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Note 2 - Summary of Significant Accounting Policies | 9 Months Ended
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Sep. 30, 2014
Accounting Policies [Abstract] |
Significant Accounting Policies [Text Block] | 2 - Summary of Significant Accounting Policies
A. | Basis of Accounting
The following is a summary of significant accounting policies consistently followed by the Trust in the preparation of its financial statements in conformity with U.S. GAAP. The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates and these differences could be material.
B. | Investment Company Status
In June 2013, the FASB issued Accounting Standards Update 2013-08, Investment Companies – Amendments to the Scope, Measurement, and Disclosure Requirements (“ASU 2013-08”). ASU 2013-08 is an update to Topic 946 that provides guidance to assess whether an entity is an investment company, and gives additional measurement and disclosure requirements for an investment company. ASU 2013-08 is effective for interim and annual periods beginning after December 15, 2013 and is required to be applied prospectively. Assessment of the Trust’s status as an investment company under ASU 2013-08 determined that the Trust meets all of the fundamental characteristics of an investment company for accounting purposes. As a result, effective January 1, 2014, the Trust qualifies as an investment company solely for accounting purposes pursuant to the accounting and reporting guidance under Topic 946, but is not registered, and is not required to be registered, under the Investment Company Act. As a result of the prospective application at ASU 2013-08, certain disclosures required by Topic 946 are only presented for periods beginning January 1, 2014. Financial statements and disclosures for periods prior to January 1, 2014 will continue to be presented in their previously reported form, however certain captions have been changed. The primary changes to the financial statements resulting from the adoption of ASU 2013-08 and application of Topic 946 include:
| ● | reporting of silver bullion at fair value on the Balance Sheet, which was previously reported at the lower of cost or market;
| ● | recognition of the change in unrealized appreciation or depreciation on investment in silver bullion is reported on the Income Statement, which was previously reported as an “Adjustment of redeemable capital Shares to redemption value” on the Statement of Changes in Shareholders’ Equity (Deficit);
| ● | Shares of the Trust are classified as “Shareholders’ equity,” representing the net asset value on the Balance Sheet, which was previously classified as “Redeemable capital Shares.” An adjustment was recorded at January 1, 2014 to reclassify the balance of redeemable capital Shares at December 31, 2013 into shareholders’ equity as follows (all balances in 000’s):
|  | Balance at December 31, 2013 |  |  | ASU 2013-08 Transition Adjustment |  |  | Balance at January 1, 2014 |
Redeemable capital Shares |  | $ | 6,240,747 |  |  | $ | (6,240,747 | ) |  | $ | — |
Shareholders’ equity |  |  | — |  |  |  | 6,240,747 |  |  |  | 6,240,747 |
| ● | the addition of a Schedule of Investments and a Financial Highlights note to the financial statements.
ASU 2013-08 prescribes that an entity that qualifies as an investment company as a result of an assessment of its status shall account for the effect of the change in status prospectively from the date of the change in status and shall recognize any impact as a cumulative effect adjustment to the net asset value at the beginning of the period. No cumulative effect adjustment to net asset value was required to be recorded as a result of adopting ASU 2013-08 because the fair value of silver bullion held by the Trust equaled the cost of silver bullion held by the Trust at December 31, 2013 and therefore there was no accumulated shareholders’ equity (deficit).
