Silver didn't fare very well during the stock market crashes. In fact, it only rose in one of the sales of 26 pence and basically remained stable in another. This is likely due to the high industrial use of silver (around 56% of total supply) and because stock sales are usually associated with a poor or deteriorating economy. The price of silver tends not to be correlated with stocks.
Therefore, if the stock market falls, the price of silver may rise. Right now, stock indices are at historic highs. However, many people think that the stock market is highly overvalued and a significant pullback is expected. If we see people fleeing the stocks, they may rush to the safe haven of silver.
Stocks benefit from economic growth and stability, while gold benefits from economic difficulties and crises. If the stock market falls, fear is usually high and investors often seek a safe haven in gold. While the silver price forecast is affected by supply and demand, it is also heavily influenced by investors who buy precious metals as safe haven assets during times of economic or political uncertainty. If industrial plants can't get the silver they need right away, they may be forced to pay higher prices to get the available silver to keep their operations going.
Market participants interested in investing in silver would do well to consider these ideas when trying to determine where the spot price might move in the future. But does this coverage hold up during stock market crashes? Knowing what effect a market crash and subsequent dollar collapse will have on silver and gold is vital for making investment decisions now and then deciding what course to take in the event of a major recession or depression. Jeff speaks regularly at conferences on precious metals, is a member of the board of directors of Strategic Wealth Preservation in Grand Cayman and provides exclusive analysis and market commentary to GoldSilver clients. After all, silver is a safe asset that generally does well in times of crisis, and the past year was plagued by tense geopolitical events along with the current COVID-19 pandemic.
However, regardless of what stocks may do, is it wise to lack a significant amount of physical gold and silver in light of all the risks we face today? I don't think so. This could be a repeat of the 1970s and 2000s, when silver vastly outperformed the U.S. stock market. To help answer the questions posed above, I analyzed past stock market declines and measured the performance of gold and silver in each of them to see if there are any historical trends.
This is because the catalysts for the rise of gold were not related to the stock market, but rather to the economic and inflationary problems that were taking place at that time. In the long term, greater investment in silver exploration and development will be needed to maintain mining production. The following table shows the eight biggest falls of the S%26 P 500 since 1976 and how the prices of gold and silver responded to each of them.