Investing.com -- Gold’s recent run has reaffirmed its role as a haven during turbulent times, but history suggests that silver, a less precious metal, could soon take the spotlight.
Silver, often overlooked in comparison to its more famous yellow cousin, has a track record of catching up after gold surges—and sometimes outperforming once the dust settles.
The yellow metal reached a record high earlier this week before easing slightly after U.S. President Donald Trump dialed back his rhetoric on trade and the Federal Reserve.
Even so, gold remains up about 41% over the past year and has returned 113% so far this decade, compared to 78% for the S&P 500, according to FactSet.
As investors brace for further geopolitical and macroeconomic shocks, gold continues to be the asset of choice for those seeking protection.
But silver’s moment may not be far behind. Historically, silver rallies have often followed gold with a lag. That trend is largely due to silver’s hybrid nature.
It shares gold’s safe-haven characteristics, appealing in times of inflation or crisis, but also has significant industrial uses in sectors like electronics and solar energy. That makes silver more sensitive to the economic cycle—lagging gold during the onset of downturns but potentially outperforming as recovery takes shape.
The gold-silver ratio—a commonly watched metric among hard-asset investors—provides a key signal.
As of Wednesday, one ounce of gold cost 98 times as much as silver, down from over 100 earlier in the week. That remains far above the 30-year average of 68, suggesting silver is undervalued relative to gold.
This isn’t the first time the ratio has skewed so heavily. During the initial COVID-19 market panic in March 2020, the ratio hit 113. Over the next year, silver soared 73%, while gold rose just 8%.
A similar pattern unfolded following the 2008 financial crisis, when the ratio jumped from 53 to 80 in just five months. Over the next year, silver rallied 81%, comfortably outpacing gold’s 44% gain.
Even a brief market scare in early 2016 saw the ratio exceed 80, once again followed by strong silver outperformance. These precedents support the view that silver tends to shine brightest after periods of extreme gold dominance.
A global economic breakdown could still derail this pattern, given silver’s industrial exposure. But during past recessions, silver has proven resilient once recovery begins—buoyed by monetary stimulus and renewed industrial demand.