iShares Silver Trust 10-K

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.   Market Information   On December 4, 2008, the Shares commenced trading on NYSE Arca under the ticker symbol SLV. Prior to that, the Shares were traded on the American Stock Exchange, also under the ticker symbol SLV, since their initial public offering on April 21, 2006.   Holders   As of December 31, 2020, there were approximately 165 DTC participating shareholders of record of the Trust. Because most of the Trust’s Shares are held by brokers and other institutions on behalf of shareholders, we are unable to estimate the total number of shareholders represented by these record holders.   Dividends   The Trust did not declare any cash distributions to Shareholders during the fiscal years ended December 31, 2020 and 2019. The Trust has no obligation to make periodic distributions to Shareholders.   Use of Proceeds from Registered Securities   Not applicable.   Purchases of Equity Securities by the Issuers and Affiliated Purchaser   54,500,000 Shares (1,090 Baskets) were redeemed during the fourth quarter of the year ended December 31, 2020.   Period   Total Number of Shares Redeemed     Average Ounces of Silver Paid Per Share   10/01/20 to 10/31/20     11,400,000     $  0.9303   11/01/20 to 11/30/20     36,150,000       0.9299   12/01/20 to 12/31/20     6,950,000       0.9295   Total     54,500,000     $  0.9299       Item 6. Selected Financial Data.   The following table summarizes the relevant December 31, 2020, 2019, 2018, 2017 and 2016 financial data for the Trust and should be read in conjunction with the Trust’s financial statements, schedules and notes related thereto which are included in this report. The Trust commenced operations on April 21, 2006.       December 31,       2020     2019     2018     2017     2016   Net realized gain (loss) on silver bullion   $  929,327,856      $  (55,102,881 )    $  (135,779,475 )    $  (92,120,817 )    $  (111,239,707 )  Net income (loss)     4,954,538,782        901,933,450        (472,326,421 )      217,471,048        682,782,768    Net income (loss) per Share     9.61        2.47        (1.38 )      0.62        1.91    Net cash flows     —        —        —        —        —    Total assets     14,797,590,146        6,543,418,555        4,906,017,787        5,407,419,250        5,543,495,441      The following table summarizes the relevant quarterly financial data for each of the four quarters of 2020 for the Trust and should be read in conjunction with the Trust’s financial statements, schedules and notes related thereto which are included in this report.       Three Months Ended (Unaudited)       March 31, 2020     June 30, 2020     September 30, 2020     December 31, 2020   Net realized gain (loss) on silver bullion   $  (9,570,709 )    $  (11,142,869 )    $  650,112,661      $  299,928,773    Net income (loss)     (1,440,459,322 )      1,666,597,884        3,222,974,616        1,505,425,604    Net income (loss) per Share     (3.69 )      3.51        5.42        2.51    Net cash flow     —        —        —        —    Total assets     5,507,482,733       8,886,943,805       13,027,789,385       14,797,590,146     16 Table of Contents   Item 7. 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 financial statements included with this report. The discussion and analysis that follows may contain statements that relate to future events or future performance. In some cases, such forward looking statements can be identified by terminology such as “may,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. These statements are based upon certain assumptions and analyses made by the Sponsor on the basis of its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. Whether or not actual results and developments will conform to the Sponsor’s expectations and predictions, however, is subject to a number of risks and uncertainties, including the special considerations discussed below, general economic, market and business conditions, changes in laws or regulations, including those concerning taxes, made by governmental authorities or regulatory bodies, and other world economic and political developments. Although the Sponsor does not make forward-looking statements unless it believes it has a reasonable basis for doing so, the Sponsor cannot guarantee their accuracy. 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 a change in the Sponsor’s expectations or predictions.   Introduction   The Trust is a grantor trust formed under the laws of the State of New York. The Trust does not have any officers, directors, or employees, and is administered by the Trustee acting as trustee pursuant to the Trust Agreement. The Trust issues Shares representing fractional undivided beneficial interests in its net assets. The assets of the Trust consist primarily of silver bullion held by a custodian as an agent of the Trust responsible only to the Trustee.   