XML 26 R12.htm IDEA: XBRL DOCUMENT v2.4.0.6
Accounting Policies, by Policy (Policies)
 6 Months Ended
Jun. 30, 2012
Valuatio Of Silver [Policy Text Block] 2.1. Valuation of Silver Silver is held by HSBC Bank USA, N.A. (the "Custodian") on behalf of the Trust and is valued, for financial statement purposes, at the lower of cost or market. The cost of silver is determined according to the average cost method and the market value is based on the London Fix used to determine the net asset value (the "NAV") of the Trust. Realized gains and losses on transfers of silver, or silver distributed for the redemption of Shares, are calculated on a trade date basis using average cost. The London Fix price for silver is set by three market making members of the London Bullion Market Association at approximately 12:00 noon London Time, on each working day. Once the value of silver has been determined, the NAV is computed by the Trustee by deducting all accrued fees and other liabilities of the Trust, including the remuneration due to the Sponsor (the "Sponsor's Fee"), from the fair value of the silver and all other assets held by the Trust. The table below summarizes the unrealized gains or losses on the Trust's silver holdings as of June 30, 2012 and December 31, 2011: June 30, 2012 December 31, 2011 Investment in silver - average cost $ 483,177,486 $ 524,562,808 Unrealized gain / (loss) on investment in silver (5,273,871 ) 18,274,489 Investment in silver - market value $ 477,903,615 $ 542,837,297 The Trust recognizes the diminution in value of the investment in silver which arises from market declines on an interim basis. Increases in the value of the investment in silver through market price recoveries in later interim periods of the same fiscal year are recognized in the later interim period. Increases in value recognized on an interim basis may not exceed the previously recognized diminution in value. The per Share amount of silver exchanged for a purchase or redemption is calculated daily by the Trustee, using the London Fix 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, to cover expenses and liabilities and any losses that may have occurred.
Receivable And Payable [Policy Text Block] 2.2. Silver Receivable and Payable Silver receivable or payable represents the quantity of silver covered by contractually binding orders for the creation or redemption of Shares respectively, where the silver has not yet been transferred to or from the Trust's account. Generally, ownership of the silver is transferred within three business days of the trade date. Silver receivable or payable at June 30, 2012 and December 31, 2011 is set out below: June 30, 2012 December 31, 2011 Silver receivable $ - $ - Silver payable $ - $ 8,392,292
Creations And Redemptions Of Shares [Policy Text Block] 2.3. Creations and Redemptions of Shares The Trust expects to create and redeem Shares from time to time, but only in one or more Baskets. The Trust issues Shares in Baskets to Authorized Participants on an ongoing basis. Individual investors cannot purchase or redeem Shares in direct transactions with the Trust. An Authorized Participant is a person who (1) is a registered broker-dealer or other securities market participant such as a bank or other financial institution which is not required to register as a broker-dealer to engage in securities transactions, (2) is a participant in The Depository Trust Company, (3) has entered into an Authorized Participant Agreement with the Trustee and the Sponsor, and (4) has established an Authorized Participant Unallocated Account with the Trust's Custodian or other silver clearing bank. An Authorized Participant Agreement is an agreement entered into by each Authorized Participant, the Sponsor and the Trustee which provides the procedures for the creation and redemption of Baskets and for the delivery of the silver required for such creations and redemptions. An Authorized Participant Unallocated Account is an unallocated silver account established with the Custodian or a silver clearing bank by an Authorized Participant. The creation and redemption of Baskets is only made in exchange for the delivery to the Trust or the distribution by the Trust of the amount of silver represented by the Baskets being created or redeemed, the amount of which is based on the combined NAV of the number of Shares included in the Baskets being created or redeemed determined on the day the order to create or redeem Baskets is properly received. The amount of bullion represented by the Baskets created or redeemed can only be settled to the nearest 1/1000th of an ounce. As a result, the value attributed to the creation or redemption of Shares may differ from the value of bullion to be delivered or distributed by the Trust. In order to ensure that the correct metal is available at all times to back the Shares, the Sponsor accepts an adjustment to its management fees in the event of any shortfall or excess. For each transaction, this amount is not more than 1/1000th of an ounce. Authorized Participants may, on any business day, place an order with the Trustee to create or redeem one or more Baskets. The typical settlement period for Shares is three business days. In the event of a trade date at period end, where a settlement is pending, a respective account receivable and/or payable will be recorded. When silver is exchanged in settlement of a redemption, it is considered a sale of silver for financial statement purposes. The Shares of the Trust are classified as "Redeemable Shares" for financial statement purposes, since they are subject to redemption at the option of Authorized Participants. Outstanding Shares are reflected at redemption value, which represents the maximum obligation (based on NAV per Share), with the difference from historical cost recorded as an