C. | Silver Bullion
JPMorgan Chase Bank N.A., London branch (the “Custodian”), is responsible for the safekeeping of silver bullion owned by the Trust. Beginning January 1, 2014, the silver bullion held by the Trust is valued at fair value. Prior to January 1, 2014, the silver bullion held by the Trust was valued at the lower of cost or market, using the average cost method. In applying the lower of cost or market valuation, if the fair value of the silver bullion held was lower than its average cost during the interim periods, an adjustment (“market value reserve”) to cost was recorded by the Trust to reflect fair value. If the fair value of the silver bullion held increased subsequent to the market value reserve being recorded, a “market value recovery” was recorded during an interim period in the same fiscal year that the market value reserve had been recorded by the Trust. The market value recovery recorded at an interim period could not exceed the previously recognized market value reserve. At the end of the Trust’s fiscal year, management made a determination as to whether the reserve was recovered or whether the cost basis of silver bullion was written down. The market value reserve, market value recovery and inventory write down each were reported as a component of “Adjustment to silver bullion inventory.” Fair value of the silver bullion is based on the price per ounce of silver determined by the CME Group at approximately 12:00 noon, London time, and announced by Thomson Reuters shortly thereafter on each day that the London silver market is open for business (“LBMA Silver Price”). Prior to August 15, 2014, fair value of the silver bullion was based on the price for an ounce of silver set each working day by three market making members of The London Bullion Market Association (“London Fix”). Gain or loss on sales of silver bullion is calculated on a trade date basis using the average cost method. The following table summarizes activity in silver bullion for the three months ended September 30, 2014 (all balances in 000’s):
|  | Ounces |  |  | Average Cost |  |  | Fair Value |  |  | Realized Gain (Loss) |
Beginning balance |  |  | 322,872.9 |  |  | $ | 6,310,696 |  |  | $ | 6,738,358 |  |  | $ | — |
Silver bullion contributed |  |  | 30,743.4 |  |  |  | 581,957 |  |  |  | 581,957 |  |  |  | — |
Silver bullion distributed |  |  | (3,118.6 | ) |  |  | (60,967 | ) |  |  | (62,616 | ) |  |  | 1,649 |
Silver bullion sold |  |  | (411.3 | ) |  |  | (8,041 | ) |  |  | (8,297 | ) |  |  | 256 |
Net realized gain on silver bullion |  |  | — |  |  |  | — |  |  |  | 1,905 |  |  |  | — |
Net change in unrealized appreciation/depreciation on investment in silver bullion |  |  | — |  |  |  | — |  |  |  | (1,261,329 | ) |  |  | — |
Ending balance |  |  | 350,086.4 |  |  | $ | 6,823,645 |  |  | $ | 5,989,978 |  |  | $ | 1,905 |
The following table summarizes activity in silver bullion for the nine months ended September 30, 2014 (all balances in 000’s):
|  | Ounces |  |  | Average Cost |  |  | Fair Value |  |  | Realized Gain (Loss) |
Beginning balance |  |  | 320,177.8 |  |  | $ | 6,243,467 |  |  | $ | 6,243,467 |  |  | $ | — |
Silver bullion contributed |  |  | 60,841.0 |  |  |  | 1,184,514 |  |  |  | 1,184,514 |  |  |  | — |
Silver bullion distributed |  |  | (29,693.0 | ) |  |  | (580,118 | ) |  |  | (597,071 | ) |  |  | 16,953 |
Silver bullion sold |  |  | (1,239.4 | ) |  |  | (24,218 | ) |  |  | (24,582 | ) |  |  | 364 |
Net realized gain on silver bullion |  |  | — |  |  |  | — |  |  |  | 17,317 |  |  |  | — |
Net change in unrealized appreciation/depreciation on investment in silver bullion |  |  | — |  |  |  | — |  |  |  | (833,667 | ) |  |  | — |
Ending balance |  |  | 350,086.4 |  |  | $ | 6,823,645 |  |  | $ | 5,989,978 |  |  | $ | 17,317 |
The following table summarizes activity in silver bullion for the three months ended September 30, 2013 (all balances in 000’s):
|  | Ounces |  |  | Average Cost |  |  | Fair Value |  |  | Realized Gain (Loss) |
Beginning balance |  |  | 318,481.3 |  |  | $ | 6,006,558 |  |  | $ | 6,006,558 |  |  | $ | — |
Silver contributed |  |  | 29,225.5 |  |  |  | 601,985 |  |  |  | 601,985 |  |  |  | — |
Silver distributed |  |  | (5,544.4 | ) |  |  | (139,664 | ) |  |  | (124,455 | ) |  |  | (15,209 | )
Silver sold |  |  | (411.1 | ) |  |  | (10,397 | ) |  |  | (8,642 | ) |  |  | (1,755 | )
Adjustment to silver bullion inventory(a) |  |  | — |  |  |  | 950,686 |  |  |  | — |  |  |  | — |
Adjustment for realized loss |  |  | — |  |  |  | — |  |  |  | (16,964 | ) |  |  | — |
Adjustment for unrealized gain on silver bullion |  |  | — |  |  |  | — |  |  |  | 950,686 |  |  |  | — |
Ending balance |  |  | 341,751.3 |  |  | $ | 7,409,168 |  |  | $ | 7,409,168 |  |  | $ | (16,964 | )
The following table summarizes activity in silver bullion for the nine months ended September 30, 2013 (all balances in 000’s):
|  | Ounces |  |  | Average Cost |  |  | Fair Value |  |  | Realized Gain (Loss) |
Beginning balance |  |  | 324,239.1 |  |  | $ | 8,135,003 |  |  | $ | 9,710,962 |  |  | $ | — |
Silver contributed |  |  | 78,089.7 |  |  |  | 1,992,277 |  |  |  | 1,992,277 |  |  |  | — |
Silver distributed |  |  | (59,304.6 | ) |  |  | (1,514,965 | ) |  |  | (1,501,375 | ) |  |  | (13,590 | )
Silver sold |  |  | (1,272.9 | ) |  |  | (32,389 | ) |  |  | (32,245 | ) |  |  | (144 | )
Adjustment to silver bullion inventory(b) |  |  | — |  |  |  | (1,170,758 | ) |  |  | — |  |  |  | — |
Adjustment for realized loss |  |  | — |  |  |  | — |  |  |  | (13,734 | ) |  |  | — |
Adjustment for unrealized loss on silver bullion |  |  | — |  |  |  | — |  |  |  | (2,746,717 | ) |  |  | — |
Ending balance |  |  | 341,751.3 |  |  | $ | 7,409,168 |  |  | $ | 7,409,168 |  |  | $ | (13,734 | )
(a) Previously reported as “market value recovery.” (b) Net value of amounts previously reported as “market value reserve” and “market value recovery.”
