Split and Slide: Silver’s 3x ETC Caught Between a Shrinking Deficit Forecast and Hot CPI Data

The WisdomTree Silver 3x Daily Leveraged ETC has been through a turbulent stretch that laid bare the perils of leveraged exposure to a metal caught between macro headwinds and shifting supply-demand dynamics. A ten-for-one stock split on 8 May lowered the per-unit entry cost, but the timing coincided with a violent two-day swing in silver that left the product nursing a 31% rout from its local peak.

Silver jumped 6.15% on 11 May to $85.36 an ounce, lifted by the temporary US-China tariff détente that saw Washington cut levies on Chinese goods to 30% and Beijing reduce duties on US imports to 10%. The industrial metal, with roughly 60% of annual demand coming from manufacturing, benefited disproportionately from the trade truce. But the rally collapsed just four days later. On 15 May, silver plunged 10.61% to $77.52 an ounce as US inflation data dashed hopes for near-term Federal Reserve rate cuts.

The April consumer price index rose 3.8% year-on-year, while producer prices recorded their strongest monthly gain since early 2022. The CME FedWatch tool now prices in essentially no rate cut for 2026 and assigns a roughly 50% chance of a hike by year-end. For unyielding assets like silver, higher real yields and a firmer dollar are toxic. The gold-to-silver ratio jumped from around 54 to nearly 59 in a single session, signalling a sharp revaluation of relative value.

Should investors sell immediately? Or is it worth buying WisdomTree Silver 3x Daily Leveraged?

Against that backdrop, UBS delivered a major blow to the supply-scarcity narrative that had underpinned the recent rally. Analysts Wayne Gordon and Dominic Schnider slashed their estimate of the global silver deficit for 2026 from roughly 300 million ounces to just 60-70 million ounces – a cut of more than 75%. Their revised year-end price target now stands at $80 an ounce, down from $100, with the second-quarter target reduced from $100 to $85. The bank cited high prices curbing demand more aggressively than previously assumed, particularly in photovoltaics, jewellery and silverware.

The investment side has also weakened. Known ETF holdings have fallen by nearly 70 million ounces to around 794 million ounces, while speculative net futures positions have shrunk to a little over 100 million ounces. That strips the market of short-term momentum. Yet the structural floor remains intact. The Silver Institute expects 2026 to mark the sixth consecutive annual deficit, at 67 million ounces. COMEX registered inventories stand at 79.88 million ounces, with a coverage ratio of 13.4% – below the 15% stress threshold. J.P. Morgan sees the average silver price at $81 for 2026, more than double the prior-year average, but the forecast hinges on sustained global demand from solar, data centres and AI infrastructure.

The WisdomTree ETC, fully collateralised and carrying a total expense ratio of 0.99% annually, manages around €330 million in assets. Its daily reset mechanism means that over longer holding periods returns can diverge sharply from a simple triple of the underlying Solactive Silver Commodity Futures SL Index. The recent volatility has punished holders: after the split on 8 May, units began trading on 11 May, only to see the product careen from a 6.15% daily gain to a 10.61% loss within four trading days. The political backdrop remains open-ended – the Trump-Xi meeting ended without an extension of the tariff pause – so the ETC remains a vehicle for short-term directional views rather than a long-term proxy for physical silver. For now, dollar strength, sticky inflation and a drastically reduced deficit forecast have the upper hand.

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