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 accounting principles generally accepted in the United States of America ("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.	Silver Bullion

JPMorgan Chase Bank N.A., London branch (the "Custodian"), is responsible for the safekeeping of silver bullion owned by the Trust.

For financial statement purposes, the silver bullion held by the Trust is valued at the lower of cost or market, using the average cost method. Should the market value of the silver bullion held be lower than its average cost during the interim periods, an adjustment ("market value reserve") to cost may be recorded by the Trust to reflect market value. At the end of the Trust's fiscal year, management will make a determination on whether the reserve is recovered or whether the cost basis of silver should be written down. Gain or loss on sales of silver bullion is calculated on a trade date basis. Fair value of the silver bullion is 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").

The following table summarizes activity in silver bullion for the years ended December 31, 2010, 2009 and 2008 (all balances in 000's):


December 31, 2010	Ounces			Average Cost			Fair Value			Realized Gain (Loss)
Beginning balance		305,206.0		$	4,210,142		$	5,185,449			—
Silver contributed		87,675.4			2,040,507			2,040,507			—
Silver distributed		(40,268.3	)		(579,557	)		(836,960	)	$	257,403
Silver sold		(1,476.3	)		(20,954	)		(29,257	)		8,303
Adjustment for realized gain		—			—			265,706			—
Adjustment for unrealized gain on silver bullion		—			—			4,129,874			—

Ending balance		351,136.8		$	5,650,138		$	10,755,319		$	265,706


December 31, 2009	Ounces			Average Cost			Fair Value			Realized Gain (Loss)
Beginning balance		218,399.7		$	2,928,317	*	$	2,356,533			—
Silver contributed		108,877.6			1,575,673			1,575,673			—
Silver distributed		(20,775.6	)		(276,552	)		(297,947	)	$	21,395
Silver sold		(1,295.7	)		(17,296	)		(18,718	)		1,422
Adjustment for realized gain		—			—			22,817			—
Adjustment for unrealized gain on silver bullion		—			—			1,547,091			—

Ending balance		305,206.0		$	4,210,142		$	5,185,449		$	22,817


December 31, 2008	Ounces			Average Cost			Fair Value			Realized Gain (Loss)
Beginning balance		150,801.2		$	1,838,497		$	2,225,826			—
Silver contributed		93,510.3			1,438,131			1,438,131			—
Silver distributed		(24,955.7	)		(335,617	)		(316,791	)	$	(18,826	)
Silver sold		(956.1	)		(12,694	)		(14,313	)		1,619
Adjustment for realized loss		—			—			(17,207	)		—
Adjustment for unrealized loss on silver bullion		—			—			(959,113	)		—

Ending balance		218,399.7		$	2,928,317	*	$	2,356,533		$	(17,207	)

*	Refer to Note 1A for a discussion of the restatement.

C.	Redeemable Capital Shares

Shares of the Trust are classified as "redeemable" for balance sheet purposes, since they are subject to redemption. 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 eligible to settle securities transactions through the book-entry facilities of the Depository Trust Company and which 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 are 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 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, sales to cover expenses and liabilities and any losses that may have occurred.

When silver is exchanged in settlement of a redemption, it is considered a sale of silver for financial statement purposes.

Due to the expected continuing sales and redemption of capital stock and the three-day period for Share settlement the Trust reflects capital Shares sold as a receivable, rather than as contra equity. Shares redeemed are reflected as a contra asset on the trade date. Outstanding Trust Shares are reflected at redemption value, which is the net asset value per Share at the period ended date. Adjustments to redemption value are reflected in shareholders' equity.

Net asset value is computed by deducting all accrued fees, expenses and other liabilities of the Trust, including the Sponsor's fees, from the fair value of the silver bullion held by the Trust.

On July 11, 2008, the Board of Directors of the Sponsor authorized a ten-for-one split of the Shares of the Trust for shareholders of record as of the close of business on July 21, 2008, payable after the close of trading on July 23, 2008. All Share and per Share amounts are restated to reflect the ten-for-one Share split.

Activity in redeemable capital Shares for the years ended December 31, 2010, 2009 and 2008 is as follows (all balances in 000's):


	Year Ended December 31, 2010						Year Ended December 31, 2009						Year Ended December 31, 2008
	Shares			Amount			Shares			Amount			Shares			Amount
Beginning balance		310,700		$	5,183,154			221,250		$	2,355,598			152,000		$	2,224,932
Shares issued		89,600			2,040,507			110,550			1,575,673			94,500			1,438,131
Shares redeemed		(41,100	)		(836,960	)		(21,100	)		(297,947	)		(25,250	)		(316,791	)
Redemption value adjustment		—			4,364,293			—			1,549,830			—			(990,674	)

Ending balance		359,200		$	10,750,994			310,700		$	5,183,154			221,250		$	2,355,598

D.	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 and gains and losses are deemed "passed through" to the holders of Shares of the Trust.