The Trust is a passive investment vehicle and seeks to reflect generally the performance of the price of silver. The Trust seeks to reflect such performance before payment of the Trust’s expenses and liabilities. The Trust does not engage in any activities designed to obtain a profit from, or ameliorate losses caused by, changes in the price of silver.   The Trust issues and redeems Shares only in exchange for silver, only in aggregations of 50,000 Shares (a “Basket”) or integral multiples thereof, and only in transactions with registered broker-dealers that have previously entered into an agreement with the Sponsor and the Trustee governing the terms and conditions of such issuance (such broker-dealers, the “Authorized Participants”). A list of the current Authorized Participants is available from the Sponsor or the Trustee.   Shares of the Trust trade on NYSE Arca, Inc. under the ticker symbol SLV.   Valuation of Silver; Computation of Net Asset Value   On each business day, as soon as practicable after 4:00 p.m. (New York time), the Trustee evaluates the silver held by the Trust and determines the net asset value of the Trust and net asset value per Share (“NAV”). The Trustee values the silver held by the Trust using the price per ounce of silver determined in an electronic auction hosted by IBA that begins at 12:00 p.m. (London time) and published shortly thereafter, on the day the valuation takes place (such price, the “LBMA Silver Price”). If there is no announced LBMA Silver Price on any day, the Trustee is authorized to use the most recently announced LBMA Silver Price unless the Trustee, in consultation with the Sponsor, determines that such price is inappropriate as a basis for evaluation. The LBMA Silver Price is used by the Trust because it is commonly used by the U.S. silver market as an indicator of the value of silver and is permitted to be used under the Trust Agreement. The use of an indicator of the value of silver bullion other than the LBMA Silver Price could result in materially different fair value pricing of the silver held by the Trust, and as such, could result in different cost or market adjustments or in different redemption value adjustments of the outstanding redeemable capital Shares. Having valued the silver held by the Trust, the Trustee then subtracts all accrued fees, expenses and other liabilities of the Trust from the total value of the silver and other assets held by the Trust. The result is the net asset value of the Trust. The Trustee computes NAV by dividing the net asset value of the Trust by the number of Shares outstanding on the date the computation is made.   Liquidity   The Trust is not aware of any trends, demands, conditions or events that are reasonably likely to result in material changes to its liquidity needs. In exchange for a 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 Trust’s only source of liquidity is its sales of silver.   Critical Accounting Policies   The financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles 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. Below is a description of the valuation of silver bullion, a critical accounting policy that the Trust believes is important to understanding its results of operations and financial position. In addition, please refer to Note 2 to the financial statements included in this report for further discussion of the Trust’s accounting policies.   Valuation of Silver Bullion   Fair value of the silver bullion is based on the LBMA Silver Price.   17 Table of Contents   There are other indicators of the value of silver bullion that are available that could be different than that chosen by the Trust. The LBMA Silver Price is used by the Trust because it is commonly used by the U.S. silver market as an indicator of the value of silver and is permitted to be used under the Trust Agreement. The use of an indicator of the value of silver bullion other than the LBMA Silver Price could result in materially different fair value pricing of the silver in the Trust, and as such, could result in different cost or market adjustments or in different redemption value adjustments of the outstanding redeemable capital Shares.   The following chart shows the daily LBMA Silver Price, as applicable, for the periods from December 2015 through December 2020:     Silver Prices (December 2015 - December 2020)     Results of Operations   The Year Ended December 31, 2020   The Trust’s net asset value grew from $6,540,758,565 at December 31, 2019 to $14,791,792,720 at December 31, 2020, a 126.15% increase for the year. The increase in the Trust’s net asset value resulted primarily from an increase in the number of outstanding Shares, which rose from 388,100,000 Shares at December 31, 2019 to 600,950,000 Shares at December 31, 2020, a consequence of 398,700,000 Shares (7,974 Baskets) being created and 185,850,000 Shares (3,717 Baskets) being redeemed during the year. The increase in the Trust’s net asset value also benefitted from an increase in the price of silver, which rose 46.76% from $18.05 at December 31, 2019 to $26.49 (the LBMA Silver Price at December 31, 2020).   