abrdn Silver ETF Trust - Quarter Report: 2010 March (Form 10-Q)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the Quarterly Period Ended March 31, 2010

or

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the Transition Period from ______ to ______

Commission File Number: 001-34412

ETFS SILVER TRUST

(Exact name of registrant as specified in its charter)


New York		26-4586763
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

c/o ETF Securities USA LLC
48 Wall Street, 11th Floor
New York, NY		10005
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code:
(212) 918-4954

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o No x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


	Large accelerated filer o	Accelerated filer o

	Non-accelerated filer x	Smaller reporting company o



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).		Yes o No x

7,800,000 shares outstanding as of May 14, 2010.

ETFS SILVER TRUST

FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2010

INDEX


PART I. FINANCIAL INFORMATION		1

Item 1.	Financial Statements (unaudited)	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	14
Item 4.	Controls and Procedures	14
Item 4T.	Controls and Procedures	14

PART II – OTHER INFORMATION		15

Item 1.	Legal Proceedings	15
Item 1A.	Risk Factors	15
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	15
Item 3.	Defaults Upon Senior Securities	15
Item 4.	(Removed and Reserved)	15
Item 5.	Other Information	16
Item 6.	Exhibits	17
SIGNATURES		18

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

ETFS SILVER TRUST

Condensed Statement of Condition (unaudited)

March 31, 2010


	March 31, 2010			December 31, 2009 (1)

ASSETS
Investment in silver (2)	$	110,890,215		$	139,223,967


Total Assets	$	110,890,215		$	139,223,967


LIABILITIES
Accounts payable to Sponsor, net of waiver (Note 2.6)	$	30,736		$	—


Total Liabilities	$	30,736		$	—


Redeemable Shares:
Shares at redemption value to investors (3)		125,740,329			156,066,265

Shareholders’ Deficit	$	(14,880,850	)	$	(16,842,298	)

Total Liabilities, Redeemable Shares & Shareholders’ Deficit	$	110,890,215		$	139,223,967


(1)	Derived from audited statement of condition as of December 31, 2009.
(2)	The market value of investment in silver at March 31, 2010 is $125,771,065 and at December 31, 2009, is $156,066,265.
(3)	Authorized share capital is unlimited and no par value per share. Shares issued and outstanding at March 31, 2010 are 7,200,000 and at December 31, 2009, 9,200,000.

See Notes to the Unaudited Condensed Financial Statements.

ETFS SILVER TRUST

Condensed Statement of Operations (unaudited)

For the three months ended March 31, 2010




	Three Months Ended March 31, 2010

REVENUES

Value of silver transferred to pay expenses	$	31,096
Cost of silver transferred to pay expenses		(29,693	)

Gain on silver transferred to pay expenses		1,403

Gain on silver distributed for the redemption of shares		7,331,209



Total Gain on silver	$	7,332,612


EXPENSES

Sponsor fees, net of waiver (Note 2.6)		61,832


Total Expenses		61,832


Net Gain from Operations	$	7,270,780


Net Gain per share	$	0.93


Weighted average number of shares		7,833,333

See Notes to the Unaudited Condensed Financial Statements.

ETFS SILVER TRUST

Condensed Statement of Cash Flows (unaudited)

For the three months ended March 31, 2010




	Three Months Ended March 31, 2010

INCREASE / (DECREASE) IN CASH FROM OPERATIONS:

Cash proceeds received from transfer of silver	$	—

Cash expenses paid		—


Increase in cash resulting from operations		—

Cash and cash equivalents at beginning of period		—


Cash and cash equivalents at end of period	$	—


SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:

Value of silver received for creation of shares	$	24,926,646


Value of silver distributed for redemption of shares - at average cost	$	53,230,705


	Three Months Ended March 31, 2010

RECONCILIATION OF NET GAIN/(LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES:

Net Gain from Operations	$	7,270,780
Adjustments to reconcile net gain to net cash provided by (used in) operating activities:
Decrease in silver assets		28,333,752
Increase in accounts payable to sponsor		30,736
Increase/(Decrease) in redeemable shares:
Creations		24,926,906
Redemptions		(60,562,174	)

Net cash provided by operating activities	$	—


Supplemental Disclosure of Non-Cash Item:
Value of silver transferred to pay expenses	$	31,096

See Notes to the Unaudited Condensed Financial Statements.

ETFS SILVER TRUST

Condensed Statement of Changes in Shareholders’ Deficit (unaudited)

For the three months ended March 31, 2010


	Three Months Ended March 31, 2010

Shareholders’ Deficit - Opening balance	$	(16,842,298	)
Net Gain for the period		7,270,780
Adjustment of Redeemable Shares to redemption value		(5,309,332	)

Shareholders’ Deficit – Closing balance	$	(14,880,850	)

See Notes to the Unaudited Condensed Financial Statements.

