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iShares Silver Trust – ‘10-Q’ for 6/30/20

On:  Wednesday, 8/5/20, at 1:53pm ET   ·   For:  6/30/20   ·   Accession #:  1437749-20-16632   ·   File #:  1-32863

Previous ‘10-Q’:  ‘10-Q’ on 5/7/20 for 3/31/20   ·   Next:  ‘10-Q’ on 11/5/20 for 9/30/20   ·   Latest:  ‘10-Q’ on 5/8/24 for 3/31/24   ·   3 References:   To:  iShares Silver Trust – ‘S-3ASR’ on 7/1/20 To:  iShares Silver Trust – ‘8-K’ on / for 12/22/16 To:  iShares Silver Trust – ‘S-3ASR’ on 12/30/08 

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  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 8/05/20  iShares Silver Trust              10-Q        6/30/20   41:2.2M                                   RDG Filings/FA

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report                                    HTML    288K 
 2: EX-31.1     Certification -- §302 - SOA'02                      HTML     18K 
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                (Parentheticals)                                                 
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19: R8          Note 1 - Organization                               HTML     19K 
20: R9          Note 2 - Significant Accounting Policies            HTML     85K 
21: R10         Note 3 - Trust Expenses                             HTML     15K 
22: R11         Note 4 - Related Parties                            HTML     16K 
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27: R16         Note 9 - Investment Valuation                       HTML     21K 
28: R17         Significant Accounting Policies (Policies)          HTML     94K 
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                (Details)                                                        
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                (Details) (Parentheticals)                                       
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                Activity in Silver Bullion (Details)                             
36: R25         Note 3 - Trust Expenses (Details Textual)           HTML     16K 
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Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

iShares® Silver Trust

Statements of Assets and Liabilities (Unaudited)

At June 30, 2020 and December 31, 2019

See notes to financial statements.

iShares®Silver Trust

Statements of Operations (Unaudited)

For the three and six months ended June 30, 2020 and 2019

See notes to financial statements.

iShares® Silver Trust

Statements of Changes in Net Assets (Unaudited)

For the three and six months ended June 30, 2020

See notes to financial statements.

iShares® Silver Trust

Statements of Changes in Net Assets (Unaudited)

For the three and six months ended June 30, 2019

See notes to financial statements.

iShares® Silver Trust

Statements of Cash Flows (Unaudited)

For the six months ended June 30, 2020 and 2019

See notes to financial statements.

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 financial statements included in Item 1 of Part I of this Form 10‑Q. 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. Except as required by applicable disclosure laws, 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 iShares Silver Trust (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 Bank of New York Mellon (the “Trustee”) acting as trustee pursuant to the Second Amended and Restated Depositary Trust Agreement (the “Trust Agreement”) between the Trustee and iShares Delaware Trust Sponsor LLC, the sponsor of the Trust (the “Sponsor”). The Trust issues units of beneficial interest (“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 Bullion; 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 ICE Benchmark Administration (“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 held by the Trust and other assets of 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. 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, is provided in the section entitled “Valuation of Silver Bullion; Computation of Net Asset Value” above. In addition, please refer to Note 2 to the financial statements included in this report for further discussion of the Trust’s accounting policies.

Results of Operations

The Quarter Ended June 30, 2020

The Trust’s net asset value grew from $5,505,117,093 at March 31, 2020 to $8,883,456,887 at June 30, 2020, a 61.37% increase. The increase in the Trust’s net asset value resulted primarily from an increase in the LBMA Silver Price, which rose 28.14% from $13.93 at March 31, 2020 to $17.85 at June 30, 2020. The Trust’s net asset value also benefited from an increase in number of outstanding Shares, which rose from 423,700,000 Shares at March 31, 2020 to 534,350,000 Shares at June 30, 2020, a consequence of 127,350,000 Shares (2,547 Baskets) being created and 16,700,000 Shares (334 Baskets) being redeemed during the quarter.

The 27.94% increase in the Trust’s NAV from $12.99 at March 31, 2020 to $16.62 at June 30, 2020 is directly related to the 28.14% 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 $8,953,394 for the quarter, or 0.12% of the Trust’s average weighted assets of $7,239,298,886 during the quarter. The NAV of $17.03 on June 2, 2020 was the highest during the quarter, compared with a low during the quarter of $13.07 on April 1, 2020.

Net increase in net assets resulting from operations for the quarter ended June 30, 2020 was $1,666,597,884, resulting primarily from an unrealized gain on investment in silver bullion of $1,686,694,147, offset by a net realized loss of $10,559,630 on silver bullion distributed for the redemption of Shares, a net investment loss of $8,953,394, and a net realized loss of $583,239 from silver bullion sold to pay expenses. Other than the Sponsor’s fees of $8,953,394, the Trust had no expenses during the quarter.

The Six-Month Period Ended June 30, 2020

The Trust’s net asset value grew from $6,540,758,565 at December 31, 2019 to $8,883,456,887 at June 30, 2020, a 35.82% increase. 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 534,350,000 Shares at June 30, 2020, a consequence of 193,500,000 Shares (3,870 Baskets) being created and 47,250,000 Shares (945 Baskets) being redeemed during the period. The increase in the Trust’s net asset value was partially offset by from a decrease in the LBMA Silver Price, which fell 1.11% from $18.05 at December 31, 2019 to $17.85 at June 30, 2020.

The 1.36% decline in the Trust’s NAV from $16.85 at December 31, 2019 to $16.62 at June 30, 2020 is directly related to the 1.11% 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 $16,630,343 for the period, or 0.25% of the Trust’s average weighted assets of $6,701,693,767 during the period. The NAV of $17.52 on February 24, 2020 was the highest during the period, compared with a low during the period of $11.20 on March 19, 2020.

