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Silver price during recession

Recessions mark the start of financial uncertainty, and can lead to long-term economic depression. As a safe haven asset, silver's price during a recession can move significantly and quickly. It is fair to say that generally the silver price goes up during a recession, but past trends also don’t necessarily mean this will be repeated in the future.

Silver's reliance on industrial demand can also mean the price during a recession can be subdued or potentially even fall in extreme cases.

Silver recession graphic.

A country is officially in recession when its Gross Domestic Product (GDP) falls for two consecutive quarters. This means economic output has fallen for six months or longer, representing a sustained drop. The world’s stock markets will usually drop during a recession, as business downturn pushes investors out of stock markets.

This in turn drives investors towards physical, safe haven assets, such as silver and gold. During a recession gold has generally performed well, achieving significant growth. Silver has also performed well during recessions, but typically does not do quite as well as gold.

Gold and silver during a recession

The disparity between gold and silver during a recession - or depression - is explained by the different levels of industrial usage. Gold has comparatively smaller demand from industrial applications when compared to the many uses of silver. In times of recession, falling industrial metal demand lessens the positive impact a recession could have on the silver price. Demand still rises from investors seeking safe havens, but drops as a result of manufacturers buying less silver for their products. Therefore, recessions and movements in US markets have greater positive impact on gold compared to that of silver.

Does silver do well in a recession?

In the past 50 years there have been four major recessions of note, and in three of the four the silver price did do well. As shown in the chart below, the silver price does usually goes up during - or just after - a recession.

Silver price recession chart

  • Mid-1970s recession: In late 1973 and early 1974, stagflation drove the UK's GDP negative. This coincided with the silver price rising.
  • Early 1980s recession: The UK was in a recession for five quarters. The larger spike seen on the chart related to Silver Thursday but still experienced a price climb the year after.
  • Early 1990s recession: The early 90s saw significant economic change, with the US savings and loan crisis, as well the UK’s adoption of the Exchange Rate Mechanism. The silver price actually dropped during this time.
  • The ‘Great Recession’: The financial crisis in the late-2000s pushed gold to a record price in Dollars. Silver also climbed to its peak Sterling price of £29.26 per ounce.
  • 'Covid' recession : The outbreak of the global pandemic saw huge economic disruption, with much of the world entering some of the worst recessions seen in peacetime. After initially falling in price, silver rebounded on huge investor demand, and industrial demand as industries reopened.

A recession can in no way be considered a sure indicator of an impending price rise for silver. It can take a few years for the rise to begin, as happened with the recession of 2008, in which the price only peaked in 2011.

Ultimately however, a recession is a sign of an economy that is struggling, and this means all hedge commodities (including silver) could do well during this time.