ETFS SILVER TRUST

Notes to the Unaudited Condensed Financial Statements


1.	Organization

	The ETFS Silver Trust (the “Trust”) is an investment trust formed on July 20, 2009 (“Date of Inception”), under New York law pursuant to a depositary trust agreement (the “Trust Agreement”) executed by ETF Securities USA LLC (the “Sponsor”) and the Bank of New York Mellon (the “Trustee”) at the time of the Trust’s organization. The Trust holds silver bullion and issues shares (“Shares”)¹ (in minimum blocks of 100,000 Shares, also referred to as “Baskets”) in exchange for deposits of silver and distributes silver in connection with the redemption of Baskets. The Sponsor is a Delaware limited liability company and a wholly-owned subsidiary of ETF Securities Limited, a Jersey, Channel Islands’ based company. The Trust is governed by the Trust Agreement. The investment objective of the Trust is for the Shares to reflect the performance of the price of silver, less the Trust’s expenses and liabilities. The Trust is designed to provide an individual owner of beneficial interests in the Shares (a “Shareholder”) an opportunity to participate in the silver market through an investment in securities. The fiscal year end for the Trust is December 31. The accompanying unaudited financial statements were prepared in accordance with the accounting principles generally accepted in the United States of America for interim financial information and with the instructions for the Form 10-Q. In the opinion of management of the Sponsor, all adjustments (which include normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows as of and for the three months ended March 31, 2010 have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These condensed financial statements should be read in conjunction with the Trust’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009. The results of operations for the three months ended March 31, 2010 are not necessarily indicative of the operating results for the full year.

2.	Significant Accounting Policies

	The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires those responsible for preparing financial statements to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from those estimates. The following is a summary of significant accounting policies followed by the Trust.

2.1.	Valuation of Silver

	Silver is held by HSBC Bank USA, National Association (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 Fix² used to determine the net asset value (“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.

¹Shares meaning units of fractional undivided beneficial interest in and ownership of the Trust which are issued by the Trust.

² The price for an ounce of 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.

ETFS SILVER TRUST

Notes to the Unaudited Condensed Financial Statements


2.	Significant Accounting Policies (continued)

2.1.	Valuation of Silver (continued)

	Once the value of silver has been determined, the NAV is computed by the Trustee by deducting all accrued fees, expenses and other liabilities of the Trust, including 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 March 31, 2010 and December 31, 2009:



	March 31, 2010		December 31, 2009


Investment in silver-average cost	$	110,890,215	$	139,223,967
Unrealized Gain on investment in silver		14,880,850		16,842,298

Investment in silver-market value	$	125,771,065	$	156,066,265


	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.

2.2.	Creations and Redemptions of Shares

	The Trust expects to create and redeem Shares from time to time, but only in one or more Baskets (a Basket equals a block of 100,000 Shares). The Trust issues Shares in Baskets to Authorized Participants³ on an ongoing basis. Individual investors cannot purchase or redeem Shares in direct transactions with the Trust. 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. 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 redemption, it is considered a sale of silver for financial statement purposes.

³A 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 (4) has established an Authorized Participant Unallocated Account with the Trust’s Custodian.

ETFS SILVER TRUST

Notes to the Unaudited Condensed Financial Statements


2.	Significant Accounting Policies (continued)

2.2.	Creations and Redemptions of Shares (continued)

	The Shares of the Trust are classified as “Redeemable Capital 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. Changes in the Shares for the three months ended March 31, 2010 and for the period from the Date of Inception through December 31, 2009 are as follows:


	Three Months Ended March 31, 2010			For the period July 20, 2009* through December 31, 2009


Number of Redeemable Shares:
Opening Balance		9,200,000			—
Creations		1,500,000			10,700,000
Redemptions		(3,500,000	)		(1,500,000	)

Closing Balance		7,200,000			9,200,000



	Three Months Ended March 31, 2010			For the period July 20, 2009* through December 31, 2009


Redeemable Shares:
Opening Balance	$	156,066,265		$	—
Creations		24,926,906			161,914,997
Redemptions		(60,562,174	)		(26,355,421	)
Adjustment to redemption value		5,309,332			20,506,689

Closing Balance	$	125,740,329		$	156,066,265

Redemption Value per Share at Period End	$	17.46		$	16.96

* Date of Inception.


2.3.	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.

ETFS SILVER TRUST

Notes to the Unaudited Condensed Financial Statements


2.	Significant Accounting Policies (continued)

2.3.	Revenue Recognition Policy (continued)

	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.

