Leveraged Silver ETFs and AGQ's Strategic Role in Capturing Bullish Momentum

The allure of silver, a metal with both industrial and speculative appeal, has long captivated investors seeking to hedge against inflation or capitalize on macroeconomic shifts. In recent years, the 2X Long Silver ETF (AGQ) has emerged as a potent instrument for those aiming to amplify gains during periods of robust silver price rallies. As global markets grapple with geopolitical uncertainties and monetary policy volatility, AGQ's 2x leverage offers a compelling case study in tactical positioning.

AGQ's Structure and Mechanism

AGQ, managed by ProShares, seeks to deliver 2x the daily performance of the Bloomberg Silver Subindex. This structure relies on a combination of futures contracts and leverage, which amplifies both gains and losses. However, as with all leveraged ETFs, AGQ's performance is subject to the compounding effects of daily rebalancing. Over extended periods, particularly in volatile markets, this can lead to deviations from a simple 2x multiple of the underlying index.

Investors must thus treat AGQ as a short- to medium-term tool, ideally aligned with well-defined bullish trends.

Performance During Silver Rallies: A Mixed but Revealing Record

AGQ's historical performance underscores its potential-and risks-as a leveraged play. From 2020 to 2023, the ETF exhibited stark contrasts. In 2021, despite a 23.62% annualized increase in silver prices, AGQ returned -32.25%, a discrepancy attributed to the compounding drag during a year marked by price volatility. Similarly, 2022 saw AGQ decline by -7.89%, even as silver prices fluctuated between $22.53 and $25.31 according to data.

However, AGQ's recent performance has been striking. In 2025 alone, it delivered a total return of 360.71%, while the past 12 months (as of December 2025) saw a 410.53% surge. This aligns with silver's meteoric rise in 2025, which peaked at $78.84 per ounce on December 30, driven by inflationary pressures and geopolitical tensions. Such returns highlight AGQ's efficacy during sustained upward trends, though they also emphasize the necessity of precise timing.

Strategic Use in a Bullish Market

The tactical value of AGQ lies in its ability to magnify gains during strong silver rallies. For instance, the 2025 surge-from $29.58 in early April to $78.84 by year-end according to price history-demonstrates how AGQ can outperform even the most aggressive physical silver investments. Investors who entered during periods of undervaluation or macroeconomic catalysts (e.g., Fed policy shifts) could have reaped outsized rewards.

Yet, AGQ's utility is contingent on market conditions. In 2023, when silver prices corrected, AGQ recorded a -15.09% total return, illustrating the amplified downside risk. This underscores the importance of using AGQ as part of a diversified strategy, rather than a standalone bet.

Risks and Considerations

Leveraged ETFs inherently carry higher risks, particularly in non-trending or sideways markets. AGQ's 3-year annualized total return of 75.6% masks the uneven performance across individual years, including the -32.25% loss in 2021. Additionally, the fund's expense ratio and the costs of maintaining leverage can erode returns over time. Investors must also monitor liquidity and market sentiment, as sudden reversals can lead to rapid value depreciation.

Conclusion

AGQ represents a high-conviction vehicle for investors seeking to capitalize on silver's upward momentum. Its 2x leverage can transform modest price gains into substantial returns, as evidenced by its 2025 performance. However, success requires disciplined timing, a clear understanding of compounding mechanics, and a tolerance for volatility. In a world where inflation and geopolitical risks remain elevated, AGQ offers a strategic tool for those who can navigate its complexities.