Silver's noteworthy run over the past year has caught the attention of both bulls and bears. The precious metal has surged to multi-month highs, fueled by retail momentum, tight supply, and macro uncertainty. Technical indicators such as the RSI suggest overbought conditions, and momentum charts hint at potential exhaustion. For traders wary of a sharp correction, bearish strategies, particularly via ETFs, offer a way to hedge or profit from a decline.
Why Some Analysts Expect A Sharp Pullback
The case for shorting silver isn't just technical. Former JPMorgan strategist Marko Kolanovic warned that silver is "almost guaranteed to drop ~50% from these levels within a year or so," citing the parabolic nature of the rally.
Contrarian trader Kevin Muir also noticed signs of exhaustion, noting that while gold continues to rally, silver seems to have peaked. Kolanovic frames silver less as a store of value and more as a leveraged macro instrument, which, when positioning unwinds, can unwind violently. Historical parallels to the 1970s show speculative manias often end with sharp corrections, even if secular trends later resume.
ETFs To Bet Against Silver
Inverse and leveraged inverse ETFs provide targeted exposure for bearish trades. ProShares UltraShort Silver (NYSE:ZSL) delivers roughly −2× daily inverse exposure. The fund saw record inflows of more than $283 million as well as record volume of 820 million shares on Monday.
Other major silver ETFs like iShares Silver Trust (NYSE:SLV), abrdn Physical Silver Shares ETF (NYSE:SIVR), and Sprott Physical Silver ETF (NYSE:PSLV), despite providing long exposure to silver, can be used to trade against silver by combining them with options strategies or as part of hedges for sophisticated traders. These traders often use put options or short positions on these funds to express bearish views or hedge existing exposure.
Macro And Structural Considerations
Silver plays two roles at the same time. Sometimes investors buy it as a safe place to hide when markets are nervous. Other times, it's bought because it's needed to make things like solar panels, electric vehicles, and AI hardware. Bulls argue that industrial deficits could support higher prices over the long term, but bears note that momentum exhaustion and overbought technical signals can create a window for tactical short positions.
Whether for hedging or speculative purposes, ETFs provide a practical alternative to direct futures or physical holdings.
Photo: Oselote from Shutterstock
