Structural Deficit Meets Hawkish Fed: WisdomTree 3x Silver ETC Plunges 28% Ahead of CPI and Warsh's First Decision

Physical silver deficit widens to 46.3M oz, but strong jobs data spurs rate hike bets, crushing silver and leveraged ETC by up to 28% in a week.

The physical silver market is running a sixth consecutive annual deficit, with the Silver Institute projecting a shortfall of 46.3 million ounces for 2026 — 15% wider than the year before. Industrial demand, now accounting for 56% of total consumption, continues to accelerate on the back of solar energy, electric vehicles and AI data centers, and shows no sign of bending to higher prices. Yet none of that has shielded the most leveraged play on the metal from a brutal sell-off in recent days.

The trigger was a US jobs report that shattered expectations. The economy added 172,000 non-farm payrolls in May, more than double the consensus estimate of around 85,000. The unemployment rate held steady at 4.3%. Markets immediately repriced the interest-rate outlook: the probability of a Federal Reserve rate hike by December jumped to 72% on the CME FedWatch tool, up from 45% just a week earlier. The dollar firmed, the yield on the 10-year US Treasury surged above 4.50%, and German Bunds with the same maturity climbed above 3.00%. For a non-yielding asset like silver, the opportunity cost became punishing.

Silver July futures opened Monday at $67.84 an ounce and quickly slipped to $67.32 — a far cry from the $74-$75 levels seen the previous week. The metal lost 6.5% on Friday alone. Geopolitical tensions in the Middle East, including fresh rocket attacks between Israel and Iran that pushed oil toward $96 a barrel, normally bolster the safe-haven appeal of precious metals. This time, the dominant channel ran through inflation: more expensive crude raises price risks and keeps the Fed on a hawkish footing, undermining gold and silver alike.

The WisdomTree Silver 3x Daily Leveraged ETC, designed to deliver three times the daily return of the Solactive Silver Commodity Futures SL Index, amplified the damage. The product closed Monday at $12.23. Over the past seven trading sessions, the decline has been punishing: one widely cited calculation puts the loss at 26.01%, while another data source shows a steeper 28.39% — a variance likely due to different measurement windows or intraday adjustments. The annualized volatility over 30 days stands at 128.18%, and the daily reset mechanism means that in such choppy conditions, compounding can rapidly erode value. The fund, with assets of €330 million, offers no cushion against that math.

Looking ahead, the next major test arrives Wednesday with the release of US consumer price data. Analysts expect headline inflation to rise to 4.2% from 3.8%, with the core rate ticking up to 2.9% from 2.8%. Any upside surprise would reinforce the argument that the Fed cannot afford to ease. The central bank’s rate-setting meeting follows on June 16-17, the first under newly installed Chair Kevin Warsh.

Bank forecasts for silver diverge sharply. J.P. Morgan Global Research sees an average price of $81 an ounce in 2026, citing the persistent supply deficit and robust industrial consumption. UBS strategists take a more cautious view, pointing to a steep decline in ETF holdings and the risk that investment demand wanes further if rates stay high.

For holders of the triple-leveraged ETC, the coming days are a binary event. A weaker-than-expected CPI print could ignite a powerful rebound. A hot number, on the other hand, would likely compound the pressure — and the product’s built-in leverage ensures that every percentage move in the underlying silver price will be magnified threefold, for better or worse.