2.4.	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 Trust has adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740-10, Income Taxes (formerly FASB Interpretation Number 48, Accounting for Uncertainty in Income Taxes). The Sponsor has evaluated the application of ASC 740 to the Trust, to determine whether or not there are uncertain tax positions that require financial statement recognition. Based on this evaluation, the Trust has determined no reserves for uncertain tax positions are required to be recorded as a result of the application of ASC 740. As a result, no income tax liability or expense has been recorded in the accompanying financial statements.

2.5.	Investment in Silver

	The following represents the changes in ounces of silver and the respective values for the three months ended March 31, 2010 and for the period from the Date of Inception through December 31, 2009:


	Three Months Ended March 31, 2010			For the period July 20, 2009* through December 31, 2009

Ounces of Silver:
Opening Balance		9,185,771.9			—
Creations		1,497,395.4			10,696,328.6
Redemptions		(3,494,308.5	)		(1,498,198.4	)
Transfers of silver		(1,940.8	)		(12,358.3	)

Closing Balance		7,186,918.0			9,185,771.9



Investment in Silver (lower of cost or market):
Opening Balance	$	139,223,967		$	—
Creations		24,926,646			161,927,868
Redemptions		(53,230,705	)		(22,525,374	)
Transfers of silver		(29,693	)		(178,527	)


Closing Balance	$	110,890,215		$	139,223,967

* Date of Inception.

ETFS SILVER TRUST

Notes to the Unaudited Condensed Financial Statements


2.	Significant Accounting Policies (continued)

2.6.	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 intends to waive a portion of its fee and reduce the Sponsor’s Fee to 0.30% for the first year of the Trust’s operations beginning on the Trust’s inception date and ending July 20, 2010. 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. At March 31, 2010, the fees payable to the Sponsor were $30,736. For the three months ended March 31, 2010, the Sponsor waived $48,848.

2.7.	Organization Cost

	Expenses incurred in organizing the Trust and the initial offering of the Shares, including applicable SEC registration fees, of approximately $1,153,000, were borne directly by the Sponsor. The Trust will not be obligated to reimburse the Sponsor.

3.	Related Parties

	The Sponsor and the Trustee are considered to be related parties to the Trust. The Trustee’s fee is paid by the Sponsor and is not a separate expense of the Trust. The Trustee and the Custodian and their affiliates may from time to time act as Authorized Participants or purchase or sell silver or Shares for their own account, as agent for their customers and for accounts over which they exercise investment discretion.

4.	Concentration of Risk

	The Trust’s sole business activity is the investment in silver, and substantially all the Trust’s assets are holdings of silver which creates a concentration risk associated with fluctuations in the price of silver. Several factors could affect the price of silver, including: (i) global silver supply and demand, which is influenced by factors such as forward selling by silver producers, purchases made by silver producers to unwind silver hedge positions, central bank purchases and sales, and production and cost levels in major silver-producing countries; (ii) investors’ expectations with respect to the rate of inflation; (iii) currency exchange rates; (iv) interest rates; (v) investment and trading activities of hedge funds and commodity funds; and (vi) global or regional political, economic or financial events and situations. In addition, there is no assurance that silver will maintain its long-term value in terms of purchasing power in the future. In the event that the price of silver declines, the Sponsor expects the value of an investment in the Shares to decline proportionately. Each of these events could have a material affect on the Trust’s financial position and results of operations.

5.	Indemnification

	Under the Trust’s organizational documents, each of the Trustee (and its directors, employees and agents) and the Sponsor (and its members, managers, directors, officers, employees and affiliates) is indemnified by the Trust

ETFS SILVER TRUST

Notes to the Unaudited Condensed Financial Statements


5.	Indemnification (continued)

	against any liability, cost or expense it incurs without gross negligence, bad faith or willful misconduct on its part and without reckless disregard on its part of its obligations and duties under the Trust’s organizational documents. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred.

6.	Subsequent Events

	In accordance with the provisions set forth in FASB ASC 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.

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 with respect to the Trust’s financial conditions, operations, future performance and business. These statements can be identified by the use of the words Statements “may, “will”, “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 the Date of Inception. 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 will not hold or trade in commodity futures contracts, nor is it a commodity pool, 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, only in aggregations of 100,000 or integral multiples thereof. 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 NAV

	As of the London Fix on each day that the NYSE Arca is open for regular trading or as soon as practicable after 4:00 p.m. New York time on such day (the “Evaluation Time”), the Trustee values the silver held by the Trust and determines 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 London Fix, or, if no London Fix is made on such day or has not been announced by the Evaluation Time, the next most recent London Fix determined prior to the Evaluation Time is used, unless the Sponsor determines that such price is inappropriate as a basis for valuation. In the case this determination is made, the Sponsor will identify an alternative basis for such evaluation to be used by the Trustee.

