Silver prices plummeted again during the 1990s recession before a steady recovery that culminated in an all-time high reached in 2011, three years after the 2007-2008 Financial Crisis. Over the last five decades, silver has only outperformed the S&P 500 in three of eight recessions: 1973, 1981 and 2007.
Precious Metals
Gold and silver are typically resilient during market downturns, Kralow said. “Precious metals are often considered a smart investment, since the decades worth of data we have available shows they tend to hold or increase the value, even in times of economic uncertainty,” he said.
Many experts say that just before a recession is the best time to invest in gold. There are several reasons for this. For one, its value tends to hold steady or, often, even increase during these down periods. That's because investors flock to the safety of gold, which drives up its price — and your returns.
Silver is sometimes referred to as the "poor man's gold." As precious metals, both silver and gold can rise in price if investors want a safe haven during times of economic uncertainty, and both can hold their value better than some other assets during times of inflation.
Precious metals, like gold or silver, tend to perform well during market slowdowns. But since the demand for these kinds of commodities often increases during recessions, their prices usually go up too.
Summary. Gold and Silver are excellent ways to diversify yourself and as protection in case of a recession.
Cash, large-cap stocks and gold can be good investments during a recession. Stocks that tend to fluctuate with the economy and cryptocurrencies can be unstable during a recession.
Silver remains an attractive investment option in 2023, mainly as a hedge against inflation and other economic uncertainties. When the government prints too much money, the value of the paper currency tends to decline, and prices go up.
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 Demand
Having hit record highs in 2021 and 2022, silver industrial offtake is expected strengthen further by 2.6 percent y/y to 550 million ounces (Moz) in 2023. Silver industrial demand should be lifted from further gains in vehicle electrification, and governments' expanding commitment to green infrastructure.
Silver's highest price reached almost $16 per ounce in 2007, only to plummet to a yearly low of about $8 per ounce in 2008 (reportedly silver experienced an annual percent change of -26.90% over the span of that year).
(NYSE:WMT) are often considered to be money-makers in times of recession. According to McKinsey report published in 2009, recession-resistant industries include consumer staples, healthcare, telecommunication services, and utilities, among more.
While no investment is guaranteed to be recession-proof, some tend to perform better than others during downturns. These include health care and consumer staples stocks (or funds tracking those sectors), large-cap stocks and income investments.
The Great Depression Backdrop
It allowed the President to reduce the gold backing the dollar by up to 50 percent. This also gave the president the power to back the dollar with a proportion of silver and not just gold, giving the silver price a boost.
Silver did not fare so well during stock market crashes.
However, you'll see that silver fell less than the S&P in all but one crash. This is significant because silver's high volatility would normally cause it to fall more.
Consumer staples, including toothpaste, soap, and shampoo, enjoy a steady demand for their products during recessions and other emergencies, such as pandemics. Discount stores often do incredibly well during recessions because their staple products are cheaper.
Silver can be considered a good portfolio diversifier with moderately weak positive correlation to stocks, bonds and commodities. However, gold is considered a more powerful diversifier.
Should You Keep Saving During a Recession? Yep. Having savings goals is never a bad idea, even during a recession.
2023 – 2024 Inflation goes out of control
The fastest way that silver can get to $100 an ounce is if inflation hits double-digit levels in 2022 and 2023. In 2021, the year-over-year inflation rate is about 9.75%. This is the highest rate of inflation in 40 years.
In general, silver averaged $21.77 in 2022. The silver price has rise above $23 per ounce since the start of 2023 from the previous lows at around $18 in late 2022.
The price could grow within the range of 500%-2500% in ten years. We have a track record supporting this prediction; between 1970-1979, the price grew from $1.70 an ounce to about $50, a 3000% growth in 10 years.
Liquidity. Your biggest risk in a recession is the loss of your job, if you're still employed or semi-employed. If you need to tap your savings for living expenses, a cash account is your best bet. Stocks tend to suffer in a recession, and you don't want to have to sell stocks in a falling market.
Generally speaking, most experts recommend having at least three to six months' worth of living expenses saved up and easily accessible in case of emergency. This ensures that if there is a sudden loss of income, you will have enough cash on hand to cover your basic needs until you can find a job.
As such, investing during a recession can be a good idea but only under the following circumstances: You have plenty of emergency savings. You should always aim to have enough money in the bank to cover three to six months' of living expenses, with the latter end of that range being more ideal.