Silver’s wild ride this week is driving the steepest discount since 2008 in the world’s biggest ETF tracking the metal.

BlackRock Inc.’s $16.2 billion iShares Silver Trust exchange-traded fund, ticker SLV, plunged 14% on Tuesday alongside spot prices. However, the ETF tracks the London Bullion Market Association’s silver price -- which is calculated once a day at an auction and was little changed. The result was a more than 11% discount between SLV and its underlying holdings as the ETF sold off more quickly.

The episode illustrates that ETFs -- which trade on exchanges and behave like stocks -- can provide a better sense of price than the less-liquid assets and benchmarks they track, according to Mizuho International. Silver has been whipsawed along with gold -- typically a much more stable asset -- as investors weigh a surge in U.S. bond yields with global stimulus measures designed to support the battered economy.

“This is an example of where the ETF, and the futures, are better price discovery instruments than the underlying on a short-term basis,” said Peter Chatwell, Mizuho’s head of multi-asset strategy.

The discount comes after SLV traded at a 7% premium last week -- the highest since 2013 -- as silver rocketed higher alongside gold as real interest rates fell. The $900 million Aberdeen Standard Physical Silver Shares, the second-largest silver ETF, also tracks the LMBA’s silver price and closed at an 11.4% discount on Tuesday.

Discounts to net-asset value were a common occurrence in fixed-income ETFs in March, when trading in cash bond markets essentially froze amid coronavirus-fueled volatility. Meanwhile, equity ETFs seldom experience such disconnects, given that the stocks they hold trade more liquidly than most other assets.

Given that the LMBA’s silver price only sets once per day, it’s more accurate to compare SLV to its indicative intraday net-asset value for a read on whether the ETF is disconnected from its underlying, according to Bloomberg Intelligence. Both SLV and its intraday NAV were trading 3.7% higher on Wednesday.

“These days, both are in play all day, and so the selloff in silver that started yesterday, only half of it reflected in NAV,” said Eric Balchunas, BI’s senior ETF analyst. “Noon to 4 p.m. selling was all ETF price.”