Silver’s Triple-Leveraged ETC Caught Between Inflation Heat and a Structural Supply Squeeze

The WisdomTree Silver 3x Daily Leveraged ETC jumped 16.91% on May 13. A divided Fed, persistent inflation, and a fifth consecutive silver supply deficit drive volatility.

The WisdomTree Silver 3x Daily Leveraged ETC delivers a daily triple kick – but on May 13 it delivered a 16.91% jolt in a single session, closing at €24.44 on the Milan exchange. That spike was no isolated dip into a pool of easy money. It reflected two immense, contradictory forces hammering the silver market: a Fed fracturing over inflation and a physical deficit that shows no sign of healing.

Inflation in the United States ran hot in April, hitting 3.8% – the highest print since May 2023. That number alone would normally push the Federal Reserve toward tighter policy, but the central bank is politically split. Kevin Warsh was confirmed as the new Fed chair by a thin 13-11 Senate vote, a margin that has fuelled talk of “Fed paralysis.” At the April 29 FOMC meeting, the committee held rates at 3.50–3.75% by an 8-4 vote, the narrowest split in 34 years. Morgan Stanley now expects no rate cut before 2027, and some market pricing even points to a potential hike. For a zero-yield asset like silver, that’s heavy headwind.

And yet the metal keeps climbing, propped up by a supply story that grows tighter by the month. The silver market posted its fifth consecutive annual deficit last year, with the shortfall running around 40 million ounces. This year, total supply is expected to shrink again. At the COMEX, inventories sit at 79.88 million ounces, and the cover ratio is a wafer-thin 13.4%. Industrial demand already exceeds 650 million ounces annually, according to the World Silver Survey. That structural scarcity gives the metal a floor that gold, for all its safe-haven appeal, cannot match.

One key industrial driver, the solar industry, is now shifting. Longi, the world’s largest solar manufacturer, announced it will replace silver with cheaper materials starting in the second quarter. Global photovoltaic demand for silver actually declined last year, and analysts forecast a further 19% drop in 2025. That substitution is a bearish undercurrent, but it is not yet strong enough to offset the broader deficit.

London spot silver was quoted at 2,121 pence on May 13, a 16.86% surge, with volumes exceeding 300,000 units per exchange. On the spot market, the metal held above $85 an ounce, and by May 14 it stood at $87.08, a modest 0.51% dip that still left the week clearly positive. Technical models from VC PMI describe silver futures as entering a bullish expansion phase, having cleared the weekly average of $78.72. Next daily targets sit at $90.88 and $92.38, with a favourable window extending to May 17.

The analyst community remains cautious. J.P. Morgan sees silver averaging $81 this year, while UBS cut its year-end target to $80. The gold-silver ratio hovers near 55, a level that suggests silver is cheap relative to gold on a historical basis, but the yield environment works against a sustained rally.

For holders of the WisdomTree ETC, the triple leverage magnifies every twist. The fund holds around €330 million in assets and charges nearly 1% annually. The daily rebalancing creates a compounding effect: in a volatile sideways market, the fund’s performance can diverge sharply from three times the index return. A sharp rally today can be followed by a vicious snapback tomorrow as the leverage works in both directions. For investors banking on a continued squeeze, the message is clear – the structural deficit is real, but the rate cycle is hostile, and the daily levered product punishes indecision as quickly as it rewards conviction.