Net increase in net assets resulting from operations for the six months ended June 30, 2020 was $226,138,562, resulting primarily from an unrealized gain on investment in silver bullion of $263,482,483, offset by a net realized loss of $20,204,979 on silver bullion distributed for the redemption of Shares, a net investment loss of $16,630,343 and a net realized loss of $508,599 from silver bullion sold to pay expenses. Other than the Sponsor’s fees of $16,630,343, the Trust had no expenses during the period.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures.

The duly authorized officers of the Sponsor performing functions equivalent to those a principal executive officer and principal financial officer of the Trust would perform if the Trust had any officers, with the participation of the Trustee, have evaluated the effectiveness of the Trust’s disclosure controls and procedures, and have concluded that the disclosure controls and procedures of the Trust were effective as of the end of the period covered by this report to provide reasonable assurance that information required to be disclosed in the reports that the Trust files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to the duly authorized officers of the Sponsor performing functions equivalent to those a principal executive officer and principal financial officer of the Trust would perform if the Trust had any officers, as appropriate to allow timely decisions regarding required disclosure.

There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures.

There were no changes in the Trust’s internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Trust’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors

Except as set forth below, there have been no material changes to the Risk Factors last reported under Part I, Item 1A of the registrant’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the Securities and Exchange Commission on February 27, 2020.

The Trust may be negatively impacted by the effects of the spread of illnesses or other public health emergencies on the global economy and the markets and service providers relevant to the performance of the Trust.

An outbreak of infectious respiratory illness caused by a novel coronavirus known as COVID-19 was first detected in China in December 2019 and has now been spread globally. This outbreak has resulted in travel restrictions, closed international borders, enhanced health screenings at ports of entry and elsewhere, disruption of and delays in healthcare service preparation and delivery, prolonged quarantines, event cancellations, supply chain disruptions, and lower consumer demand, layoffs, defaults and other significant economic impacts, as well as general concern and uncertainty. The impact of this outbreak has adversely affected the economies of many nations and the entire global economy and may impact individual issuers and capital markets in ways that cannot necessarily be foreseen. Other infectious illness outbreaks that may arise in the future could have similar impacts. Public health crises caused by the outbreak may exacerbate other pre-existing political, social and economic risks in certain countries or globally.

The COVID-19 outbreak may continue to have serious negative effects on social, economic and financial systems, including significant uncertainty and volatility in the financial markets. For instance, the suspension of operations of mines, refineries and vaults that extract, produce or store silver, restrictions on travel that delay or prevent the transportation of silver, and an increase in demand for silver may disrupt supply chains for silver, which could cause secondary market spreads to widen and compromise our ability to settle transactions on time. Any inability of the Trust to issue or redeem Shares or the Custodian or any sub-custodian to receive or deliver silver as a result of the outbreak will negatively affect the Trust’s operations.

The duration of the outbreak and its effects cannot be determined with certainty. A prolonged outbreak could result in an increase of the costs of the Trust, affect liquidity in the market for silver as well as the correlation between the price of the Shares and the net asset value of the Trust, any of which could adversely affect the value of your Shares. In addition, the outbreak could also impair the information technology and other operational systems upon which the Trust’s service providers, including the Sponsor, the Trustee and the Custodian, rely, and could otherwise disrupt the ability of employees of the Trust’s service providers to perform essential tasks on behalf of the Trust. Governmental and quasi-governmental authorities and regulators throughout the world have in the past responded to major economic disruptions with a variety of fiscal and monetary policy changes, including, but not limited to, direct capital infusions into companies, new monetary programs and lower interest rates. An unexpected or quick reversal of these policies, or the ineffectiveness of these policies, is likely to increase volatility in the market for silver, which could adversely affect the price of the Shares.

Further, the outbreak could interfere with or prevent the operation of the electronic auction hosted by IBA to determine the LBMA Silver Price, which the Trustee uses to value the silver held by the Trust and calculate the net asset value of the Trust. The outbreak could also cause the closure of futures exchanges, which could eliminate the ability of Authorized Participants to hedge purchases of Baskets, increasing trading costs of Shares and resulting in a sustained premium or discount in the Shares. Each of these outcomes would negatively impact the Trust.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

a) None.

b) Not applicable.

c) 16,700,000 Shares (334 Baskets) were redeemed during the quarter ended June 30, 2020.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Not applicable.

Item 6. Exhibits

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned in the capacities* indicated thereunto duly authorized.

iShares Delaware Trust Sponsor LLC,
Sponsor of the iShares Silver Trust (registrant)

Paul Lohrey
Director, President and Chief Executive Officer
(Principal executive officer)

Mary Cronin
Director and Chief Financial Officer
(Principal financial and accounting officer)

*    The registrant is a trust and the persons are signing in their respective capacities as officers of iShares Delaware Trust Sponsor LLC, the Sponsor of the registrant.

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Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘10-Q’ Filing		Date		Other Filings
Filed on:		8/5/20
		7/31/20
For Period end:		6/30/20
		6/2/20
		4/1/20
		3/31/20		10-Q
		3/19/20
		2/27/20		10-K
		2/24/20
		12/31/19		10-K
		6/30/19		10-Q
		3/31/19		10-Q
		12/31/18		10-K
		12/22/16		8-K
		4/21/06
				List all Filings

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3 Previous Filings that this Filing References

As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 7/01/20 iShares Silver Trust S-3ASR 7/01/20 5:743K RDG Filings/FA 12/22/16 iShares Silver Trust 8-K:1,3,9 12/22/16 4:741K RDG Filings/FA 12/30/08 iShares Silver Trust S-3ASR 12/30/08 8:1M Donnelley … Solutions/FA

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Filing Submission 0001437749-20-016632   –   Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

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