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Silver vs. Stocks: Comparing Performance During Recessions

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Silver vs. Stocks: Comparing Performance During Recessions

Silver vs. Stocks: Comparing Performance During Recessions

Historically, silver has been an alternative to traditional investments like stocks and bonds.

Amid the recent wave of bank failures and rising interest rates, many investors sought the metal, making prices jump.

But has silver helped investors weather recessionary storms in the past? The above graphic uses data from Macrotrends to highlight silver’s price movements during recessions and compares it to changes in the S&P 500.

Silver Price During Recessions

Like gold, silver’s value comes from its scarcity as a precious metal. Silver, however, has a higher industrial use, from electronics and medical applications to batteries and solar panels.

Additionally, the silver market is much smaller than the gold market, making it a much more volatile asset.

The metal saw its biggest price drop in 1980 when it tumbled over 56% after the Hunt brothers, who controlled over half of the world’s privately owned silver, failed in an attempt to corner the market and were forced to sell after a rise in margin requirements.

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.

Recession yearRecession length% change in nominal price of silver% change in S&P 500
197316 months43.5%-13.1%
19806 months-56.5%6.6%
198116 months17.5%5.8%
19908 months-19.8%5.4%
20018 months-3.7%-1.8%
200718 months-8.7%-37.4%
20202 months-9%-1.4%

As of March 2023, the silver nominal price was down 6.1% while the S&P500 was down 3.3%.

Silver Price in 2023

Over the next months, silver demand is expected to rise, supporting the price. Silver’s industrial market could be lifted from further gains in vehicle electrification and governments’ expanding commitment to green infrastructure, according to the Silver Institute.

However, if the economic scenario worsens and industrial users of silver reduce their output, the metal may face some headwinds.

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Visualizing Global Gold Production in 2023

Gold production in 2023 was led by China, Australia, and Russia, with each outputting over 300 tonnes.

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Graphic breaking down global gold production in 2023

Visualizing Global Gold Production in 2023

This was originally posted on our Voronoi app. Download the app for free on iOS or Android and discover incredible data-driven charts from a variety of trusted sources.

Over 3,000 tonnes of gold were produced globally in 2023.

In this graphic, we list the world’s leading countries in terms of gold production. These figures come from the latest USGS publication on gold statistics (published January 2024).

China, Australia, and Russia Produced the Most Gold in 2023

China was the top producer in 2023, responsible for over 12% of total global production, followed by Australia and Russia.

CountryRegion2023E Production (tonnes)
🇨🇳 ChinaAsia370
🇦🇺 AustraliaOceania310
🇷🇺 RussiaEurope310
🇨🇦 CanadaNorth America200
🇺🇸 United StatesNorth America170
🇰🇿 KazakhstanAsia130
🇲🇽 MexicoNorth America120
🇮🇩 IndonesiaAsia110
🇿🇦 South AfricaAfrica100
🇺🇿 UzbekistanAsia100
🇬🇭 GhanaAfrica90
🇵🇪 PeruSouth America90
🇧🇷 BrazilSouth America60
🇧🇫 Burkina FasoAfrica60
🇲🇱 MaliAfrica60
🇹🇿 TanzaniaAfrica60
🌍 Rest of World-700

Gold mines in China are primarily concentrated in eastern provinces such as Shandong, Henan, Fujian, and Liaoning. As of January 2024, China’s gold mine reserves stand at an estimated 3,000 tonnes, representing around 5% of the global total of 59,000 tonnes.

In addition to being the top producer, China emerged as the largest buyer of the yellow metal for the year. In fact, the country’s central bank alone bought 225 tonnes of gold in 2023, according the World Gold Council.

Estimated Global Gold Consumption

Most of the gold produced in 2023 was used in jewelry production, while another significant portion was sold as a store of value, such as in gold bars or coins.

  • Jewelry: 46%
  • Central Banks and Institutions: 23%
  • Physical Bars: 16%
  • Official Coins, Medals, and Imitation Coins: 9%
  • Electrical and Electronics: 5%
  • Other: 1%

According to Fitch Solutions, over the medium term (2023-2032), global gold mine production is expected to grow 15%, as high prices encourage investment and output.

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Charted: The Value Gap Between the Gold Price and Gold Miners

While gold prices hit all-time highs, gold mining stocks have lagged far behind.

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Line chart comparing gold price and gold mining stocks since 2000.

Gold Price vs. Gold Mining Stocks

This was originally posted on our Voronoi app. Download the app for free on Apple or Android and discover incredible data-driven charts from a variety of trusted sources.

Although the price of gold has reached new record highs in 2024, gold miners are still far from their 2011 peaks.

In this graphic, we illustrate the evolution of gold prices since 2000 compared to the NYSE Arca Gold BUGS Index (HUI), which consists of the largest and most widely held public gold production companies. The data was compiled by Incrementum AG.

Mining Stocks Lag Far Behind

In April 2024, gold reached a new record high as Federal Reserve Chair Jerome Powell signaled policymakers may delay interest rate cuts until clearer signs of declining inflation materialize.

Additionally, with elections occurring in more than 60 countries in 2024 and ongoing conflicts in Ukraine and Gaza, central banks are continuing to buy gold to strengthen their reserves, creating momentum for the metal.

Traditionally known as a hedge against inflation and a safe haven during times of political and economic uncertainty, gold has climbed over 11% so far this year.

According to Business Insider, gold miners experienced their best performance in a year in March 2024. During that month, the gold mining sector outperformed all other U.S. industries, surpassing even the performance of semiconductor stocks.

Still, physical gold has outperformed shares of gold-mining companies over the past three years by one of the largest margins in decades.

YearGold PriceNYSE Arca Gold BUGS Index (HUI)
2023$2,062.92$243.31
2022$1,824.32$229.75
2021$1,828.60$258.87
2020$1,895.10$299.64
2019$1,523.00$241.94
2018$1,281.65$160.58
2017$1,296.50$192.31
2016$1,151.70$182.31
2015$1,060.20$111.18
2014$1,199.25$164.03
2013$1,201.50$197.70
2012$1,664.00$444.22
2011$1,574.50$498.73
2010$1,410.25$573.32
2009$1,104.00$429.91
2008$865.00$302.41
2007$836.50$409.37
2006$635.70$338.24
2005$513.00$276.90
2004$438.00$215.33
2003$417.25$242.93
2002$342.75$145.12
2001$276.50$65.20
2000$272.65$40.97

Among the largest companies on the NYSE Arca Gold BUGS Index, Colorado-based Newmont has experienced a 24% drop in its share price over the past year. Similarly, Canadian Barrick Gold also saw a decline of 6.5% over the past 12 months.

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