The 46.05% increase in the Trust’s NAV from $16.85 at December 31, 2019 to $24.61 at December 31, 2020 was directly related to the 46.76% increase in the price of silver.   The Trust’s NAV increased slightly less than the price of silver on a percentage basis due to the Sponsor’s fees, which were $50,643,408 for the year, or 0.50% of the Trust’s average weighted assets of $10,151,255,819 during the year. The NAV of $26.89 on September 1, 2020 was the highest during the year, compared with a low during the year of $11.20 on March 19, 2020.   18 Table of Contents   Net increase in net assets resulting from operations for the year ended December 31, 2020 was $4,954,538,782, resulting from an unrealized gain on investment in silver bullion of $4,075,854,334, a net realized gain of $7,414,067 from investment in silver bullion sold to pay expenses and a net realized gain of $921,913,789 on silver bullion distributed for the redemption of Shares, partially offset by a net investment loss of $50,643,408. Other than the Sponsor’s fees of $50,643,408, the Trust had no expenses during the year ended December 31, 2020.   The Year Ended December 31, 2019   The Trust’s net asset value grew from $4,904,036,623 at December 31, 2018 to $6,540,758,565 at December 31, 2019, a 33.37% increase for the year. The increase in the Trust’s net asset value resulted primarily from an increase in the price of silver, which rose 16.68% from $15.47 at December 31, 2018 to $18.05 (the LBMA Silver Price at December 31, 2019). The increase in the Trust’s net asset value also benefitted from an increase in the number of outstanding Shares, which rose from 337,850,000 Shares at December 31, 2018 to 388,100,000 Shares at December 31, 2019, a consequence of 120,750,000 Shares (2,415 Baskets) being created and 70,500,000 Shares (1,410 Baskets) being redeemed during the year.   The 16.05% increase in the Trust’s NAV from $14.52 at December 31, 2018 to $16.85 at December 31, 2019 is directly related to the 16.68% increase in the price of silver.   The Trust’s NAV increased slightly less than the price of silver on a percentage basis due to the Sponsor’s fees, which were $27,765,547 for the year, or 0.50% of the Trust’s average weighted assets of $5,557,559,388 during the year. The NAV of $18.06 on September 4, 2019 was the highest during the year, compared with a low during the year of $13.46 on May 29, 2019.   Net increase in net assets resulting from operations for the year ended December 31, 2019 was $901,933,450, resulting from an unrealized gain on investment in silver bullion of $984,801,878, partially offset by a net investment loss of $27,765,547, a net realized loss of $2,188,446 from investment in silver bullion sold to pay expenses and a net realized loss of $52,914,435 on silver bullion distributed for the redemption of Shares. Other than the Sponsor’s fees of $27,765,547, the Trust had no expenses during the year ended December 31, 2019.   The Year Ended December 31, 2018   The Trust’s net asset value fell from $5,405,193,851 at December 31, 2017 to $4,904,036,623 at December 31, 2018, a 9.27% decrease for the year. The decrease in the Trust’s net asset value resulted primarily from a decrease in the price of silver, which fell 8.30% from $16.87 at December 31, 2017 to $15.47 (the LBMA Silver Price at December 31, 2018). The decrease in the Trust’s net asset value was also affected by a decrease in the number of outstanding Shares, which fell from 339,750,000 Shares at December 31, 2017 to 337,850,000 Shares at December 31, 2018, a consequence of 64,000,000 Shares (1,280 Baskets) being created and 65,900,000 Shares (1,318 Baskets) being redeemed during the year.   The 8.74% decline in the Trust’s NAV from $15.91 at December 31, 2017 to $14.52 at December 31, 2018 was directly related to the 8.30% decrease in the price of silver.   The Trust’s NAV decreased slightly more than the price of silver on a percentage basis due to the Sponsor’s fees, which were $25,335,523 for the year, or 0.50% of the Trust’s average weighted assets of $5,065,663,223 during the year. The NAV of $16.52 on January 25, 2018 was the highest during the year, compared with a low during the year of $13.12 on November 14, 2018.   Net decrease in net assets resulting from operations for the year ended December 31, 2018 was $472,326,421, resulting from a net investment loss of $25,335,523, a net realized loss of $3,730,211 from investment in silver bullion sold to pay expenses, a net realized loss of $132,049,264 on silver bullion distributed for the redemption of Shares and an unrealized loss on investment in silver bullion of $311,211,423. Other than the Sponsor’s fees of $25,335,523, the Trust had no expenses during the year ended December 31, 2018.     Item 7A. Quantitative and Qualitative Disclosures About Market Risk.   Not applicable.   19 Table of Contents