D. | Calculation of Net Asset Value
On each business day, as soon as practicable after 4:00 p.m. (New York time), the net asset value of the Trust is obtained by subtracting all accrued fees, expenses and other liabilities of the Trust from the fair 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 the net asset value per Share by dividing the net asset value of the Trust by the number of Shares outstanding on the date the computation is made.
E. | Offering of the Shares
Trust Shares are issued and redeemed continuously in aggregations of 50,000 Shares in exchange for silver bullion rather than cash. Individual investors cannot purchase or redeem Shares in direct transactions with the Trust. The Trust only transacts with registered broker-dealers that are eligible to settle securities transactions through the book-entry facilities of the Depository Trust Company and that have entered into a contractual arrangement with the Trust and the Sponsor governing, among other matters, the creation and redemption of Shares (such broker-dealers, the “Authorized Participants”). Holders of Shares of the Trust may redeem their Shares at any time acting through an Authorized Participant and in the prescribed aggregations of 50,000 Shares; provided, that redemptions of Shares may be suspended during any period while regular trading on NYSE Arca, Inc. (“NYSE Arca”) is suspended or restricted, or in which an emergency exists as a result of which delivery, disposal or evaluation of silver is not reasonably practicable. The per Share amount of silver exchanged for a purchase or redemption is calculated daily by the Trustee, using the LBMA Silver Price to calculate the silver amount in respect of any liabilities for which covering silver sales have not yet been made, and represents the per Share amount of silver held by the Trust, after giving effect to its liabilities, sales to cover expenses and liabilities and any losses that may have occurred. Prior to August 15, 2014, the Trustee used the London Fix to calculate the silver amount in respect of any liabilities for which covering silver sales have not yet been made. When silver bullion is exchanged in settlement of a redemption, it is considered a sale of silver bullion for accounting purposes. As noted in Note 2B above, beginning January 1, 2014, Shares of the Trust are classified as shareholders’ equity. The Trust reflects Shares issued and Shares redeemed within shareholders’ equity on trade date. Share activity was as follows (all balances in 000’s):
|  | Nine Months Ended September 30, 2014 |
|  | Shares |  |  | Amount |
Shares issued |  |  | 63,350 |  |  | $ | 1,184,514 |
Shares redeemed |  |  | (30,900 | ) |  |  | (597,071 | )
Net increase |  |  | 32,450 |  |  | $ | 587,443 |
Prior to January 1, 2014, Shares of the Trust were classified as “redeemable” for balance sheet purposes. Due to the expected continuing sales and redemption of capital stock and the three-day period for Share settlement, the Trust reflected redeemable capital Shares sold as a receivable, rather than as contra equity. Shares redeemed were reflected as a contra asset on the trade date. Outstanding Trust Shares were reflected at redemption value, which was the net asset value per Share at the period end date. Adjustments to redemption value were reflected in shareholders’ equity (deficit). Activity in redeemable capital Shares was as follows (all balances in 000’s):
|  | Year Ended December 31, 2013 |
|  | Shares |  |  | Amount |
Beginning balance |  |  | 335,000 |  |  | $ | 9,706,654 |
Shares issued |  |  | 85,750 |  |  |  | 2,096,484 |
Shares redeemed |  |  | (88,250 | ) |  |  | (2,031,644 | )
Redemption value adjustment |  |  | — |  |  |  | (3,530,747 | )
Ending balance |  |  | 332,500 |  |  | $ | 6,240,747 |
F. | Federal Income Taxes
The Trust is treated as a “grantor trust” for federal income tax purposes and, therefore, no provision for federal income taxes is required. Any interest, expenses, gains and losses are “passed through” to the holders of Shares of the Trust. The Sponsor has reviewed the tax positions as of September 30, 2014 and has determined that no provision for income tax is required in the Trust’s financial statements.

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