If the Stock Market Crashes This Year, Will Silver Soar? Here's What History Says

Investing in silver can be an effective way to diversify your portfolio and add stability to it over the long term. Over the past 12 months, the precious metal has been incredibly popular with investors, soaring from around $30 to now north of $70, and that’s even with a sharp pullback in the market this year. The iShares Silver Trust (SLV 1.58%), which tracks silver, is up around 137% in the past 12 months.

Silver has been acting like a highly speculative asset recently, but what about if the market crashes — could it be a safe-haven investment to be holding, and could it rise in value amid a downturn? Here’s what history says might happen.

How has the iShares Silver Trust performed in previous market crashes?

A good gauge of how the iShares Silver Trust might perform in a downturn is to look at its past performance in market crashes. While that doesn’t guarantee that the same will happen in the next crash, it can nonetheless show whether silver has been a safe-have asset that investors have turned to amid adversity in the past.

The most recent crash took place in 2022, when inflation crushed investor confidence, and many companies were cutting back on spending. That year, the S&P 500 fell by 19%, and the iShares Silver Trust would end up rising by a relatively modest 2%. In 2020, there was a brief but sudden crash in the markets due to the COVID pandemic. During the first three months, the S&P 500 fell by 20%, and the iShares Silver Trust actually performed slightly worse, falling by nearly 22%. Prior to that, there was the Great Recession. The S&P 500 would crash an incredible 38% in 2008. While the iShares fund didn’t do as badly, it still fell by a whopping 24%.

While the iShares Trust has provided investors with a bit of safety in previous crashes, it has also shown that it isn’t immune to the effects of a significant sell-off in the markets.

Should you add the iShares Silver Trust to your portfolio today?

The iShares Silver Trust has been relatively stable in recent months, which can be an encouraging sign for investors who want to own it for the purposes of reducing risk rather than speculation. If there’s a crash in the stock market this year, however, I don’t think the iShares Silver Trust will provide much safety, simply because of its significant run-up in value over the past year, combined with the lack of concrete evidence that silver can be an effective safe-haven asset.

While it has generally done better than the S&P 500 during previous crashes, the iShares Trust hasn’t soared in value or even always generated positive returns. It can be a way to diversify your portfolio and add some safety, but I wouldn’t expect it to soar if there’s a market crash.