What Happens to Silver in Recessions? Good investment?

Can you make money investing in silver, and is silver actually a safe haven for stock market crashes? You may be surprised to see the numbers.

There are no shortage of videos right here on YouTube telling you to go out and invest in silver and to basically bet everything on silver. If you follow some of the gurus like Peter Schiff or Robert Kiyosaki, they have been forever advising to buy metals. "Back up the truck and buy silver" was the latest video with Kitco and Kiyosaki and this has been the message for decades.

But is silver really going to provide the massive returns that are expected?

So first off, I own silver. I like silver. I follow the market closely. I can quote you a dozen reasons why everyone should own some silver including that its a hard asset, the gold to silver ratio being at all time highs, the devaluation of paper money, quantitative easing, the economy being in the biggest bubble ever, government debt that will never be able to pay off, . I get it, and everyone should have some silver.........so if you do not own some silver look into getting some, buy some Gold and/or silver bullion it doesnt take much to stack some metals here and there every week or month and it really builds up over time. The problem is when buyers become fixated exclusively on silver expecting these outrageous returns, they don't invest in dividend stocks, or in their own small business, they avoid everything betting the entire farm on silver. and you see dozens of videos here on YouTube from stackers who wait patiently for the day that silver is at $2,000 an oz.

Unlike dividends metals really don't help you build wealth, they are supposedly a defensive financial position reserved for bad economic times to preserve wealth. When the economy is falling, if you are able to just stay where you are that's a good thing. When the economy is booming, not so much.

So the argument is that because the economy is going to crash or correct, metals are the obvious choice. While I dont necessarily disagree we are past due for a correction or worse, as to the assertion that silver will be the best choice in this scenario, I disagree and Ill show you why in a moment.

Let's be honest - nobody really knows how the next economic calamity might play out. Hyperinflation? Mad Max scenario? Recession? Depression? and nobody knows what people will use as alternative currency if ours devalues to the point of worthlessness. If we look at recent history in Venezuela sure, some people are using gold and silver to get by, but there are many reasons it is not ideal. Bitcoin has become the currency of choice for more people as it is easy to use and safer. In my opinion it doesn't hurt to also have some bitcoins on hand in an emergency, but most silver bugs shrug off Bitcoin as a ponzi or having no actual worth. This is often based on emotional bias, rather than a true understanding of what Blockchain actually represents. But that is another topic.
Let's look at how silver fared in the most notable S&P declines in recent history.

So in 1976 the S&P went down almost 20% and silver went up by 15% , gold by 53%. But silver then was about $4 an oz. and gold $133 an oz. And my guess would be that most silver investors are expecting to get more than a meager 15% return on their silver. I mean at today's prices that would be about a $2 an oz increase. So if you had 1,000 oz that cost you $15,000 it would be worth $17,250. Not the post apocalyptic return most people expect and this was one of only two times silver even went up.

1980 S&P down 27% and look at this gold down 46% and silver down 66.1%!! So in this case silver and gold went down along with the S&P. It happened again in 1987 S&P down 33.5% silver down 11.7% gold up just a bit at 6%. 1990 S&P down almost 20% silver down 10.8% gold up 6.8% - not by much again. 98 again down almost 20% silver down 9.5% and gold down 5%. 200-2002 S&P down almost 50% gold up 12.4% and silver down 14.4%. The 2007-2009 economic meltdown at 56.8% gone - if you had held on to silver you would have been safe at a whopping 1.1% gain. Gold again outperforming at 25.5% up. And the last time we saw a blip was in 2011 - down about 19% silver again down almost 20% gold up 9.4%.

Investing in silver and precious metals are an emotional thing. People love silver, they love gold. They love the security it brings and what it represents, which is true value. But if we consider this chart - the next time the S&P tanks if history serves as an indicator silver will not blast to the moon as silver bugs expect. In fact Gold bugs have been better off, but only marginally.

https://goldsilver.com/blog/if-stock-market-crashes-what-happens-to-gold-and-silver/

http://www.franchise.city A Better way to Buy a Franchise!