s NAV per Share fell slightly more than the price per ounce of silver on a percentage basis due to the Sponsor’s Fee, net of waiver, which was $283,484 for the quarter, or 0.30% of the Trust’s ANAV on an annualized basis. The NAV per Share of $18.19 at February 24, 2020 was the highest during the quarter, compared with a low of $11.63 at March 19, 2020. The decrease in net assets from operations for the quarter ended March 31, 2020 was $93,469,761, resulting from a realized loss of $3,326 on the transfer of silver to pay expenses, a realized loss of $111,595 on silver distributed for the redemption of Shares, a change in unrealized loss on investment in silver of $93,071,356 and the Sponsor’s Fee, net of waiver, of $283,484. Other than the Sponsor’s Fee, the Trust had no expenses during the quarter ended March 31, 2020 13 Liquidity & Capital Resources The Trust is not aware of any trends, demands, commitments, events or uncertainties that are reasonably likely to result in material changes to its liquidity needs. In exchange for the Sponsor’s Fee, the Sponsor has agreed to assume most of the expenses incurred by the Trust. As a result, the only ordinary expense of the Trust during the period covered by this report was the Sponsor’s Fee. The Trustee will, at the direction of the Sponsor or in its own discretion, sell the Trust’s silver as necessary to pay the Trust’s expenses not otherwise assumed by the Sponsor. The Trustee will not sell silver to pay the Sponsor’s Fee but will pay the Sponsor’s Fee through in-kind transfers of silver to the Sponsor. At March 31, 2021, the Trust did not have any cash balances. Off-Balance Sheet Arrangements The Trust has no off-balance sheet arrangements. Critical Accounting Policies The financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements relies on estimates and assumptions that impact the Trust’s financial position and results of operations. These estimates and assumptions affect the Trust’s application of accounting policies. Refer to Note 2 to the Financial Statements for further information on accounting policies. Item 3. Quantitative and Qualitative Disclosures About Market Risk Not applicable.