offsetting amount to retained earnings. When silver is exchanged in settlement of a redemption, a gain or loss in the amount of the difference between the market value on the trade date and the historical cost is recorded through the Condensed Statement of Operations. Changes in the Shares for the six months ended June 30, 2012 and for the year ended December 31, 2011 are set out below: Six MonthsEndedJune 30, 2012 YearEndedDecember 31, 2011 Number of redeemable Shares Opening balance 19,100,000 16,700,000 Creations 800,000 8,900,000 Redemptions (2,100,000 ) (6,500,000 ) Closing balance 17,800,000 19,100,000 Redeemable Shares Opening balance $ 534,304,845 $ 509,311,012 Creations 24,396,727 342,215,198 Redemptions (61,435,552 ) (238,992,879 ) Adjustment to redemption value (19,478,763 ) (78,228,486 ) Closing balance $ 477,787,257 $ 534,304,845 Redemption value per Share at period end $ 26.84 $ 27.97
Revenue Recognition, Policy [Policy Text Block] 2.4. Revenue Recognition Policy The primary expense of the Trust is the Sponsor's Fee, which is paid by the Trust through in-kind transfers of silver to the Sponsor. With respect to expenses not otherwise assumed by the Sponsor, the Trustee will, at the direction of the Sponsor or in its own discretion, sell the Trust's silver as necessary to pay these expenses. When selling silver to pay expenses, the Trustee will endeavor to sell the smallest amounts of silver needed to pay these expenses in order to minimize the Trust's holdings of assets other than silver. Unless otherwise directed by the Sponsor, when selling silver the Trustee will endeavor to sell at the price established by the London Fix. The Trustee will place orders with dealers (which may include the Custodian) through which the Trustee expects to receive the most favorable price and execution of orders. The Custodian may be the purchaser of such silver only if the sale transaction is made at the next London Fix, or such other publicly available price that the Sponsor deems fair, in each case as set following the sale order. A gain or loss is recognized based on the difference between the selling price and the average cost of the silver sold. Neither the Trustee nor the Sponsor is liable for depreciation or loss incurred by reason of any sale.
Income Tax, Policy [Policy Text Block] 2.5. Income Taxes The Trust is classified as a "grantor trust" for U.S. federal income tax purposes. As a result, the Trust itself will not be subject to U.S. federal income tax. Instead, the Trust's income and expenses will "flow through" to the Shareholders, and the Trustee will report the Trust's proceeds, income, deductions, gains, and losses to the Internal Revenue Service on that basis. The Sponsor has evaluated whether or not there are uncertain tax positions that require financial statement recognition and has determined that no reserves for uncertain tax positions are required as of June 30, 2012 and December 31, 2011.
Investment, Policy [Policy Text Block] 2.6. Investment in Silver Changes in ounces of silver and the respective values for the six months ended June 30, 2012 and for the year ended December 31, 2011 are set out below: Six MonthsEndedJune 30, 2012 YearEndedDecember 31, 2011 Ounces of silver Opening balance 19,263,211.3 16,432,768.8 Creations 793,368.9 9,048,980.8 Redemptions (excluding silver payable at December 31, 2011 - 297,810.2) (2,380,571.6 ) (6,164,137.0 ) Transfers of silver (28,164.6 ) (54,401.3 ) Closing balance 17,647,844.0 19,263,211.3 Investment in silver (lower of cost or market) Opening balance $ 524,562,808 $ 329,357,195 Creations 24,396,727 348,314,831 Redemptions (excluding silver payable at December 31, 2011 - $8,109,767*) (65,013,440 ) (151,789,835 ) Transfers of silver (768,609 ) (1,319,383 ) Unrealized loss on investment in silver (5,273,871 ) - Closing balance $ 477,903,615 $ 524,562,808 * Market Value of silver payable at December 31, 2011 - $8,392,292
Expenses [Policy Text Block] 2.7. Expenses The Trust will transfer silver to the Sponsor to pay the Sponsor's Fee that will accrue daily at an annualized rate equal to 0.45% of the adjusted net asset value ("ANAV") of the Trust, paid monthly in arrears. Presently, the Sponsor is continuing to waive a portion of its fee and reduce the Sponsor's Fee to 0.30% (which it has done since the Date of Inception). The Sponsor has agreed to assume administrative and marketing expenses incurred by the Trust, including the Trustee's monthly fee and out-of-pocket expenses, the Custodian's fee and the reimbursement of the Custodian's expenses, exchange listing fees, United States Securities and Exchange Commission (the "SEC") registration fees, printing and mailing costs, audit fees and certain legal expenses. For the three months ended June 30, 2012 and June 30, 2011 the Sponsor's Fee, net of fees waived by the Sponsor, was $397,875 and $520,410, respectively. For the six months ended June 30, 2012 and June 30, 2011 the Sponsor's Fee, net of fees waived by the Sponsor, was $848,762 and $930,293, respectively. At June 30, 2012 and at December 31, 2011, the fees payable to the Sponsor were $116,358 and $140,160, respectively. As a result of the waiver, fees waived for the three months ending June 30, 2012 and June 30, 2011 were $198,938 and $260,205, respectively. Fees waived for the six months ending June 30, 2012 and June 30, 2011 were $424,381 and $465,147, respectively.
Subsequent Events, Policy [Policy Text Block] 2.8. Subsequent Events In accordance with the provisions set forth in Financial Accounting Standards Board Accounting Standards Codification 855-10, Subsequent Events , the Trust's management has evaluated the possibility of subsequent events existing in the Trust's financial statements through the filing date. During this period, no material subsequent events were identified.