Contradiction in Silver: Triple-Leveraged ETC Rallies as Fed Splits and Solar Switches

Silver hits two-month high of $88/oz; leveraged ETC jumps 17% in a day. Fed division, falling solar demand, and supply tightness create mixed outlook.

Silver touched $88 an ounce on Wednesday, a two-month peak, but the WisdomTree Silver 3x Daily Leveraged ETC has already delivered a far more dramatic move. On 13 May, the product closed at €24.44 on the Milan exchange, up 16.91% in a single session, while the London spot fix jumped 16.86% to 2,121 pence. Volume topped 300,000 units per trading venue.

Yet the forces driving that surge are anything but straightforward. US consumer prices accelerated to 3.8% in April, the fastest annual pace since May 2023, cementing expectations that rate cuts are off the table for this year. The CME Group’s FedWatch Tool now prices in a 30% probability of a rate hike before December. Morgan Stanley has pushed back its forecast for the first easing to 2027, a scenario that normally weighs on non-yielding assets like silver.

Inside the Federal Reserve, the rift is widening. At the 29 April FOMC meeting, the committee held the federal funds rate at 3.50%–3.75% but the vote was 8–4 — the narrowest majority in 34 years and the highest number of dissenting votes at a single meeting since late 1992. Days earlier, the US Senate confirmed Kevin Warsh as the new Fed chair by a razor-thin 13–11 vote, a result that FXStreet notes echoes historical periods of political infighting. Between 1978 and 1980, when the Fed was similarly divided, silver surged 713%; during the financial crisis, it later rallied several hundred percent again.

Industrial demand, however, is telling a different story. The solar photovoltaic sector, a key consumer of silver, cut its purchases by 6% last year and analysts expect a further 19% plunge in 2026. The shift is technological: manufacturers are steadily reducing silver content per cell. Longi Green Energy, one of the world’s largest solar producers, plans to eliminate silver entirely from the second quarter, replacing it with base metals like copper.

Supply constraints provide a partial counterweight. The silver market posted its fifth consecutive annual deficit, with a shortfall of roughly 40 million ounces. Falling ore grades and a lack of new mining projects continue to cap output. COMEX inventories stand at 79.88 million ounces, representing a cover ratio of just 13.4%. The World Silver Survey puts industrial consumption at over 650 million ounces, making silver more vulnerable to physical tightness than gold.

Analysts remain cautiously optimistic. J.P. Morgan forecasts an average price of $81 per ounce in 2026, while the LBMA consensus hovers near $80. On the charts, the VC PMI model shows silver futures in a bullish expansion phase, having breached the weekly moving average at $78.72. Next daily targets are $90.88 and $92.38, with the bullish window extending until 17 May.

But the leveraged ETC adds a layer of complexity. Its triple daily reset amplifies both gains and losses, and the compounding effect means that long-term returns diverge sharply from the underlying metal’s performance in volatile conditions. A rapid reversal can work the leverage in the opposite direction just as forcefully.

Geopolitics has also thrown a fresh obstacle in the path. India, the world’s second-largest silver importer, raised its import tariff from 6% to 15%, a move that could dent physical demand from the subcontinent.

For the WisdomTree product to sustain its recent trajectory, the market needs clear catalysts: a weaker US dollar, softer inflation prints, or a less restrictive Fed. Until then, every daily swing in the spot price carries disproportionate weight — and the product’s holders are riding the sharpest edge of the silver story.