Why Silver Could Outshine Gold After Its Record Run

Gold’s recent surge has reaffirmed its role as a safe haven, but history suggests silver could soon take center stage. While gold touched a record high earlier this week, silver, often seen as gold’s less glamorous cousin, has a pattern of outperforming after gold rallies.

Gold remains up about 41% over the past year, delivering a 113% return over the past decade, outpacing the S&P 500’s 78% gain, according to FactSet. Although gold remains the primary choice during geopolitical and economic uncertainty, silver’s moment may be close. Historically, silver lags gold during downturns but often rallies stronger during recoveries, thanks to its dual role as a precious and industrial metal.

Silver’s industrial demand, especially in electronics and solar energy, makes it more sensitive to economic cycles. The gold-silver ratio—a key market metric—currently stands around 98, well above the 30-year average of 68, indicating silver may be undervalued relative to gold.

Past trends reinforce this view. Following the 2020 COVID-19 panic, when the ratio peaked at 113, silver surged 73% compared to gold’s 8% gain. Similarly, after the 2008 financial crisis, silver rallied 81% within a year, outpacing gold’s 44% rise. Even the minor market tremor in 2016 saw silver outperform after the ratio exceeded 80.

While a severe global recession could weigh on silver due to its industrial ties, historical patterns show that silver typically shines once recovery momentum builds, supported by monetary stimulus and renewed industrial demand.