	Once the value of the silver held by the Trust has been determined, the Trustee subtracts all estimated accrued but unpaid fees and other liabilities of the Trust from the total value of the silver and all other assets of the Trust. The resulting figure is the ANAV of the Trust. The ANAV is used to compute the Sponsor’s Fee. The Trustee then subtracts from the ANAV the amount of accrued Sponsor’s Fees 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 Quarter Ended March 31, 2010

	During the period the market value of the Trust’s assets decreased from $157,719,704 on January 4, 2010 (January 1-3, 2010 were not business days; the market value of the Trust’s assets on December 31, 2009 was $156,066,265) to $125,771,065 at quarter end, representing a 20.56% decrease. The number of Shares outstanding also decreased from 9,200,000 at January 4, 2010 to 7,200,000 at quarter end, with a net total of 20 Baskets being redeemed (15 Baskets created and 35 Baskets redeemed during the period). The redemption value per Share increased from $16.97 on January 4, 2010 to $17.46 on March 31, 2010. The NAV per share increased slightly less than the price per ounce of silver ($17.17 on January 4, 2010 to $17.50 on March 31, 2010) due to Sponsor’s Fee, which was $61,832 for the quarter. Other than the Sponsor’s Fee, the Trust had no other expenses during the period. The redemption value per Share of $18.81, on January 11, 2010, was the highest during the period, compared with a low of $15.12 on February 8, 2010. The number of Baskets created during the period was 15 (representing 1,500,000 Shares). 35 Baskets (representing 3,500,000 Shares) were redeemed during the period. Net gain for the quarter was $7,270,780, resulting from a net gain of $1,403 on the transfer of silver to pay the Sponsor’s Fee and a net gain of $7,331,209 on silver distributed for the redemptions of Baskets, which was offset by the Sponsors fees of $61,832.

	Liquidity

	The Trust is not aware of any trends, demands, conditions, 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 Trust’s only source of liquidity is its transfers and sales of silver. 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, 2010 the Trust did not have any cash balances.


	Critical Accounting Estimates

	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. In addition, please refer to Note 2 to the financial statements for further discussion of accounting policies.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

	Not applicable.

Item 4. Controls and Procedures

	The authorized officers of the Sponsor performing functions equivalent to those that a principal executive officer and principal financial officer of the Trust would perform if the Trust had any officers, and 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 have been effective as of the end of the period covered by this Form 10-Q.

	There have been no changes in the Trust’s or Sponsor’s internal control over financial reporting that occurred during the Trust’s first fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Trust’s or Sponsor’s internal control over financial reporting.

Item 4T. Controls and Procedures

	Not applicable.

PART II – OTHER INFORMATION


Item 1. Legal Proceedings

	None.

Item 1A. Risk Factors

	There have been no material changes to the risk factors since last disclosed in the prospectus included in the registrant’s registration statement filed on Form S-1 on July 21, 2009.

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

	Item 2(a). None.

	Item 2(b). Not applicable.

	Item 2(c). From the Date of Inception through March 31, 2010, 122 Baskets have been created and 50 Baskets redeemed as follows:


Period	Total Baskets Created	Total Baskets Redeemed	Total Authorized Shares

07/20/09-07/30/09	55	0	5,500,000
08/1/09-08/31/09	14	0	1,400,000
09/1/09-09/30/09	7	0	700,000
10/01/09-10/31/09	11	0	1,100,000
11/01/09-11/30/09	10	0	1,000,000
12/01/09-12/31/09	10	15	(500,000	)
01/01/10-01/31/10	3	15	(1,200,000	)
02/01/10-02/28/10	5	20	(1,500,000)
03/01/10-03/31/10	7	0	700,000


Item 3. Defaults Upon Senior Securities

	None.

Item 4. (Removed and Reserved)

	None.


Item 5. Other Information

	None.

Item 6. Exhibits

(a) Exhibits


31.1	Chief Executive Officer’s Certificate, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2	Chief Financial Officer’s Certificate, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1	Chief Executive Officer’s Certificate, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2	Chief Financial Officer’s Certificate, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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 thereunto duly authorized.




		ETF SECURITIES USA LLC
		Sponsor of the ETFS Silver Trust
		(Registrant)


Date: May 17, 2010		/s/ Graham Tuckwell

		Graham Tuckwell
		President and Chief Executive Officer
		(Principal Executive Officer)


Date: May 17, 2010		/s/ Thomas Quigley

		Thomas Quigley
		Chief Financial Officer and Treasurer
		(Principal Financial Officer and Principal Accounting Officer)

* The Registrant is a trust and the persons are signing in their capacities as officers of ETF Securities USA LLC, the Sponsor of the Registrant.

Exhibit Index


31.1	Chief Executive Officer’s Certificate, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2	Chief Financial Officer’s Certificate, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1	Chief Executive Officer’s Certificate, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2	Chief Financial Officer’s Certificate, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.