Does silver hold a safe-haven potential?

That equates to roughly a 733 percent total gain (about 6 percent compounded annually).

Gold price climbed over the same period, from ~$353 per ounce in 1991 to ~$2,624 by end-2024, a gain of ~643 percent.

However, inflation eroded a substantial portion of these nominal gains. Since US consumer prices roughly tripled since the early 1990s, the real (inflation-adjusted) returns of the metals were much more modest.

One estimate finds that since 1970 silver delivered ~5.3 percent annual price growth, but only ~3.15 percent after inflation. In other words, silver did modestly outpace inflation, preserving purchasing power, though not by as wide a margin as its nominal surge suggests.

Gold's long-run real return is similarly slim – to the order of 1–2 percent per year, historically. By comparison, US Treasury bonds have averaged around 5–6 percent annually since 1926, which, historically, provided a small real return above inflation as well as a steady income.

Risk and volatility: Silver vs. Gold vs. Bonds

A key consideration for a safe haven is risk. Here, silver’s dual nature works against it. Silver is far more volatile than traditional safe havens. Its annual price swings have averaged around 20 percent or more, roughly double gold’s typical volatility (gold’s moves are nearer 10–15 percent per year).

In practical terms, silver often sees sharper spikes and deeper crashes. For instance, in the 2008 financial crisis, silver plunged almost 27 percent for the year, as industrial demand evaporated, whereas gold price rose about 3 percent.

US Treasuries, meanwhile, usually exhibit low volatility and tend to gain value in equity downturns as investors seek safety – e.g., in 2008, 10-year Treasuries returned +20% as yields fell.

An exception was the inflation shock of 2022 when even bonds suffered an unprecedented drawdown of ~15 percent.

Overall, silver’s higher risk is evident in its more frequent big swings – a red flag for those looking for stability. Correlation patterns reinforce this point.

Gold’s correlation to equities is near zero or negative, meaning it often zigs when stocks zag, a desirable safe-haven trait. Silver’s inverse correlation to the stock market is weaker. When stocks fall, gold tends to rise, but "silver is not necessarily an anti-stock asset" as it can fall in tandem with risk assets. This is because silver’s price is partially driven by economic activity (half of its demand is industrial).

In fact, during sudden crashes (2020 COVID shock), silver initially plunged alongside equities. The gold-to-silver ratio – a barometer of relative strength – spiked above 100:1 in 1991, 2020, and 2025, indicating that, during times of extreme stress, investors flocked to gold far more than silver. These episodes underscore that silver often lags as a safe haven during acute crises.

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Silver’s safe-haven moments and portfolio role

Despite its volatility, silver has shown a glimmer of safe-haven behaviour under certain conditions.

During periods of geopolitical tension or stagflation fears, both precious metals can attract defensive inflows. For example, in early 2025, silver jumped +18.5 percent in a quarter, right alongside gold (+18.2 percent), as rising geopolitical uncertainty boosted their appeal as havens.

Historical analysis even suggests that, during some major crises, silver’s percentage gains outpaced gold’s. A study of major geopolitical crises from 1979–2024 found silver often enjoyed strong safe-haven demand, sometimes rising faster than gold.

Notably, during the late 2000s, the Global Financial Crisis and subsequent European debt turmoil, silver price skyrocketed. From its 2008 lows to 2011 highs, it soared roughly +495 percent, versus gold’s ~+238 percent rise over the same trough-to-peak interval.

Much of silver's surge occurred as monetary stimulus kicked in; it first fell during the 2008 panic, then massively rebounded. This pattern aligns with a view from Bloomberg data: gold tends to lead as the initial safe haven, and "silver … quickly plays catch-up" when monetary expansion and inflation fears take hold.

In essence, silver can shine after the worst of a crisis, especially in reflationary environments – it is often said to have "a monetary asset side" that flourishes when investors worry about currency debasement and seek inflation hedges.

In a diversified portfolio, silver can still play a useful role. Its long-run returns have been positive in both nominal and real terms, and it is not highly correlated with either stocks or bonds over multi-year horizons. Holding a small allocation (5–10 percent) in silver or silver-backed assets can provide diversification benefits – potentially boosting returns during commodity bull markets or inflationary periods when equities and bonds falter.

That said, one must size positions judiciously, given silver's higher volatility. Gold has historically offered a smoother ride as a hedge, while Treasuries provide income and reliable crisis performance (aside from inflation-driven exceptions). Silver is better viewed as a satellite diversifier rather than a primary safety anchor.

Also read | Buy, sell or hold: How should retail investors look at gold amid easing global tensions?

So, does silver qualify as a safe haven?

By global safe-haven standards, silver is a mixed case. On the one hand, it is a hard asset with intrinsic value, scarce supply, and a history of preserving wealth over the long run (silver’s price has risen in real terms over decades, albeit gradually).

It tends to thrive in inflationary and reflationary booms, often outperforming gold in the upswing of an economic recovery or when inflation expectations surge. On the other hand, silver’s higher risk and industrial linkage mean it often fails to hold its value at the start of crises – precisely when a safe haven is needed most.

As one analysis noted, "Silver typically is not considered a safe-haven asset", though it can act like a monetary asset in the right circumstances. Silver is not a consistently reliable safe haven in the way gold or Treasuries have been.

Its record, from 1991–2025, shows solid gains but gut-wrenching volatility and periodic steep drawdowns. However, as part of a broader portfolio, a modest silver allocation can enhance diversification and offer upsides during certain turmoil (especially when inflation and monetary response are key concerns).

In global terms, prudent investors treat silver as a complement to core safe havens – a potential source of return and inflation hedge, but not the first line of defence when markets turn stormy.

The writer is a certified financial planner and founder, True North Finance, a financial and investment planning firm based in Pune.

Disclaimer: The views expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.